2020 (2) TMI 851 - HC - Income Tax

Offence punishable u/s 276CC - willfull default or not in filing a return pursuant to the notices issued u/s 153A - HELD THAT - The respondent had sent a letter (Ex.PW-2/1) dated 12.09.2009, requesting for copies of the seized material. The noting on the said material indicates that the respondent was asked to pay a sum of ₹500/- to the PRO Income Tax Department, CR Building, New Delhi. Admittedly, the respondent had paid the said amount and communicated the same by a letter dated 18.08.2009 (Ex.PW-2/2). It appears from the noting that copies of certain documents (VA-1 to VA-17) were provided to the representatives of the respondent. Not disputed that copies of all material/ documents seized during the search and seizure operations were not provided to the respondent. Admittedly, the respondent was also not provided the copy of the panchnama in respect of the documents seized from the premises occupied by his brother. More importantly, it is not disputed that that the respondent had sent several letters, including letters dated 27.04.2010 (Ex. DW-1/D) and 20.05.2010 (Ex. DW-1/C), seeking copies of the documents for the purpose of filing the returns. But copies of all the documents seized had not been provided to the respondent. Contention that the respondent was further required to specify the document which was required by him for filing the return, to rebut the presumption of culpable mental state, is unpersuasive. The returns for the relevant assessment year had already been filed in due course. The respondent was now called upon to once again file the return pursuant to the allegedly incriminating material seized during the search and seizure operations. Plainly, in the circumstances, it would be necessary for the respondent to examine all material documents seized during the search and seizure operations before filing the return. The respondent had already indicated his difficulty in doing so in view of the family disputes and had requested for inspection and copies of all documents seized during the raid. Appellate court had concluded that the respondent s failure to file the return at the material time could not be considered as willful. This Court finds no fault with the trial court s view. Undeniably, it is a plausible one and, therefore, warrants no interference by this Court.

Summary

Issues:
- Impugning an order acquitting the respondent of an offence under Section 276CC of the Income Tax Act, 1961.
- Allegation of willful default in filing a return under Section 153A of the Act.
- Dispute regarding necessary documents for filing the return.
- Conviction under Section 276CC by the MM and subsequent acquittal by the appellate court.
- Contention of willful default and evidence presented by the Revenue.
- Examination of documents seized during search and seizure operations.
- Failure to provide all seized documents to the respondent.
- Dispute between the respondent and his brother affecting income tax compliance.
- Request for inspection and copies of seized material for filing returns.
- Appellate court's finding of non-willful default by the respondent.

Analysis:

The High Court of Delhi heard the Revenue's petition challenging the respondent's acquittal of an offence under Section 276CC of the Income Tax Act, 1961. The Revenue alleged willful default by the respondent in filing a return following notices issued under Section 153A of the Act. The respondent claimed lack of necessary documents due to family disputes and unavoidable reasons, denying any malafide intention for non-compliance. The appellate court, while upholding the respondent's appeal, found the default was not willful, considering the unavailability of essential documents for filing the return. The Revenue contended that the default should be assumed as willful unless proven otherwise under Section 278E of the Act.

The respondent's letter highlighted disputes affecting income tax compliance between him, his family, and his brother, who possessed the required documents. The respondent's requests for inspection and copies of seized material for filing returns were acknowledged, but not all documents were provided. The appellate court's decision was based on the respondent's difficulty in filing the return due to unavailability of all seized documents, leading to a conclusion of non-willful default. The High Court upheld this reasoning, emphasizing the necessity for the respondent to examine all seized documents before filing the return, considering the family disputes and lack of complete documentation. The court found no fault with the appellate court's decision, dismissing the Revenue's petition and disposing of the pending application.