2020 (8) TMI 411 - HC - Income Tax

Filing return of income belatedly after the expiry of the time limit prescribed u/s 139(1) - offences under Section 276 (c) (c) of the Income Tax Act, 1961 - HELD THAT - To punish the accused, there must be wilful attempt to evade payment of tax, he must be in possession of the book with false entries, the person should have made false entries in the book of accounts and omitting any entry in the statement of accounts. The petitioner voluntarily disclosed the undisclosed income to the respondent on the inspection conducted u/s 132 on 18.12.2012. Therefore, there is no intention from the petitioner for willful evading of payment of tax. Admittedly, the respondent on the inspection dated 18.12.2012, had seized the relevant book of accounts and as such the petitioner could not able to file the return of income on or before 05.08.2013. Therefore, the petitioner had no wilful intention to evade tax as alleged by the respondent. Petitioner had paid the entire tax amount on 13.03.2018 and the respondent had also acknowledged the same by the acknowledgment dated 14.03.2018. Therefore, the offence under Section 276 (c ) (2) of the Income Tax Act is not at all attracted as against the petitioner herein, and the entire criminal proceedings pending against the petitioner is nothing but clear abuse of process of law. As such it cannot be sustained as against the petitioner and it is liable to be quashed. This criminal original petition is allowed.

Summary

Issues:
Challenge to criminal proceedings under Section 276 (c ) (2) of the Income Tax Act, 1961.

Analysis:
The respondent initiated criminal proceedings against the petitioner for failing to file his return of income for the assessment year 2013-2014 within the prescribed time limit. The petitioner belatedly filed his return of income after a search conducted under Section 132 of the Income Tax Act. The respondent issued a show cause notice on 14.07.2017, alleging a violation of Section 276 (c ) (2) of the Act.

The petitioner's counsel argued that once the petitioner filed his return of income and paid the demanded amount, he should not be penalized under Section 276 (c ) (2) of the Income Tax Act. The court examined the documents and noted that the petitioner filed his return of income after the due date, leading to a delay in payment of income tax. Subsequently, the petitioner was directed to pay a significant sum as tax.

However, the petitioner eventually paid the entire tax amount demanded by the respondent on 13.03.2018, which was acknowledged by the respondent on 14.03.2018. The court analyzed the provisions of Section 276 (c ) (2) of the Income Tax Act, emphasizing that to establish guilt, there must be a willful attempt to evade tax, possession of books with false entries, making false entries, or omitting relevant entries. The court found that the petitioner voluntarily disclosed undisclosed income during the inspection and did not have the intention to evade tax willfully.

Consequently, the court concluded that the criminal proceedings against the petitioner were an abuse of process of law and not sustainable. Therefore, the petition challenging the proceedings was allowed, and the entire case in E.O.C.No.576 of 2017 was quashed by the Additional Chief Metropolitan Magistrate(Economic Offences), Egmore, Chennai.