2019 (3) TMI 1985 - HC - Income Tax

Offence punishable u/s 277 - as alleged petitioner did not disclose his money lending and chit business in his returns of income and declared false statement of returns of income filed in his individual capacity and wilfully under reported the income earned by the petitioner - HELD THAT - The concept of mens rea is integral to criminal jurisprudence and offence cannot be committed intentionally. Section 278 (E) of the Taxation Laws places burden of proving the option of mens rea upon the accused and also provides that such absence need to be proved not only to the basic threshold of preponderance of possibility but beyond reasonable doubt. In every prosecution case the court shall always presume culpable mental state and it is for the accused to prove the contrary beyond reasonable doubt. In the present case it is evident from the complaint that the petitioner did not disclose his income to the tune of Rs.35 crores for the assessment years 2009-2010 2010-2011 2011-12 2012-2013 2013- 2014 and 2014-2015. The petitioner wilfully made false statement of return of income and wilfully under reported the income earned. Therefore the entire proceedings cannot be quashed on the grounds raised by the petitioner as stated supra. The petitioner has to prove the contrary beyond reasonable doubt before the trial court and the trial court has to enquire the complaint independently on the basis of the evidence as such these petitions are liable to be dismissed.

Summary

Issues:
Petition to quash proceedings under Section 277 of the Income Tax Act for non-disclosure of income.

Analysis:
1. Petitioner's Submission:
- Petitioner engaged in various businesses, accused of non-disclosure of income.
- Allegations include not maintaining proper documents, transactions in cash, and underreporting income.
- Petitioner denied intention to evade taxes, sought quashing of proceedings.

2. Respondent's Argument:
- Respondent contended petitioner failed to disclose substantial income over multiple assessment years.
- Accusations of not revealing money lending and chit business in tax returns.
- Respondent opposed quashing, citing willful false statements and underreporting of income.

3. Court's Consideration:
- Court examined the petitioner's non-disclosure of Rs.35 crores income and false statements.
- Referred to precedents emphasizing the importance of mens rea in criminal offenses.
- Ruled that burden of proving absence of mens rea lies with the accused, beyond reasonable doubt.

4. Precedents Cited:
- Mentioned judgments like Arun Arya Vs. Income Tax Officer and P.Jayappan Vs. S.K.Perumal.
- Highlighted the significance of mens rea in criminal jurisprudence.
- Explained the burden of proof on the accused regarding mens rea in taxation laws.

5. Court's Decision:
- Court found no grounds to quash the proceedings based on petitioner's arguments.
- Emphasized the need for the petitioner to prove absence of mens rea beyond reasonable doubt.
- Dismissed the petitions, stating the trial court must independently evaluate the evidence.

6. Conclusion:
- Criminal Original petitions to quash proceedings under Section 277 of the Income Tax Act were dismissed.
- Connected miscellaneous petitions were closed, affirming the continuation of the legal proceedings.