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2016 (3) TMI 1406 - HC - Income TaxProsecution u/s 276CC - as per the Notice under section 153A the return of income was to be filed by 12th October 2013 which the petitioner has failed - HELD THAT - Under Section 153A A.O shall also assess or reassess the total income in respect of each assessment year falling within such six assessment years. Section 276CC of the Act under Chapter XXII- Offences Prosecution provides for prosecution for failure to furnish return of income if a person willfully fails to furnish in due time the return of income which he is required to furnish under sub-section (1) OF Section 139 or by notice given under clause (1) of sub-section(1) of section 142 or section 148 or section 153A he shall be punishable i in a case where the amount of tax which would have been evaded if the failure had not been discovered exceeds one hundred thousand rupees with rigorous imprisonment for a term which shall not be less than six months but which may extent to seven years and with fine; ii in any other case with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. Section 279 pertains to prosecution at the instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Sub-section (2) of Section 279 provides that any offence under this Chapter may either before or after the institution of proceedings be compounded by the Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General. The Apex Court in case of Prakash Nath Khanna Ors . 2004 (2) TMI 3 - SUPREME COURT held that the expression in due time occurring in Section 276CC means within the time stipulated in Section 139 1 and not the time postulated in Section 139 4 - filing of the return under section 139 4 even though without any notice from the Assessing Officer to do so does not satisfy the requirement of section 139 1 and attracts Section 276-CC. Thus in view of clear provisions of Section 276 attempt to reach a different conclusion by placing reliance on marginal heading or explanatory memo laid before the Parliament at the time of introduction of that section is impermissible. With respect to quashing criminal proceedings under Article 226 of the Constitution of India the Apex Court held and observed that if the accused challenges the prosecution on the grounds that a there was no concealment of income and the allegation of tax evasion was based on no evidence b the delay in filing returns happened in unavoidable circumstances and without any guilty mind the absence of culpable mental state could be pleaded in defence at the criminal trial and the factual allegations raised by the writ petitioner-accused could then be considered by the trial Court. Thus this group of petitions deserve no consideration and are accordingly dismissed. Needless to say that all the contentions raised before this Court by the petitioners shall be available to them at the time of trial and dismissal of these petitions and any of the observations made shall not come in the way of the parties concerned nor it could be regarded by the Court concerned which shall adjudicate the matters on its own merits.
Issues Involved:
1. Invocation of extraordinary jurisdiction under Article 226 of the Constitution of India. 2. Quashing of summons issued under Section 276CC of the Income Tax Act, 1963. 3. Examination of willful default and mens rea in the failure to file income tax returns. 4. Applicability of compounding provisions under Section 279(2) of the Income Tax Act. 5. Relevance of precedents and judicial interpretations. Issue-wise Detailed Analysis: 1. Invocation of Extraordinary Jurisdiction under Article 226: The petitioner sought to invoke the extraordinary jurisdiction of the High Court under Article 226 of the Constitution to quash the summons issued by the Chief Judicial Magistrate, Vadodara, in Criminal Case No. 16069/2015. The petitioner argued that the delay in filing the return was due to the seizure of documents during a raid by the Income Tax Department, which caused a bona fide delay. The petitioner also faced financial difficulties, necessitating a loan to pay the tax. 2. Quashing of Summons Issued under Section 276CC of the Income Tax Act: The petitioner contended that the prosecution under Section 276CC was unwarranted as there was no willful default or mens rea. The petitioner had disclosed the entire undisclosed income and paid the tax. Despite this, a show cause notice was issued for prosecution under Section 276CC for failing to file the return by the stipulated date. The petitioner argued that the delay was not willful but due to circumstances beyond control. 3. Examination of Willful Default and Mens Rea: The petitioner argued that the element of mens rea, a precondition for prosecution under Section 276CC, was absent. The petitioner cited the need to prove willful default through clear, cogent, and reliable evidence. The petitioner relied on precedents from various High Courts to emphasize that the absence of mens rea should preclude prosecution. 4. Applicability of Compounding Provisions under Section 279(2): The petitioner highlighted that under Section 279(2) of the Income Tax Act, the offense is compoundable. The petitioner had disclosed income and paid the tax, arguing that there was no delay or willful default. The petitioner claimed that the search and seizure of documents made it impossible to file returns on time, negating any mens rea. 5. Relevance of Precedents and Judicial Interpretations: The petitioner relied on judgments from the Calcutta High Court, Andhra Pradesh High Court, and Madhya Pradesh High Court to argue that the court should examine whether the delay in filing returns was willful. The petitioner contended that the High Court could assess the absence of willful defiance and quash the prosecution. Court's Analysis and Judgment: The Court examined the provisions of Section 153A, 276CC, and 279 of the Income Tax Act. It referred to the Supreme Court's decision in Prakash Nath Khanna & Anr. vs. Commissioner of Income Tax & Anr., which clarified that "in due time" under Section 276CC means within the time stipulated in Section 139(1) and not the extended time under Section 139(4). The Supreme Court held that the existence of culpable mental state (mens rea) is presumed under Section 278E, and the accused can plead absence of such mental state during the trial. The Court concluded that the factual aspects raised by the petitioner, such as the absence of mens rea and the reasons for delay, should be adjudicated during the trial. The Court dismissed the petitions, stating that the contentions raised by the petitioner could be addressed during the trial and that the High Court should not make a roving inquiry at this stage. Conclusion: The High Court dismissed the petitions, holding that the issues raised by the petitioner regarding the absence of mens rea and the reasons for delay in filing returns should be examined during the trial. The Court emphasized that the statutory presumption of culpable mental state under Section 278E must be addressed in the trial court, and the High Court should not interfere at this stage. The petitioner was advised to raise all contentions during the trial, and the dismissal of the petitions would not prejudice the trial proceedings.
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