1988 (3) TMI 41 - HC - Income Tax

Summary

Issues Involved:
1. Legitimacy of criminal proceedings u/s 276CC(ii) of the Income-tax Act, 1961.
2. Impact of charging interest u/s 139(8) on the initiation of criminal proceedings.
3. Requirement of mens rea for criminal prosecution under the Income-tax Act.

Summary:

Legitimacy of Criminal Proceedings u/s 276CC(ii):
The petitioner, the karta of a Hindu undivided family, challenged the criminal proceeding initiated u/s 276CC(ii) of the Income-tax Act, 1961, by the Income-tax Officer for the assessment year 1982-83. The petitioner filed the return on February 15, 1985, and paid the self-assessment tax. The Income-tax Officer completed the assessment and charged interest u/s 139(8), 217, and 220(2). Penalty proceedings u/s 271(1)(a) were initiated but not concluded. A criminal complaint was filed alleging wilful default in filing the return by the due date.

Impact of Charging Interest u/s 139(8):
The petitioner contended that charging interest u/s 139(8) implies an extension of time for filing the return, thus precluding criminal prosecution for the same delay. Reliance was placed on the case of Dooars Transport v. CIT [1986] 162 ITR 383, where it was held that charging interest up to the date of filing the return raises a presumption of extension of time, and hence, no penalty or criminal prosecution can be initiated.

Requirement of Mens Rea:
The court emphasized that mens rea is an essential ingredient of a criminal offence. The Income-tax Officer, by charging interest u/s 139(8), impliedly extended the time for filing the return, negating the element of wilful default. The complaint did not disclose any offence as it failed to establish wilful default. The court held that the initiation of criminal proceedings without determining the liability of the accused-assessee was inappropriate.

Conclusion:
The court quashed the criminal proceedings u/s 276CC(ii) of the Income-tax Act, 1961, against the petitioner, stating that the complaint did not disclose any offence and that the initiation of such proceedings was without jurisdiction. The respondents were directed not to proceed further with the criminal case.