2013 (5) TMI 128 - HC - Income Tax

Failure to furnish the return - Offence U/s 276-CC of the Income Tax Act, 1961 - The accused/Assessee has not rendered any valid and cogent reasons for filing the Income Tax Return for the Assessment year, 1994-95 after the lapse of 7 months - Held that - Just because the respondent had applied for the compounding of the offence before the filing of the complaint against her in Court, as is was being claimed by her, and the same according to her had not been decided before the filing of the complaint it could not be said that the complaint was not maintainable, as was also the submission of the learned counsel for the respondent not was the trial Court required to examine at the stage of charge as to why the department was not compounding the offence in the case of the respondent herein. If she was aggrieved by any action or inaction on the part of the authority competent to take the decision on her request for compounding she should have had recourse to legal remedies instead of waiting for the prosecution to be launched by the department. The impugned orders of the trial Court and the revisional Court are set aside and the matter is now remanded back to the Court of the Additional Chief Metropolitan Magistrate with the direction for framing charge under Section 276-CC of the Income Tax Act against the respondent and to try her in accordance with law. It is however, clarified that nothing observed by this Court in this order shall be considered by the trial Court to be any final expression of opinion on the merits of the complainant s case or the respondent s explanation which she had tendered in response to show cause notice given to her before the filing of the complaint in Court by the Income Tax Department - The case shall now be taken up by the trial Court on 29th April,2013 at 2 p.m.

Summary

Issues:
The main issue involves the discharge of the respondent by the Court of Additional Chief Metropolitan Magistrate for an offense under Section 276-CC of the Income Tax Act, 1961 due to the failure of the Income Tax Department to establish the wilfulness of the respondent's failure to submit the income tax return for the assessment year 1994-95. The appeal challenges the orders of the trial Court and the revisional Court.

Detailed Analysis:

1. Discharge of the Respondent:
The respondent was discharged by the trial Court and the decision was affirmed by the Sessions Court. The petitioner-complainant filed a petition under Section 482 of the Code of Criminal Procedure, 1973 and Article 227 of the Constitution of India to set aside these orders. The complaint alleged that the respondent failed to file the income tax return for the assessment year 1994-95 within the prescribed period, despite receiving caution notices and statutory notices from the Income Tax Department.

2. Legal Arguments:
The petitioner's counsel argued that the delay in filing the return should have been presumed as wilful under Section 278-E of the Income Tax Act. They cited relevant judgments to support their stance. On the other hand, the respondent's counsel contended that the Department had accepted penalties for the delayed filing before considering prosecution, and the request for compounding the offense was unreasonably rejected.

3. Court's Analysis:
The High Court found that the trial Court erred in discharging the respondent. The Court noted that the respondent did not file the return within the prescribed period and did not respond to communications from the Department. The Court emphasized the existence of Section 278-E, which allows for a presumption of culpable mental state. The Court referred to Supreme Court judgments to support this interpretation.

4. Legal Precedents:
The Court highlighted that the trial Court should have framed charges against the respondent based on the presumption under Section 278-E, allowing the respondent to prove the absence of wilful default during the trial. The Court also referenced a previous case where the presumption of mens rea under Section 278-E was deemed essential at the charge stage.

5. Decision and Remand:
The High Court allowed the petition, setting aside the orders of the trial Court and the revisional Court. The matter was remanded back to the Court of the Additional Chief Metropolitan Magistrate with directions to frame charges under Section 276-CC of the Income Tax Act against the respondent and proceed with the trial. The Court clarified that its decision should not be considered a final opinion on the merits of the case or the respondent's explanations.

This detailed analysis outlines the legal proceedings and the High Court's decision in the case challenging the discharge of the respondent under the Income Tax Act.