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2021 (10) TMI 1215 - HC - Income TaxOffences u/s 276CC and 276C 1 - Non disclosure of income - assessee had not filed the Annual Return as mandated under Section 139 1 of the Act, 1961, nor under the extended time u/s 139 4 - HELD THAT - As the petitioner had laid the blame on his previous employer stating that there has been a mismatch in the income earned as given in Form 16 and as uploaded in Form 26AS. It had also been stated that this was not brought to the knowledge of the petitioner since he had left employment. It was also stated that even though the Show Cause Notices have been received, he was under the bona fide impression that since tax had been paid, no further action is required to be clarified from his end. It is the case of the petitioner herein that there was no wilful act of non disclosure of income. As a matter of fact, it is the further contention that not just was tax paid, but Self Assessment Tax had also been paid. However, it is seen that it is the consistent case of the respondent / Department that the petitioner had not explained the high level transactions in purchase and sale of mutual funds and transactions in credit cards. As stated in SASI ENTERPRISES 2014 (2) TMI 19 - SUPREME COURT the claim of the petitioner herein that he was innocent and ignorant and therefore, indulgence should be granted to him, is actually a fact which should be proved by him in a Court of law. Such innocence or ignorance cannot be presumed. On the other hand, what can be presumed is the culpable mental status and it is for the petitioner herein to prove the contrary. Insofar as the judgment relied on by the learned counsel for the petitioner in VINAYCHANDRA CHANDULAL SHAH 1993 (12) TMI 10 - GUJARAT HIGH COURT learned Judge, with due respect, has not at all considered the presumption as given in Section 278E of the Act, 1961, regarding culpable mental state. This was a provision brought into the Taxation Law in the year 1986 itself. The burden lies on the assessee to show that he had no wilful intention not to file the Return. Any explanation to discharge such burden can be tested only during the course of trial. This Court cannot presume that the petitioner herein is innocent of any of the offences complained. It is for the petitioner to establish such innocence. The platform for establishing such innocence is the Court where the trial is to be conducted and in the present case, that particular Court is the Court of the Additional Chief Metropolitan Magistrate/EO-I, Egmore, Chennai. A direction is given to the learned Additional Chief Metropolitan Magistrate/EO-I, Egmore, Chennai, to commence trial and to complete the same on or before 31.01.2022. The petitioner is directed to cooperate in the trial process.
Issues Involved:
1. Quashing of proceedings under Section 482 Cr.P.C. in EOCC.No.121/2016. 2. Alleged offences under Sections 276CC and 276C[1] of the Income Tax Act, 1961. 3. Non-filing of Income Tax Returns for Assessment Year 2013-2014. 4. Examination of bona fide mistake and mens rea. 5. Reliance on precedents and judicial interpretation of relevant statutes. Detailed Analysis: 1. Quashing of Proceedings under Section 482 Cr.P.C.: The petitioner sought to quash the proceedings in EOCC.No.121/2016, pending before the Additional Chief Metropolitan Magistrate/Economic Offences-I, Egmore, Chennai, under Section 482 Cr.P.C. The petition was filed to halt further proceedings in the said Calendar Case. 2. Alleged Offences under Sections 276CC and 276C[1] of the Income Tax Act, 1961: The respondent filed a complaint against the petitioner for offences under Sections 276CC and 276C[1] of the Income Tax Act, 1961, related to the Assessment Year 2013-2014. The complaint was based on the petitioner’s failure to file the Annual Return as mandated under Section 139[1] and within the extended time under Section 139[4] of the Act, despite having a taxable income. 3. Non-filing of Income Tax Returns for Assessment Year 2013-2014: The respondent contended that the petitioner had substantial income and engaged in high-end financial transactions but failed to file the required Income Tax Returns. This non-filing led to suspicions about the source of funds. Show Cause Notices were issued, but the petitioner responded only after significant delay. 4. Examination of Bona Fide Mistake and Mens Rea: The petitioner argued that the non-filing was due to a bona fide mistake, believing that his former employer had filed the returns. The petitioner also cited discrepancies between Form 16 and Form 26AS and claimed to have paid taxes, including Self Assessment Tax. However, the respondent maintained that the petitioner’s actions were deliberate and aimed at evading tax. 5. Reliance on Precedents and Judicial Interpretation of Relevant Statutes: The petitioner’s counsel cited several judgments to argue the absence of mens rea: - Vinaychandra Chandulal Shah Vs. State of Gujarat: Highlighted the necessity of a wilful attempt to evade tax for Section 276C to apply. - J.M.Shah Vs. Income Tax Officer: Emphasized that mens rea is required to constitute an offence under Section 277. - M/s.Vyalikaval House Building Cooperative Society Limited: Asserted that delayed payment of tax does not constitute an attempt to evade tax under Section 276C[2]. - M/s.Bejan Singh Eye Hospital Private Limited: Argued that prosecution would be an abuse of legal process if taxes were paid and no dues were pending. Respondent’s Argument and Supreme Court Precedents: The respondent’s counsel relied on Supreme Court judgments to counter the petitioner’s claims: - Sasi Enterprises Vs. Assistant Commissioner of Income Tax: Stressed that failure to file returns within the stipulated period invites prosecution under Section 276CC. - Prakash Nath Khanna V. Commissioner of Income Tax: Clarified that Section 276CC applies to failures under Sections 139(1) and (2), not 139(4), and emphasized the presumption of culpable mental state under Section 278E. Court’s Analysis and Conclusion: The Court noted that the petitioner’s reliance on previous judgments did not consider the Supreme Court’s rulings, which mandated filing returns within the stipulated period. The Court emphasized that the presumption of culpable mental state under Section 278E applies, and it is for the petitioner to prove otherwise during the trial. The Court rejected the petitioner’s submissions and dismissed the Criminal Original Petition, directing the trial to proceed expeditiously. Final Directions: The Additional Chief Metropolitan Magistrate/EO-I, Egmore, Chennai, was directed to commence and complete the trial by 31.01.2022, with the petitioner required to cooperate in the trial process. Consequently, connected miscellaneous petitions were closed.
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