2018 (11) TMI 134 - HC - Income Tax

Offence u/s 276CC on the private complaint lodged by the Income Tax Department - failure to file the return of income on time - whether the accused can be discharged under Section 245 (2) Cr.P.C without examining the witnesses? - Held that - The very non-filing of the return cannot be a reason for launching a prosecution against the petitioners. In the opinion of this Court, this is a disputed question of fact which cannot be gone into in proceedings under Section 245 (2) Cr.P.C. On a reading of the complaint of the Income Tax Department, there are prima facie materials to take cognizance of the offence and issue process which the Trial Court has done. There are no materials to exercise powers under Section 245 (2) Cr.P.C, to discharge the accused at the threshold in this case. It is always open to the petitioners to plead for discharge under Section 245(1) Cr.P.C, after the prosecution witness is examined. This petition is closed. The respondent is directed to produce their witnesses for examination before the Trial Court within a period of three (3) months from the date of receipt of a copy of this order.

Summary

Issues:
Petition for discharge under Section 245(2) Cr.P.C in a case of non-filing of Income Tax return leading to prosecution under Section 276 CC of the Income Tax Act.

Analysis:
The petitioners, accused in a case before the Additional Chief Metropolitan Magistrate, were charged under Section 276 CC of the Income Tax Act for failing to file the return of income on time for the assessment year 2014-2015. The petitioners sought discharge under Section 245(2) Cr.P.C, which was rejected by the Trial Court, leading to the present petition before the High Court.

The petitioners argued that even in cases where Chapter XIX B applies, accused can be discharged under Section 245(2) Cr.P.C without examining witnesses. However, the Court clarified that such power can only be exercised if the allegations are groundless, emphasizing that even strong suspicion is enough to frame charges, citing a Supreme Court precedent.

The petitioners contended that they were not liable to pay any Income Tax and claimed that the Income Tax Department owed them a refund. They argued that the non-filing of the return should not lead to prosecution. The Court noted this as a disputed question of fact unsuitable for determination under Section 245(2) Cr.P.C.

The Court found prima facie materials in the complaint of the Income Tax Department to take cognizance of the offense and issue process, which the Trial Court had correctly done. As there were no grounds to discharge the accused under Section 245(2) Cr.P.C, the petition was closed with the direction for the respondent to produce witnesses for examination within three months before the Trial Court. The petitioners were granted the option to seek discharge under Section 245(1) Cr.P.C after the prosecution witness is examined, maintaining the legal process.

In conclusion, the High Court upheld the Trial Court's decision, emphasizing the need for a proper examination of evidence and witnesses before considering discharge under Section 245 Cr.P.C in cases involving non-filing of Income Tax returns leading to prosecution under the Income Tax Act.