2018 (12) TMI 586 - HC - Income Tax

Non compliance to notice u/s 142 (1) - Non submission of ITR - penalty under Section 271(1)(b) - breaches committed in compliance with the requirement of law under Section 139 (1) - Cognizance of the offence under Section 276 CC read with Section 278B of Income Tax Act - Held that - The offence under Section 276 CC of IT Act deals with failure to comply with the obligation under Sections 139 (1) or 142(1) or 148 of IT Act. Disobedience of each said provision of law itself constitutes a distinct offence. The offence under Section 276 CC, prima facie, stood constituted upon failure on the part of the assessee to furnish the return of income for the assessment year in question within the period prescribed in law. The notices by the assessing authority under Section 142 (1) were issued with the objective of facilitating best judgment assessment. The failure to abide by such notices would also constitute offence, distinct from the offence that had been earlier committed by virtue of breach of Section 139 (1). The assessment proceedings are not related to these criminal prosecutions. They may eventually have a bearing for the benefit of proviso to Section 276CC to be invoked but not so as to inhibit continuation of the criminal process. See KARAN LUTHRA VERSUS INCOME TAX OFFICER (ITO) 2018 (10) TMI 135 - DELHI HIGH COURT . In the present case, there was a breach even in compliance with the notice under Section 142 (1), which by the same logic as indicated above, constitutes distinct offence. There is no merit in the contentions raised in the petition. The same is dismissed.

Issues:
1. Challenge to summoning order under Section 276 CC read with Section 278 B of Income Tax Act, 1961.
2. Allegation of abuse of process of law due to no breach of provisions leading to offence under Section 276 CC.
3. Interpretation of Section 139 (1) and Section 142 (1) of IT Act in relation to filing of income tax return.
4. Application of proviso to Section 276 CC in cases of failure to file a return under Section 139 (1) or in response to notices under Section 142 or Section 148 of IT Act.

Analysis:

1. The petitioners challenged a summoning order under Section 276 CC read with Section 278 B of the Income Tax Act, 1961, alleging abuse of process of law due to no breach of provisions leading to the offence. The petition invoked the inherent jurisdiction of the High Court under Section 482 of the Code of Criminal Procedure, 1973, contending that the proceedings were an abuse of law. The petitioners claimed that there was no income tax liability as the income tax return for the relevant assessment year had been submitted for a refund, not to evade tax liability.

2. The facts revealed that the petitioners failed to submit the income tax return for the assessment year 2012-13 within the prescribed timeline. Despite a notice issued by the respondent and subsequent penalty levied for non-compliance, the return was only filed after a significant delay. The cause of action for the complaint was based on breaches related to the requirements under Section 139 (1) and compliance with the notice under Section 142 (1) of the IT Act.

3. The petitioners primarily relied on Section 139 (4) of the IT Act, which allowed for the submission of a return even after the prescribed deadline under certain conditions. The Supreme Court's interpretation of Section 276 CC in Sasi Enterprises case highlighted the relief provided to genuine assessees under the proviso, emphasizing the importance of timely filing to avoid prosecution. The proviso's applicability was limited to voluntary filing under Section 139 (1) and did not extend to cases where non-compliance had been detected through notices under Section 142 (1) or Section 148.

4. In a similar matter before the High Court, the Court emphasized that the offence under Section 276 CC pertained to failure to comply with obligations under Sections 139 (1) or 142 (1) or 148 of the IT Act, with each disobedience constituting a distinct offence. The failure to furnish the return within the prescribed period and non-compliance with notices under Section 142 (1) were considered separate offences. The assessment proceedings were deemed unrelated to the criminal prosecutions, and the benefit of the proviso to Section 276 CC could be invoked based on timely filing but did not hinder the continuation of the criminal process.

5. Ultimately, the High Court found no merit in the contentions raised by the petitioners and dismissed the petition challenging the summoning order under Section 276 CC of the Income Tax Act, 1961.

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