9911796707
TMI Blog2021 (10) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... Year 2013 - 2014, had not filed the Annual Return as mandated under Section 139[1] of the Act, 1961, nor under the extended time under Section 139[4] of the said Act. It had been stated that the petitioner herein had received substantial income in the form of salary amounting to Rs. 68,71,731/- and had also indulged in high end transactions with respect to purchase and sale of mutual funds and with respect to credit card transactions. (4) It is the contention of the respondent that owing to non-filing of the Income Tax Returns, suspicions had arisen over the source of funds for such transactions. It had also been contended that several Show Cause Notices had been issued, but there was no reply by the petitioner herein. Finally, the petitioner had condescended to give a reply on 02.05.2016 for the Show Cause Notice dated 26.04.2016. The respondent 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 offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er also stated that it was a bona fide mistake on the part of the former employer of the petitioner and the petitioner could not be held liable to answer to the charge levied by the respondent herein. (11) In this connection, the learned counsel for the petitioner relied on the judgment of the Gujarat High Court reported in 1995 213 ITR 307 [Guj] - Vinaychandra Chandulal Shah Vs. State of Gujarat and Another, wherein a learned Single Judge had examined a application filed to quash the proceedings initiated owing to non-filing of Returns as per Section 139[1] of the Income Tax Act, 1961. In that particular case, the accused had disclosed total income of Rs. 2,01,380/- and had also paid advance tax and also paid Self Assessment Tax under Section 140A of the Act, 1961 after the filing of the Return. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. They had declared total income and the tax payable thereon. They, however, failed to pay the Self Assessment Tax. The property of the petitioner therein / Society was attached. That was lifted on condition that the property should be brought for sale and the sale proceeds should be remitted to the Department. The petitioner therein / Society had issued a cheque stating that the cheque can be encashed at the time of registration of the Sale Deed. The Department, however, did not encash the cheque. A complaint was lodged before the Court for Economic Offences at Bengaluru, seeking prosecution of the petitioner therein / Society for the offence under Section 276C[2] of the Act, 1961. The petitioner therein / Society approached the High Court under Section 482 Cr.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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court of India reported in 2014 [5] SCC 139 [Sasi Enterprises Vs. Assistant Commissioner of Income Tax], wherein the Hon'ble Supreme Court had stated that protection as given under the proviso to Section 276CC of the Act, 1961, is not available once there is a failure to file the Return and once such failure is discovered and detected and notices under Section 142 or under Section 148 of the Act, 1961, had been issued calling for filing of the Return. It had been stated that duty to file the Return under Section 139[1] of the Act, 1961, is mandatory and failure to file the Return within the stipulated period would invite compulsory punitive interest as well as prosecution under Section 276CC of the Act, 1961. In paragraphs 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act within the time limit specified therein. 29.We may indicate that the above reasoning has the support of the Judgment of this Court in Prakash Nath Khanna Vs. CIT reported in 2004 [9] SCC 686. When we apply the above principles to the facts of the case in hand, the contention of the learned senior counsel for the appellant that there has not been any willful failure to file their return cannot be accepted and on facts, offence under Section 276CC of the Act has been made out in all these appeals and the rejection of the application for the discharge calls for no interference by this Court. [Emphasis supplied] (17) The learned Special Public Prosecutor also relied 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the prosecution case. Section 278-E is relevant for this purpose and the same reads as follows: "278-E: Presumption as to culpable mental state- (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation: In this sub-section, "culpable mental state" includes intention, motive or knowledge of a fact 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 rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t brought to the knowledge of the petitioner since he had left employment. It was also stated that even though the Show Cause Notices have been received, he was under the bona fide impression that since tax had been paid, no further action is required to be clarified from his end. (23) It is the case of the petitioner herein that there was no wilful act of non disclosure of income. As a matter of fact, it is the further contention that not just was tax paid, but Self Assessment Tax had also been paid. However, it is seen that 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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