2008 (7) TMI 523 - HC - Income Tax

Offences and Prosecution- the income-tax returns on behalf of the Hindu undivided family were not submitted well within the lime for the assessment years 1980-81 and 1981-82 and, therefore, the offence punishable under section 276CC of the Income-tax Act was committed. It was also the case of the complainant, i.e., the Income-tax Department that Ram Lal who was the karta of the Hindu undivided family and his son, accused No.2, Roshan Lal, were responsible for the commission of the aforesaid offence. held that- the Department had not alleged in the complaint that the Karta of the Hindu undivided family was ill up to the time when the return were required to be filed and the Karta had transferred his liability in this regard to his son. Therefore, the petitioner could not be said to have consented or connived with the karta of the Hindu undivided family in the late filing of the returns. As the offence shall be deemed to have been committed on the date when the returns were required to be filed, the involvement of the petitioner after this date could not be sufficient to show that he consented or connived in the last filing of the returns. Mere participation of the petitioner in the income tax proceedings could not be a ground to fasten upon him the liability for commission of any offence under the act as the offence had already been committed. Thus, no responsibility could be fastened upon the petitioner in terms of section 278C(2) for the offence punishable under section 276CC and the complaints against him were liable to be quashed.

Summary

Issues:
Quashing of proceedings under section 482 of the Criminal Procedure Code regarding late filing of income tax returns by a Hindu undivided family and the liability of the son for the offense under section 276CC of the Income-tax Act.

Analysis:

Issue 1: Liability for late filing of income tax returns by a Hindu undivided family
The complaint alleged that the income-tax returns for the assessment years 1980-81 and 1981-82 were not submitted on time by a Hindu undivided family, leading to an offense under section 276CC of the Income-tax Act. The responsibility was placed on the karta of the family, Ram Lal, and his son, Roshan Lal, was accused of connivance under section 278C(2) of the Act. The defense argued that as per section 140 of the Income-tax Act, the karta is primarily liable for filing returns. It was contended that Roshan Lal's participation in income-tax proceedings post the filing deadline does not establish connivance or consent in the offense. The court agreed, emphasizing that mere involvement after the offense date does not implicate Roshan Lal in the late filing, leading to the conclusion that no liability can be imposed on him under section 278C(2) of the Act.

Issue 2: Quashing of Complaint Cases
The court examined the arguments presented by both parties. The Income-tax Department contended that Roshan Lal, being aware of the karta's illness during the filing period, was complicit in the late submission of returns. However, the court found this argument unsubstantiated in the complaints. It was noted that the complaints did not mention any transfer of liability from the ill karta to Roshan Lal. The court held that Roshan Lal's involvement in income-tax proceedings post the filing deadline does not establish his consent or connivance in the offense. Consequently, the court allowed the application under section 482 of the Criminal Procedure Code, quashing Complaint Cases Nos. 2302 and 2303 of 1987 against Roshan Lal.

In conclusion, the court ruled in favor of the applicant, determining that no liability could be imposed on Roshan Lal for the offense under section 276CC of the Income-tax Act. The complaints against him were deemed improper and were consequently quashed.