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TMI Blog2010 (2) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional District judge-cum-Chief Judicial Magistrate, Coimbatore, on June 11,2001 in C.C.No.19 of 1999 and C.C.No.20 of 1999, respectively, acquitting the respondent-accused of the offence under section 276CC of the Income-tax Act, 1961. 2. The case of the appellant-complainant-Income-tax Department is as follows: 3. The respondent-accused is a resident of Avinashi, which comes within the jurisdiction of the Income-tax Department. During the respective years 1991-92 and 1992-93, the accused was receiving income by way of salary and interest from the finance business. As his total income from all sources was assessable under the provisions of the Income-tax Act, he is required to furnish the return of his total income in the prescribed form under section 139(1) of the Income-tax Act (hereinafter referred to as "the Act")within the specified time. On his failure to do so, he was issued with notices under sections 142 and 148 of the Act and even thereafter, he did not comply with the statutory requirement. Subsequently, return was filed belatedly on August 31, 1994, and March 28, 1996, respectively, to P. W.5, who sent the same to P. W. 4 for due assessment. On receipt of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the same will not absolve the liability of the respondent from the offence under section 276CC of the Act. The trial court has committed error and considered the decision of the Supreme Court reported in CIT v. M. Chandra Sekhar [1985] 151 ITR 433; [1985] 1 SCC 283 and came to the conclusion that since interest has been levied, the respondent-accused is not guilty of the offence under section 276CC of the Act and the offence has not been made out. Hence, the trial court acquitted the respondent. Learned special public prosecutor appearing for the appellant-Income-tax Department also relied upon various decisions of the Supreme Court, this court and other High Courts and submitted that the return should be filed within the stipulated time, in default, the respondent-accused is guilty of the offence under section 276CC of the Act. Hence, he prayed for conviction of the respondent-accused. 6. Per contra, learned counsel for the respondent-accused would contend that it is true that the respondent has not filed the returns in time, but as per section 139(2) of the Act, time has been extended and in pursuance of the same, he submitted his returns. Since interest has been lev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by the trial court stating that before amendment of section 139(2) of the Act, the income-tax authority was having authority to extend the lime for submitting the returns. But after amendment, the provision of section 139(2) of the Act has been taken away and it was deleted. The amendment came into existence only from the year 1989, i.e., with effect from April 1, 1989. The said decision relied upon by the trial court in M. Chandra Sekhar's case [1985] 151 ITR 433 deals with section 139 of the Act, prior to amendment from April 1, 1971. This decision CIT v.M. Chartdra Sekhar reported lit [1985] 151 ITR 433 (SC) has been referred to by this court in the decision reported in K. Jagadeesan v. ITO [1993] 199 ITR 307 (Mad), in which, this court held as follows (headnote): "So, after the amendment, the interest to be paid is absolute, not-withstanding extension of date by the income-tax Officer, under the proviso to section 139(1). Under the unamended provisions, the discretion to extend the time for furnishing the return could not be beyond the 30th day of September of the assessment year, or the 31st day of December of the assessment year, as the case may be, and such e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in that case, it was further held that the Tribunal was not justified in canceling the penalty. 11. Learned counsel for the respondent-accused relied upon the decision of the Supreme Court reported in CIT v, M. J. Devada [1991] 187 ITR 546 (SC) ; [1993] Supp (1) SCC 408, which was referred to by the trial court, and in the said decision, Chandra Sekhar' s case [1985] 151 ITR 433 (SC) was referred to. In CIT v. M. J. Devada [1991] 187 ITR 546 (SC); [1993] Supp (1) SCC 408, it was held by the Supreme Court as follows (page 547): "1. These appeals have arisen against similar orders of the High Court of Andhra Pradesh failing to be persuaded, Income-tax Appellate Tribunal beforehand, to refer the following three questions of law to the High Court said to arise from the appellate orders of the Income-tax Appellate Tribunal, Hyderabad. Those questions are taken and reproduced below from one case and in the others they are substantially the same. '(1) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that by the levy of interest under section 139 of the Income-tax Act, 1961, the Income-tax Officer must be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e him and if that record can sustain the finding that there had been concealment, that would be sufficient to sustain the penalty. The fact that the authorities were unable to secure a conviction in a prosecution subsequently launched does not alter the record the Assessing Officer had before him and which record is what the appellate authority is required to peruse for the purpose of deciding as to whether the penalty was or was not warranted. While it would be wholly incongruous to prosecute a person for wilful concealment after the statutory Tribunal had held that there was no concealment, a finding by the criminal court that there has been no concealment wilful or otherwise, cannot have the effect of erasing the finding of concealment properly recorded by the statutory authorities, and upheld by the Tribunal. Held, that, in the instant case, the acquittal of the assessee in a prosecution subsequently launched and in which some of the documents which had constituted the basis for the levy of penalty under section 271 (1) (c) had not been put in evidence, could not be regarded as having the effect of removing the foundation on the basis of which the penalty had been levied unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings have nothing to do either with the levy of interest or penalty. In the absence of these proceedings also, criminal prosecution can be launched if the ingredients of the offence under section 276B of the Income-tax Act, 1961, namely, failure to pay the tax deducted at source to the credit of the Central Government within the prescribed time, are made out. The assessee can be charged with interest and also punished by prosecution. The legal position can be summarised as follows: (i) The scope and purport of interest/penalty proceedings and prosecution under the Income-tax Act are separate and independent. The existence or the absence of the one or the other is no bar to any one of them; (ii) Simply charging of interest by the Department under section 201(1A) of the Act, for the delay in the payment of the amount to the Central Government, does not obliterate the prosecution; (iii) The non-initiation of penalty proceedings does not lead to a presumption that the default in payment was for good and sufficient reasons or that the assessee was not obliged to establish that there were good and sufficient reasons for the default in payment; (iv) Non-initiation of penalty pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al return." 18. Learned special public prosecutor appearing for the appellant-Income tax Department would also rely upon a decision of a Division Bench of the Punjab and Haryana High Court, reported in CIT v. Dehati Co-operative Marketing-cum-Processing Society [1981] 130 ITR 504 (P H) and argue that the penalty could be imposed on the assessee under section 139(1) of the Act for the whole of the period commencing from the due date of filing return, to the date the assessee belatedly filed the return and the period of default would come in between the said period. In the said decision, it was held as follows (headnote): "It cannot be said that once a notice requiring the assessee to furnish a return under section 139(2) or section 148 of the Income-tax Act, 1961, is issued, penalty cannot be imposed for failure to furnish the return under section 139(1). If the provisions relevant in connection with notices under sections 139(2) and 148 were omitted from section 271 of the Act, the result would be that after the Income-tax Officer or the Appellate Assistant Commissioner comes to the finding that any person has without reasonable cause failed to furnish a return, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he position was beyond dispute that the Legislature intended to deem the non-filing of the return to be a continuing default-the wrong for which penalty was to be visited, commenced from the date of default and continued month after month until compliance was made and the default came to an end. The rule of 'de die in diem' was applicable not on daily but on monthly basis. The imposition of penalty not confined to the first default but with reference to the continued default was obviously on the footing that non-compliance with the obligation of making a return was an infraction as long as the default continued. If a duty continued from day-to-day, the non-performance of that duty from day-to-day is a continuing wrong. The legislative scheme under section 271(1)(a) of the 1961 Act in making provision for a penalty conterminous with the default provided for a situation of continuing wrong." 20. Learned special public prosecutor appearing for the appellant-Income-tax Department further relied upon the decision of the Supreme Court reported in Prakash Nath Khanna v. CIT [2004] 266 ITR 1 and submitted that one of the significant terms used in section 276CC of the Act for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersal Supply Corporation v. State of Rajasthan [1994] 206 ITR 222. 22. Learned special public prosecutor appearing for the appellant-Income-tax Department further relied upon the decision of the Supreme Court reported in Thomas Dana v. State of Punjab, AIR 1959 SC 375, and submitted that merely because interest/penalty has been levied, the respondent-assessee's criminal liability will not be absolved and the confiscation proceedings are entirely different from criminal prosecution. In the said decision, the Supreme Court held as follows (page 375) "Simply because the Customs authorities took a very serious view of the smuggling activities of a person and imposed very heavy penalties under item 8 of the Schedule to section 167 of the Sea Customs Act would not convert those authorities into a court of law or the penalty imposed on that person the same thing as a punishment imposed by a criminal court by way of punishment for a criminal offence. That Act when it meant proceeding to be taken by the Customs authorities themselves, as is the case in most of the items to Schedule to section 167, has empowered those authorities to deal with the offending articles by way of confisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 139(2) has been omitted. In such circumstances, the respondent-assessee ought to have filed the returns within the stipulated time as per section 139(4) of the Act. 25. Section 139(4) of the Act reads as follows: " 139 Return of income . ... (4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year." 26. Section 276CC of the Act reads as follows: " 276CC. Failure to furnish returns of income. If a person wilfully fails to furnish in due time the return of income which he is required to furnish under sub-section (1) of section 139 or by notice given under cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective assessment years. So, he is liable to be prosecuted for the offence under section 276CC of the Act. Since he has not filed the returns in time, mere payment of interest/penalty will not absolve his criminal liability. Hence, the trial court has committed error in acquitting the respondent-accused. The appellant-Income-tax Department has proved that the respondent-accused is guilty of the offence under section 276CC of the Income-tax Act, beyond reasonable doubt. The respondent-accused is guilty of the offence under section 276CC of the Income-tax Act. Therefore, he is liable to be convicted for the offence under section 276CC of the Income-tax Act. 29. In fine, (a) the criminal appeals filed by the appellant-Income-tax Department are allowed. (b) The impugned judgments of acquittal passed by the trial court are hereby set aside. (c) The respondent-accused is convicted for the offence under section 276CC of the Income-tax Act. 30. To question the respondent-accused regarding the sentence for the said conviction under section 276CC of the Income-tax Act, the Registry is directed to post the criminal appeals on February 18, 2010, under the caption "regarding quest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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