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TMI Blog2021 (10) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... ot explained the high level transactions in purchase and sale of mutual funds and transactions in credit cards. As stated in SASI ENTERPRISES [ 2014 (2) TMI 19 - SUPREME COURT] the claim of the petitioner herein that he was innocent and ignorant and therefore, indulgence should be granted to him, is actually a fact which should be proved by him in a Court of law. Such innocence or ignorance cannot be presumed. On the other hand, what can be presumed is the culpable mental status and it is for the petitioner herein to prove the contrary. Insofar as the judgment relied on by the learned counsel for the petitioner in VINAYCHANDRA CHANDULAL SHAH [ 1993 (12) TMI 10 - GUJARAT HIGH COURT] learned Judge, with due respect, has not at all considered the presumption as given in Section 278E of the Act, 1961, regarding culpable mental state. This was a provision brought into the Taxation Law in the year 1986 itself. The burden lies on the assessee to show that he had no wilful intention not to file the Return. Any explanation to discharge such burden can be tested only during the course of trial. This Court cannot presume that the petitioner herein is innocent of any of the offences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent contended that the petitioner had deliberately not filed the Income Tax Returns within the stipulated period and therefore, the respondent was not able to assess the income for the escaped assessment, for which the Return should have been submitted. (5) In view of the above facts, complaining that the petitioner herein had committed offences under Section 276CC and 276C[1] of the Income Tax Act, 1961, with respect to the Assessment Year 2013 2014, a complaint, as aforesaid, had been preferred before the learned Additional Chief Metropolitan Magistrate / EO-I, Egmore, Chennai, which had been taken cognizance as EOCC.No.121/2016. (6) This petition has been filed seeking to quash the said Calendar Case. (7) Heard arguments advanced by Mr.Naveen Kumar Murthi, learned counsel appearing for the petitioner and Mr.L.Murali Krishnan, learned Special Public Prosecutor [Income Tax] appearing for the respondent. (8) Mr.Naveen Kumar Murthi, learned counsel for the petitioner pointed out that the petitioner was not able to file the Returns owing to the fact that the petitioner was under the bona fide impression that his erstwhile employer, namely, ITW India Limited, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn. The assessment under Section 143[3] of the Act, 1961 was determined and the accused thereafter was required to pay tax and interest under Section 139[8] of the Act, 1961 and also penalty. The learned Single Judge, after extracting the provisions under Section 276C of the Act, 1961, had also examined the word ' evasion ' as defined in various judicial dictionaries and had stated that it would require an element of wilful attempt to evade to pay tax, penalty or interest. It was also stated that there should be evasion to pay tax and only when there is a finding that there is evasion, then a charge can be levied imposing tax, penalty or interest. It was also held by the learned Judge that Section 276 C can be attracted only when a person wilfully attempts to evade payment of any tax, penalty or interest and not otherwise. (12) The learned counsel also relied on the judgment of a learned Single Judge of this Court reported in 1995 [II] CTC 4 [J.M.Shah Vs. Income Tax Officer, City Ward III [4], Madras- 6] wherein the learned Single Judge had examined the necessity of mens rea as an ingredient to constitute the offence under Section 277 of the Act, 1961. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.P.C., to quash the proceedings. The learned Single Judge found that the only circumstance which the respondent relied was non-payment of Self Assessment Tax along with the Return. It was found by the learned Single Judge that though the Returns were filed after much delay, there cannot be an inference that there was an attempt to evade the tax declared in the Returns. It was further held that delayed payment could be a ground to impose penalty or interest, but cannot be a ground to initiate prosecution under Section 276C[2] of the Act, 1961. Leaving the doors open for imposing penalty and interest, the criminal proceedings were quashed. (14) The learned counsel for the petitioner further relied on the decision of a learned Single Judge of this Court made in Crl.OP.[MD].No.13383/2019 dated 12.03.2020 [M/s.Bejan Singh Eye Hospital Private Limited and Others Vs. The Income Tax Officer, O/o.Principal Commissioner of Income Tax, Madurai rep. By the Assistant Commissioner of Income Tax Circle-I, Nagercoil] . The learned Single Judge had directly referred to the judgment of the Karnataka High Court in M/s.Vyalikaval House Building Cooperative Society [referred supra] and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aphs No.26 to 29, the Hon'ble Supreme Court has held as follows:- '' 26 . Section 276CC, it may be noted, takes in sub-section (1) of Section 139, Section 142(1)(i) and Section 148. But, the proviso to Section 276CC takes in only sub-section (1) of Section 139 of the Act and the provisions of Section 142(1)(i) or 148 are conspicuously absent. Consequently, the benefit of proviso is available only to voluntary filing of return as required under Section 139(1) of the Act. In other words, the proviso would not apply after detection of the failure to file the return and after a notice under Section 142(1)(i) or 148 of the Act is issued calling for filing of the return of income. Proviso, therefore, envisages the filing of even belated return before the detection or discovery of the failure and issuance of notices under Section 142 or 148 of the Act. 27 . We may in this respect also refer to subsection (4) to Section 139 wherein the legislature has used an expression whichever is earlier . Both Section 139(1) and Sub-Section (1) of Section 142 are referred to in sub-section (4) to Section 139, which specify time limit. Therefore, the expression whicheve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the judgment reported in 2004 [135] Taxman 327 [SC] [Prakash Nath Khanna V. Commissioner of Income Tax] , wherein the Hon'ble Supreme Court examined Section 276CC read with 139 of the Act, 1961 and held as follows:- '' 18.Another plea which was urged with some amount of vehemence was that the provisions of Section 276-CC are applicable only when there is discovery of the failure regarding evasion of tax. It was submitted that since the return under subsection (4) of Section 139 was filed before the discovery of any evasion, the provision has no application. The case at hand cannot be covered by the expression in any other case . This argument though attractive has no substance. 19. The provision consists of two parts. First relates to the infractions warranting penal consequences and the second, measure of punishment. The second part in turn envisages two situations. The first situation is where there is discovery of the failure involving the evasion of tax of a particular amount. For the said infraction stringent penal consequences have been provided. Second situation covers all cases except the first situation elaborated above. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or belief in, or reason to believe, a fact (2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability . 22. There is a statutory presumption prescribed in Section 278-E. The Court has to presume the existence of culpable mental state, and absence of such mental state can be pleaded by an accused as a defence in respect to the act charged as an offence in the prosecution. Therefore, the factual aspects highlighted by the appellants were rightly not dealt with by the High Court. This is a matter for trial. It is certainly open to the appellants to plead absence of culpable mental state when the matter is taken up for trial. 23. Looked at from any angle the appeals are without merit and are dismissed. '' [Emphasis Supplied] (18) The learned Special Public Prosecutor appearing for the respondent / Department further relied on the judgment reported in 2021 SCC Online 315 [Neeharika Infrastructure Private Limited Vs. State of Maharashtra and Others] , wherein it had been stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is the consistent case of the respondent / Department that the petitioner had not explained the high level transactions in purchase and sale of mutual funds and transactions in credit cards. (24) As stated by the Hon'ble Supreme Court, the claim of the petitioner herein that he was innocent and ignorant and therefore, indulgence should be granted to him, is actually a fact which should be proved by him in a Court of law. Such innocence or ignorance cannot be presumed. On the other hand, what can be presumed is the culpable mental status and it is for the petitioner herein to prove the contrary. (25) Even in the case relied on by the learned counsel for the petitioner, namely, in Vyalikaval House Building Cooperative Society's case and also relied on by a learned Single Judge of this Court in Crl.OP.[MD].No.13383/2019, only the prosecution had been quashed, but the imposition of penalty and interest had not been interfered with. The learned Single Judge of this Court had unfortunately, overlooked that particular fact while relying on the judgment of the learned Single Judge of the Karnataka High Court. (26) Insofar as the judgment relied on by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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