2009 (1) TMI 50 - HC - Wealth-tax

Non-filing of return held that it is not permissible for any one to decide its net wealth below taxable limit by working out deduction and evade to file return S. 14(2) does not prevent assessee from filing a return if one has net wealth less than 15 lac held that is was not mandatory that the documents mentioned in the complaint should have been made available to the trial court even at cognizance of the complaint criminal proceedings cannot be quashed even if tax case is pending

Issues Involved:
1. Non-filing of Wealth Tax Return and alleged contravention of Section 14(1) and Section 35B of The Wealth-Tax Act, 1957.
2. Validity of the complaint and cognizance taken by the Magistrate.
3. Maintainability of the Criminal Original Petition in light of previous withdrawals.
4. Applicability of Section 14(2) of the Act and whether the petitioner was obligated to file a return.
5. Impact of pending tax appeals on the prosecution.
6. Nature of the offence under Section 35B of the Act - whether it is a continuing offence.

Detailed Analysis:

1. Non-filing of Wealth Tax Return and alleged contravention of Section 14(1) and Section 35B of The Wealth-Tax Act, 1957:
The petitioner, a prominent political figure, did not file a wealth tax return for the assessment year 1993-94 by the due date of 31.08.1993, despite being aware of her statutory duty. Notices under Section 16(4) were issued, but the petitioner neither replied nor filed the return, leading to an ex parte assessment. The total taxable wealth was determined, and a show cause notice was issued for prosecution under Section 35B of the Act, alleging wilful failure to file the return.

2. Validity of the complaint and cognizance taken by the Magistrate:
The petitioner argued that the Magistrate took cognizance without supporting documents, merely based on the complaint's recitals. The court held that it is not mandatory for the documents to be available at the time of taking cognizance. The Magistrate needs only to be prima facie satisfied with the allegations in the complaint. The court found no error in the Magistrate's order taking cognizance.

3. Maintainability of the Criminal Original Petition in light of previous withdrawals:
The respondent raised a preliminary objection regarding the maintainability of the petition, citing previous withdrawals of similar petitions. The court noted that the current petition was based on a new cause of action, discovered only when the Magistrate called for records in 2007. Thus, the petition was deemed maintainable.

4. Applicability of Section 14(2) of the Act and whether the petitioner was obligated to file a return:
The petitioner contended that under Section 14(2), if the net wealth is below the taxable limit, the return is deemed never to have been furnished. The court clarified that Section 14(2) presupposes the filing of a return, which was not done in this case. Therefore, the petitioner was obligated to file the return, and her failure to do so warranted prosecution.

5. Impact of pending tax appeals on the prosecution:
The petitioner argued that pending tax appeals should stay the prosecution. The court held that criminal proceedings and tax assessments are independent. The mere expectation of success in tax appeals does not bar prosecution. The court found no reason to stay the criminal proceedings, especially given the long pendency and the age of witnesses.

6. Nature of the offence under Section 35B of the Act - whether it is a continuing offence:
The court referenced the Supreme Court's decision in Maya Rani Punj v. CIT, holding that non-compliance with the obligation to file a return is a continuing offence as long as the default persists. Therefore, the petitioner's failure to file the return constitutes a continuing offence under Section 35B of the Act.

Conclusion:
The court dismissed both the Criminal Original Petition and the Criminal Revision Case, finding no merit in the petitioner's arguments. The court directed the trial court to expedite the proceedings and dispose of the case within five months, emphasizing the need for cooperation from both parties to ensure a timely conclusion.

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