2022 (1) TMI 1265 - HC - Income Tax

Prosecution initiated for the offence u/s 276CC - as alleged assessee has not filed Return of Income for the Assessment Year 2014-15 - HELD THAT - The only criteria to initiation of prosecution is that there must be a wilful failure to furnish Return as required under Section 139(1) or failure to file Return after notices issued under Section 142 or 148 of the Act. As the offence under Section 276CC is attracted on failure to comply with the provisions of Section 139(1) or failure to respond to the notice issued under Section 142 or Section 148 of the Act within the time limit specified therein the very allegation in the complaint itself indicate that the assessee has not filed their Return of Income for the Assessment Year 2014-15. The statement also indicates that the assessee has earned substantial income for which TDS has been deducted under Section 194C and 194H of the Income Tax Act during the financial year 2013-14. Show cause notice also issued on 26.07.2017. Despite the above Return has not been filed. Therefore it is alleged that there is a wilful failure to file a Return. Considering the penal provision which makes it punishable under Sections 276-CC for non filing of Return and wilfully concealed its true and correct income. This Court is of the view that the contention of the leanred counsel for the petitioner cannot be countenanced. Accordingly the Petition is liable to be dismissed.

Summary

Issues:
Prosecution under Section 276CC of the Income Tax Act for non-filing of return of income for Assessment Year 2014-15.

Analysis:
The petitioner filed a petition to quash the prosecution initiated under Section 276CC of the Income Tax Act for not filing the return of income for the Assessment Year 2014-15 before the due date of 31.7.2014. The petitioner, an assessee, earned substantial income for which TDS was deducted but failed to file the return as mandated by Section 139 of the Income Tax Act. Despite a show cause notice issued on 26.7.2017, the return was not filed, leading to the prosecution under Section 276CC.

The petitioner's counsel argued that without an assessment order, prosecution under Section 276CC is not maintainable, emphasizing the proviso to the section. However, the respondent's counsel contended that willful failure to file the return of income, whether required under Section 139 or in response to notices under Section 142 or 148, justifies prosecution under Section 276CC.

Upon examination, the court found that Section 276CC allows prosecution for willful failure to furnish the return as required under Section 139 or in response to notices issued under Section 142 or 148 of the Act. The proviso provides relief to genuine assesses based on the tax payable amount. The court referred to the Supreme Court's decision in Sasi Enterprises case, which clarified the application of Section 276CC and the role of the proviso in protecting certain categories of assesses.

The court noted that the complaint indicated the assessee's failure to file the return despite earning substantial income and a show cause notice issued. Considering the penal provision under Section 276CC, which punishes non-filing of return and willful concealment of income, the court dismissed the petition, allowing the trial to proceed.

In conclusion, the court upheld the prosecution under Section 276CC for the non-filing of the return of income, emphasizing the importance of complying with the provisions of the Income Tax Act and rejecting the petitioner's argument against prosecution without an assessment order.