2023 (11) TMI 761 - HC - Income Tax

Offence punishable u/s 276CC - mens rea of the petitioner - rebuttal of presumption u/s 278E - non filing of the income tax return for the assessment year 2012-2013 - accused replied that the delay was due to books of accounts and other materials were seized by the Income Tax Department. It is difficult for the accused to collect details with regard to 18 assessees in the group. He is aged person and suffering from hypertension and diabetes. Therefore, he was unable to file his return of income - HELD THAT - Relief sought for in this criminal original petition cannot be considered though the penalty proceedings was dropped against the petitioner. Further, in a prosecution for the offence under Section 276C there can be a presumption for existence of mens rea and it is for the accused to prove the contrary and that too, beyond reasonable doubt during the course of trial. Therefore, the grounds raised by the petitioner can be considered only before the trial court during the trial since subsequent act of offering additional income payment after search and after detection is not voluntary compliance and it was only during such proceedings it came to light that the petitioner made an attempt to evade the taxes and interest. Hence, it is for the petitioner to rebut the presumption under Section 278E of the Income Tax Act which provides culpable mental state of mind of the accused. In the case on hand, the petitioner failed to file his return of income. After inspection, seized the materials and found that the petitioner concealed the income. Therefore, he was issued notice under Section 153A of Income Tax Act. It was also proved that the petitioner subsequently filed income tax return for the assessment year 2012-2013 on 20.11.2015 showing his income. He suppressed and concealed the said income in the income tax return filed by him on 18.04.2013. Therefore, the above judgment is not applicable to the case on hand. In the case on hand, as stated supra, the mens rea is categorically proved against the petitioner. In his income tax return, he failed to disclose a major portion of income. Therefore, after inspection and seizure of documents, found that there was concealment of income by the petitioner. As such, he was issued notice u/s 153A of Income Tax Act. Thereafter, he was also issued show cause notice. Only thereafter, the petitioner filed his second income tax return for the assessment year 2012-2013 on 20.11.2015. Therefore, the respondent rightly prosecuted the petitioner for concealment of income. There was clear concealment by the petitioner while filing his first return of income for the assessment year 2012-2013. In fact, the levying of penalty was already dropped in view of the order passed by the tribunal. However, the petitioner is now facing prosecution under Section 276CC of Income Tax Act. That apart, the mens rea of the petitioner is clearly established by the respondent and as such, the above judgment is also not helpful to the case on hand. Decided against assessee.

Summary

Issues Involved:
1. Non-filing of income tax return for the assessment year 2012-2013.
2. Allegations of concealment of income and wilful default.
3. Bar of limitation for initiating prosecution.
4. Validity of criminal prosecution despite the dropping of penalty proceedings.

Summary:

1. Non-filing of Income Tax Return:
The petitioner was accused of not filing his income tax return for the assessment year 2012-2013. A search conducted on 03.09.2013 revealed that the petitioner did not file his return within the stipulated time under Section 139(1) of the Income Tax Act. Despite being served a notice under Section 153A on 29.04.2014 to file the return within 30 days, the petitioner filed it belatedly on 20.11.2015.

2. Allegations of Concealment and Wilful Default:
The petitioner was found to have concealed the purchase of an immovable property and did not disclose the true income in his return. The court noted that non-filing of returns within the due date constitutes an offence under Section 276CC of the Income Tax Act. The subsequent filing of returns does not protect the defaulter from prosecution as established in the judgments of Sasi Enterprises Vs. Assistant Commissioner of Income Tax and Prakash Nath Khanna Vs. CIT.

3. Bar of Limitation:
The petitioner argued that the complaint was barred by limitation as the sanction for prosecution was granted on 27.09.2017, more than three years after the alleged non-filing period ended on 07.06.2014. However, the court held that the criminal prosecution is independent of the penalty proceedings and can be initiated irrespective of the limitation period for penalty.

4. Validity of Criminal Prosecution:
Despite the dropping of penalty proceedings by the Tribunal on the ground of limitation, the court maintained that it does not preclude the initiation of prosecution for the offence under Section 276CC. The Tribunal's decision on penalty does not bind the criminal prosecution, as adjudication proceedings and criminal prosecution are independent of each other. The court relied on the judgment in Radheshyam Kejriwal Vs. State of West Bengal to support this view.

Conclusion:
The court dismissed the petition to quash the prosecution, stating that the grounds raised by the petitioner could be considered only during the trial. The existence of mens rea was presumed, and it was for the petitioner to rebut this presumption during the trial. The criminal original petition was dismissed, and the connected miscellaneous petition was closed.