2021 (2) TMI 864 - HC - Income Tax

Offence punishable u/s 276(C)(1) and 276CC - petitioner has failed to submit the return for the assessment year 2013-14 - HELD THAT - On perusal of the returns filed by the petitioner that the total tax with interest payable by the petitioner. Total tax amount paid by the petitioner including advance tax TDS, TCS and also self assessment tax. Therefore, the petitioner has also claimed refund of the income tax - Further, the Principal Commissioner of Income Tax, Madurai, accorded sanction by order, dated 29-7-2016, to prosecute the petitioner for the offence punishable under section 276CC of the Income-tax Act. Whereas on perusal of the complaint, the respondent has lodged a complaint for the offence punishable under sections 276(C)(i) and 276CC of the Income-tax Act. Even according to the defacto complainant, the petitioner has failed to file the Income-tax return for the assessment year 2013-14 within time. Therefore, he can be prosecuted for the offence under section 276CC of the Income-tax Act. Whereas Section 276(C)(i) related to if a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable. Admittedly, the petitioner has failed to pay the tax in time and subsequently, he has filed Income-tax return on 29-3-2016. Therefore, the respondent without application of mind mechanically filed a complaint that too without any allegation for the offence punishable under section 276(C)(i) of the Income-tax Act. Section 276CC proviso (ii)(b) provides that a person shall not be proceeded against under this section for failure to furnish in due time the return of fringe benefits under Sub Section (i) of 115 WD or return of income under section 139(1) if the tax payable by him and the total income determined on regular assessment does not exceed ₹ 3,000/- as reduced by advance tax paid and any tax deducted at source. On perusal of the return filed by the assessment year 2013-14 revealed that the tax payable by the petitioner is nil and he also claimed for refund of the tax after adjusting the other payment made under as advance TDS, TCS and self assessment tax and claimed a sum of ₹ 1,070/-. Therefore, the entire complaint is nothing but clear abuse of process of law and it cannot be sustained as against the petitioner.

Summary

Issues:
Quashing of proceedings under sections 276(C)(1) and 276CC of the Income-tax Act 1961 for failure to submit the return for the assessment year 2013-14.

Analysis:
1. The petitioner filed a petition seeking to quash the proceedings in C.C.No.13 of 2016 based on a complaint by the respondent alleging failure to submit the income tax return for the assessment year 2013-14. The petitioner argued that the return was filed on 29-3-2016, and the tax payable was adjusted against advance tax and TDS, resulting in a refund claim. The sanction to prosecute was only for the offence under section 276CC, while the complaint included sections 276(C)(1) and 276CC, rendering it flawed and liable to be quashed.

2. Section 276CC proviso (ii)(b) exempts prosecution if the total income tax payable does not exceed &8377; 3,000 after adjustments. The petitioner's return for 2013-14 indicated nil tax payable, with a refund claim after adjustments for advance tax, TDS, and self-assessment tax. Therefore, the complaint's basis was unfounded, constituting an abuse of the legal process.

3. The respondent contended that the petitioner failed to file the return or pay tax for 2013-14, leading to a show cause notice under section 276CC. The respondent obtained sanction to prosecute, arguing that factual disputes should be addressed during trial, not under section 482 of Cr. P.C. The petitioner's failure to appear in person further complicated the matter.

4. The court noted that the petitioner did file the income tax return on 29-3-2016, showing a total tax payable of &8377; 7,19,409, which was offset by payments totaling &8377; 7,20,484, resulting in a refund claim of &8377; 1,070. The sanction to prosecute was solely under section 276CC, while the complaint erroneously included section 276(C)(1), indicating a lack of proper application of the law.

5. Ultimately, the court allowed the Criminal Original Petition, quashing the proceedings in C.C.No.13 of 2016 against the petitioner. The court found the complaint to be an abuse of process, given the petitioner's compliance with tax obligations and the incorrect application of legal provisions. The judgment emphasized the importance of accurate legal procedures and the need to avoid unjust prosecution.