2023 (11) TMI 946 - HC - Income Tax

Offence u/s 276CC - Assessee not submitting the return for the assessment year 2009-2010 even after the expiry of the assessment year by 31.03.2010 - petitioner submits that before initiating criminal prosecution, the authority ought to have rejected the reply of the petitioner but without considering and rejecting the reply of the petitioner, launching of the criminal prosecution cannot be countenanced for the reason that the petitioner had taken a stand in his reply that on account of ill health, lack of knowledge, the return could not be filed on time and non-filing of the return was not willful. HELD THAT - The Court concurs with the submission of the learned counsel for the petitioner. The order dated 31.03.2011 though records that the reply of the assessee is not satisfactory but then does not assign any reason for arriving at that conclusion when petitioner had taken stand that on account of his ill health the return was not filed on time and delayed filing was not willful nor intentional. Considering the submission made by the learned counsel for the petitioner, the order dated 11.08.2022 passed in Complaint Case by the learned Special Judge, Economic Offence, Patna whereby the petition filed by the petitioner under Section 245 Cr.P.C. seeking discharge has been rejected, is hereby quashed.

Summary

Issues involved:
The issues involved in this case include the rejection of a petition seeking discharge under Section 245 Cr.P.C., the initiation of criminal prosecution under Section 276CC of the Income Tax Act, and the consideration of replies by the authorities.

Rejection of Petition Seeking Discharge:
The petitioner, an income tax assessee, filed a quashing application seeking to set aside the order passed by the Special Judge, Economic Offence, Patna. The order dated 11.08.2022 rejected the petitioner's plea for discharge under Section 245 Cr.P.C. The petitioner had initially received a notice under Section 148 of the Income Tax Act on 22.10.2010, prompting him to file his return for the assessment year 2009-2010 on 26.10.2010. Subsequently, the petitioner received a notice under Section 276CC on 11.01.2011, threatening criminal prosecution for the delayed filing of the return. Despite the petitioner's explanation citing health issues and lack of knowledge for the delay, the authorities proceeded with the prosecution without adequately considering and rejecting the petitioner's reply. The Court found that the order rejecting the discharge lacked essential details and failed to provide a reasoned basis for deeming the petitioner's reply unsatisfactory. Consequently, the Court quashed the order dated 11.08.2022.

Initiation of Criminal Prosecution under Section 276CC:
The petitioner's delayed filing of the income tax return for the assessment year 2009-2010 led to the issuance of notices under Section 276CC of the Income Tax Act. Despite the petitioner's submission explaining the reasons for the delay, including health issues and lack of knowledge, the authorities proceeded with the criminal prosecution without adequately considering the petitioner's response. The petitioner argued that unless the authorities conclusively determined the delay to be willful, prosecution under Section 276CC was unwarranted. The Court concurred with the petitioner's argument, emphasizing the need for a considered conclusion on the willfulness of the delay before initiating criminal proceedings. The Court found that the authorities had not satisfactorily evaluated the petitioner's explanation and quashed the order rejecting the discharge petition.

Consideration of Replies by the Authorities:
The Income Tax Department contended that the petitioner's reply to the notices was unsatisfactory, as evidenced by the order dated 31.03.2011 issued by the Commissioner of Income Tax, Bhagalpur. However, the petitioner argued that the order lacked essential details and failed to provide a rationale for deeming the reply unsatisfactory. The Court agreed with the petitioner, noting that the order did not adequately justify the rejection of the petitioner's explanation for the delayed filing of the return. The Court emphasized the importance of a thorough assessment before initiating criminal prosecution and ultimately quashed the order dated 11.08.2022.