2018 (10) TMI 137 - HC - Income Tax

Complaint u/s 276(C)/277 - punishment for making false statement and verification in account - absence of mens-rea - Penalty u/s 271(1)(C) - willful attempt to conceal the particulars of income with a view to evade the payment of Tax - Held that - Generally a guilty mind is a sine qua non for an offence to be committed. However, The Taxation Laws S. 278E has carved out an exception to this rule. The said Section places the burden of proving the absence of mens-rea upon the accused and also provides that such absence needs to be proved not only to the basic threshold of preponderance of probability but beyond reasonable doubt . In every prosecution case, the Court shall always presume culpable mental state and it is for the accused to prove the contrary beyond reasonable doubt. No doubt, this presumption is a rebuttable one. In present case, as is evident from complaint, there is definite finding under section 144 of Income Tax Act that accused/petitioner had ₹ 20,20,420/- income in assessment year 2000-2001; Even appeal preferred by petitioner has been dismissed. The ground taken that there was no wilful default on behalf of petitioner in concealing the income is not tenable, because it is factual defence, which is to be proved during course of trial. The criminal court has to judge the case independently on the evidence placed before it. So complaint lodged by respondent and process issued thereon against petitioner does not suffer from any infirmity of law.

Summary

Issues involved:
1. Challenge to the order dated 31.03.2009 passed by the Court of Special Mobile Magistrate, Railways, Jammu.
2. Allegations of illegal proceedings and abuse of process of law against the petitioner.
3. Interpretation of Sections 276-C and 277 of the Income Tax Act.
4. Compliance with taxing provisions and the collection of taxes under the Income-Tax Act, 1961.
5. Application of mens rea in criminal jurisprudence.
6. Burden of proof in cases involving absence of mens rea under Section 278E of the Taxation Laws.

Detailed Analysis:
1. The petitioner challenged the order dated 31.03.2009, alleging that the complaint, order, and proceedings against him were illegal and contrary to law. The petitioner argued that imposition of a penalty under the Income Tax Act does not automatically imply guilt under Sections 276-C/277, emphasizing the need to establish willful intent to conceal accounts. The petitioner contended that the Magistrate failed to record satisfaction or discuss reasons for taking cognizance, rendering the order vitiated. However, the Court noted the complaint filed by the Income Tax Officer against the petitioner for willful attempt to evade tax, as per Sections 276-C/277 of the Income Tax Act.

2. Sections 276-C and 277 of the Income Tax Act provide for punishment in cases of willful attempt to evade tax, penalty, interest, or under-reporting of income. The Court highlighted that compliance with taxing provisions involves imposition of interests, penalties, and prosecutions to combat tax evasion effectively. It emphasized the importance of prosecuting tax evaders beyond monetary penalties to maintain public trust in tax administration. The Court explained that mens rea, the guilty mind, is crucial in criminal offenses, except where Section 278E of the Taxation Laws places the burden of proving absence of mens rea on the accused beyond a reasonable doubt.

3. The Court analyzed the petitioner's claim that there was no willful default in concealing income, pointing out that the assessment order and dismissal of the appeal indicated otherwise. The Court emphasized that factual defenses need to be proven during trial, and the criminal court must independently assess the evidence presented. Consequently, the Court dismissed the petition, vacated any stay, and directed copies of the order to the Income Tax Department and the lower court for compliance.