1978 (12) TMI 36 - HC - Income Tax

Summary

Issues:
- Appeal against order of acquittal under sections 276(b) and 276(d) of the Income Tax Act, 1961 for failure to file return and pay tax.
- Defence of respondents regarding lack of offence.
- Interpretation of section 276 of the Act regarding reasonable cause or excuse.
- Burden of proof on prosecution to show deliberate default without reasonable cause.
- Lack of evidence to prove absence of reasonable cause for late filing or payment.
- Upholding order of acquittal based on failure of prosecution to prove offence.

Analysis:
The judgment involves an appeal against an order of acquittal under sections 276(b) and 276(d) of the Income Tax Act, 1961, concerning the failure to file a return and pay tax within the prescribed time limit. The prosecution alleged that the respondents contravened the provisions of the Act, while the defence asserted that no offence was committed. One of the respondents contended that he was not the principal officer and therefore not liable to file the return. The prosecution argued that the company should be held liable for failing to pay the tax. However, the defence raised a legal point that no offence was committed based on the provisions of section 276 of the Act, which required proof of deliberate default without reasonable cause.

The judgment delves into the interpretation of section 276, emphasizing the requirement to prove the absence of reasonable cause or excuse for late filing or payment. The court highlighted that the prosecution must demonstrate that the default was deliberate and conscious, not merely a late filing or payment. The burden of proof lies on the prosecution to establish the deliberate nature of the default without reasonable cause. The judgment cited legal authorities to support the principle that the prosecution must prove the absence of reasonable cause for filing the return or depositing the money within the prescribed time to establish an offence.

Furthermore, the judgment scrutinized the lack of evidence in the case to prove the absence of reasonable cause for the late filing or payment. It rejected the prosecution's argument that the dishonest conduct of the respondents indicated no reasonable cause for the delay. The court emphasized the necessity of evidence to show the deliberate nature of the default without reasonable cause. Ultimately, the judgment upheld the order of acquittal based on the prosecution's failure to prove that an offence was committed. Despite the accused not raising this ground in the lower court, the acquittal was upheld on the basis of the prosecution's inability to establish the absence of a reasonable cause for the late filing or payment. The appeal was deemed to lack merit and was dismissed accordingly.