1991 (8) TMI 11 - HC - Wealth-tax

Summary

Issues:
1. Quashing of complaints under section 35B of the Wealth-tax Act, 1957 based on wilful failure to furnish return of wealth.
2. Interpretation of instructions regarding prosecution initiation by Central Board of Direct Taxes.
3. Reopening of assessments and filing of returns affecting the validity of previous assessments.

Analysis:

1. The accused filed petitions under section 482 of the Code of Criminal Procedure seeking to quash complaints against him under section 35B of the Wealth-tax Act, 1957 for wilful failure to furnish returns of wealth. The complaints were based on the accused's failure to file returns for various assessment years despite repeated notices and extensions granted. The court noted that the allegations in the complaints established a prima facie case of wilful failure, leaving the accused the opportunity to contest this during trial. The court held that at this stage, the accusations were sufficient to proceed, and the petitions were dismissed.

2. The petitioner argued that prosecution should not be initiated as per instructions from the Central Board of Direct Taxes, which stated that prosecution should not be launched unless the amount involved exceeded Rs. 10,000. However, the court clarified that the instructions applied to the amount involved in the case, not the tax amount. As the wealth-tax amounts involved in all cases exceeded Rs. 10,000, the court rejected the petitioner's argument, emphasizing that the instructions did not support the petitioner's stance.

3. The petitioner contended that assessments were reopened, returns were filed, and thus the previous assessments should be considered inoperative. However, the court observed that despite assessments being reopened and returns filed later, the accused had failed to file returns on the due dates, leading to the initial assessments. The court highlighted that the question of wilful failure could only be determined during trial and not at the threshold stage. Consequently, the court ruled that the complaints could not be quashed based on the grounds raised by the petitioner, maintaining the complaints' legal validity. The court dismissed all petitions accordingly.