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TMI Blog1990 (3) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... d issued a notice under section 14(2) of the Act to the accused requiring him to file the return within 35 days of the receipt of the notice but despite the fact that the notice was duly served, the accused failed to comply with the same and an application of the accused seeking extension of time for filing of the return was rejected by the Wealth-tax Officer. Then, the facts have been given with regard to the net taxable wealth of the accused and the assessment made in that respect which was Rs. 3,03,09,870. The petitioners, having been summoned to face prosecution in the aforesaid complaints, have chosen to file these criminal revision petitions for quashment of the complaints. The complaints pertain to four assessment years, viz., 1975-76, 1976-77, 1977-78 and 1978-79. It is an admitted fact that the wealth-tax returns were filed by these petitioners before the completion of the assessment proceedings for the said assessment years and necessary assessment orders had been made on March 19, 1980, and directions had been also given for initiating penalty proceedings under sections 18(1)(a), 18(l)(c) and section 35B of the Act but, in fact, I am told that no such penalty proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in due time. He has argued that section 15 cannot be resorted to by the petitioners in order to escape their penal liability which they incurred by not filing the wealth-tax returns within the time prescribed in section 14(1) and section 14(2) of the Act. He has contended that filing of the returns in consonance with section 15 of the Act before the completion of the assessment only enables the petitioners to have the advantage of the assessment being made on the basis of the said returns but the same does not have the effect of wiping out the penal liability incurred by the petitioners. He has argued that, if the contention of the petitioners is accepted, then the provision of section 35B, proviso to sub-clause (ii), would become redundant. He has also pointed out, that initiation of penalty proceedings or non-imposition of penalties has nothing to do with the penal liability incurred by the petitioners. He has argued that both types of actions could be taken against the petitioners for their deliberately not filing the wealth-tax returns in due time and even if no penalty proceedings have been taken against the petitioners, there is no legal bar to prosecuting the petitioners f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day of April 1975, if (a) tile return is furnished by him before the expiry of the assessment year. A perusal of the aforesaid provisions of the statute makes it very clear that in case the return is not wilfully filed within the due time, the person would be deemed to have committed the offence under section 35B but in case the return is furnished by him before the expiry of the assessment year, then such a person would not be proceeded against under this section for failure to furnish the return in due time fixed in sub-section (1) of section 14 of the Act. Section 15 contains an enabling provision by virtue of which if a return is filed before the assessment is made, the said return has to be taken into consideration for purposes of making an assessment. The said return is valid only for that purpose and the ingredients of section 35B for constituting an offence stand fulfilled as soon as it is proved that a person has wilfully failed to furnish the return within the time prescribed in section 14(1) or section 14(2) and that offence would not be taken notice of if the return is filed before the expiry of the relevant assessment year. If the contention is accepted that criminal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the assessment is made and it is well settled by now that a return can always be filed at any time before the assessment is made and the Income-tax Officer has to make the assessment on that return and he could not choose to ignore it. Then, referring to section 24(2) of the Income-tax Act, it was held that, 'Under this provision, the assessee must submit his return regarding loss in order to take advantage of the same and it was held that a return submitted at any time before the assessment is made is a valid return and it was observed that if section 22(3) is complied with, section 22(1) also must be held to have been complied with. The Supreme Court was considering the validity of the return filed before the assessment is made for purposes of section 24(2) of the Income-tax Act. The Supreme Court was not examining the penal provisions of similar nature appearing in the Income-tax Act or even the provisions pertaining to imposing of penalty. It is also a well-settled rule of interpretation that the observations or findings of the Supreme Court have to be given importance keeping in view the context in which they are made. The Supreme Court was deciding a totally different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also cited Maya Rani Punj v. CIT [1986] 157 ITR 330 (SC). Although the question which arose for decision in the said case was that the offence committed under section 271(1)(a) of the Income-tax Act, 1961, is a continuing offence or not and it was held that it is a continuing offence, but it was laid down that the offence is committed by the person if he fails to file the return, or if the return is not filed within the stipulated period under section 139(1) of the Income-tax Act which is similarly worded as section 14(1) of the Act. Section 139(41 of the Income-tax Act almost corresponds to section 15 of the Wealth-tax Act. It was held in this judgment that the assessee becomes liable to pay penalty on return being not filed in time prescribed in section 139(1) of the Income-tax Act. Learned counsel for the petitioners, as a matter of fact, did not dispute that if the return is not filed within the time prescribed in section 14(1) or section 14(2) of the Act, the assessee is liable to be visited with penalties in accordance with section 18 of the Act. I do not understand that when the provisions of section 18 and section 35B with regard to the ingredients, viz., for imposing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration by the criminal court but the criminal proceedings cannot be quashed only on the score that a judgment has been given in a revenue matter which may have bearing on the question which has to be decided by the criminal court independently. Learned counsel for the petitioners has contended that section 35A of the Act deals with the criminal prosecution of a person who wilfully attempts in any manner to evade any tax, penalty or interest and he could be prosecuted without prejudice to any penalty that may be imposed, while, under section 35B, the words "without prejudice to any penalty that may be imposable" stand omitted. So, the irresistible conclusion is that if penalty is to be imposed for the default made in furnishing the wealth-tax returns, then, no criminal prosecution could be launched under section 35B. In the present case, admittedly, no penalty proceedings have been launched against the petitioners. So, this question does not arise for consideration in the present case. Learned counsel for the petitioners has cited Fertilizer Corporation of India Ltd. v. State of Bihar [1988] (1) U. J. (S.C.) 357 ; AIR 1988 SC 361, wherein, on facts, the Supreme Court fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return, no prosecution can be launched. It was also held that if the quasi-criminal proceeding, namely, the proceeding for imposition of penalty, cannot be sustained when the Income-tax Officer, while making the assessment, charges interest, on a parity of reasoning, no criminal proceedings can be launched in such a case and, in the criminal proceeding, wilful default in filing the return has to be established. In this judgment, it was held by a single Bench of the Calcutta High Court that, by charging interest under section 139(8) of the Income-tax Act, the Income-tax Officer has impliedly extended the time to file the return and the question of wilful default in filing the return of income does not and cannot arise. The facts of the case are distinguishable. Here, the Wealth-tax Officer has not condoned the delay by the petitioners in filing the wealth-tax returns, rather the prayer of the petitioners for condonation of such delay has been rejected by the Wealth-tax Officer. So, this judgment is not applicable to the facts of the present case. Counsel for the petitioners has placed reliance on CWT v. Ramniklal D. Mehta [1982] 136 ITR 729 (Orissa). On the facts, it was foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletion of the trial. Counsel for the petitioners has also made reference to Sequoia Construction Co. P. Ltd. v. ITO [1986] 158 ITR 496 (Delhi). Brief notes of the case have been mentioned therein from where it is clear that the assessee had established good and sufficient reason for the default made by him and the penalties were cancelled. It was held by the High Court that it would be a sheer exercise in futility and harassment of the accused to allow criminal proceedings on the same facts to continue. In the present case, there is no finding given by the authorities in any penalty proceedings that the petitioners have not committed wilful default. So, this judgment cannot help the petitioners. The mere fact that no penalty proceedings have been actually launched against the petitioners is no ground to quash the criminal proceedings if the ingredients of the offence mentioned in section 35B stand prima facie made out. Similarly, on facts, S.K. Sinha v. S. K. Shingal [1987] 32 DLT 91, judgment of a single Bench of this court, is distinguishable. In the said case, the petitioner was criminally prosecuted under the Customs Act. On same facts, adjudication proceedings were brou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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