2018 (10) TMI 135 - HC - Income Tax

Offence under Section 276CC - disobedience of Section 139 (1) by failure on the part of the assessee to furnish the return of income - Held that - In the context of complaint relating to AY 2003-04, the evidence of complainant had shown disobedience of Section 139 (1) by failure on the part of the assessee to furnish the return of income. The notice under Section 142 (1) which had been served had also not been complied with. This added to the gravity and to the reasons for filing of the criminal prosecution. The subsequent notice (Ex.PW-2/5) cannot prima facie be read so as to supersede the previous notice (Ex.PW-2/4) particularly to have the effect of giving to the assessee indefinite period for compliance since that can never be the intention of the law or of the process issued thereunder. The fact that the assessee had subsequently furnished the return of income for AY 2003-04 on 24.10.2007 can also not take away from the fact that he had incurred the liability to be prosecuted earlier on account of failure to furnish the income-tax return within the stipulated period. In the opinion of this Court, the revisional court took the correct view in the case of complaints relating to AY 2004-05 and 2005-06, but fell into error in the context of complaint relating to AY 2003-04. There was no case made out for discharge of assessee in the latter case.

Summary

Issues:
1. Challenge to the orders framing charge in criminal complaints.
2. Interpretation of Section 139, 142, 148, and 276 CC of the Income Tax Act, 1961.
3. Consideration of the contentions raised by the accused regarding non-filing of income tax returns.
4. Evaluation of the arguments related to the notices issued by the assessing authority.
5. Analysis of the Supreme Court's decisions in similar cases.
6. Determination of the liability of the accused for prosecution based on non-compliance with income tax return filing requirements.

Issue 1: Challenge to the orders framing charge in criminal complaints
The accused challenged the orders framing charges in criminal complaints related to non-filing of income tax returns for assessment years 2003-2006. The revisional court upheld the charges for AY 2004-05 and 2005-06 but discharged the accused in the case of AY 2003-04 due to a distinct fact-situation.

Issue 2: Interpretation of Sections 139, 142, 148, and 276 CC of the Income Tax Act
Sections 139, 142, and 148 of the Income Tax Act impose obligations on taxpayers to file returns and provide information to the assessing officer. Section 276 CC makes failure to comply with these provisions punishable. The accused failed to file returns within the prescribed time, leading to criminal complaints and subsequent legal proceedings.

Issue 3: Consideration of contentions regarding non-filing of income tax returns
The accused argued that no tax was due for AY 2004-05 and 2005-06, claiming a refund instead. However, the courts rejected this argument, emphasizing that non-filing of returns constitutes an offense under Section 276 CC, irrespective of the tax liability.

Issue 4: Evaluation of arguments related to notices issued by the assessing authority
The accused contended that the notices issued by the assessing officer were not complied with due to various reasons. However, the courts held that failure to respond to these notices constitutes a distinct offense under the Income Tax Act.

Issue 5: Analysis of Supreme Court's decisions in similar cases
The court considered previous Supreme Court decisions to determine the applicability of the law in the present case. The judgments highlighted that non-filing of returns constitutes an offense under Section 276 CC, independent of the assessment proceedings.

Issue 6: Determination of the liability of the accused for prosecution
The court concluded that the accused's failure to comply with the income tax return filing requirements warranted prosecution under Section 276 CC. While the charges for AY 2004-05 and 2005-06 were upheld, the accused was discharged for AY 2003-04 based on specific circumstances.

In conclusion, the court dismissed two petitions challenging the orders framing charges and allowed one petition, restoring the proceedings for AY 2003-04. The judgment clarified the legal obligations under the Income Tax Act and emphasized the consequences of non-compliance with income tax return filing requirements.