Wilful Failure To Furnish Return As Per Sec 139(1) Is Only Criterion For Initiation Of Prosecution U/s 276CC: Madras High Court

Accordingly, the High Court refused to interfere in the criminal proceedings and relegated the petitioner/ taxpayer to the trial, while stating that the onus is upon the petitioner to prove the contrary and that can be done only at the time of the trial.

A Single Judge Bench of Justice N. Anand Venkatesh observed that “the only criterion for initiation of prosecution is that there must be a wilful failure to furnish returns as required under Section 139(1) of the Act and once that requisite is fulfilled, the statutory presumption under Section 278E starts operating and this provision brings in a statutory presumption with regard to the existence of a culpable mental state”. (Para 11)

As per the brief facts of the case, the ITO has filed a private complaint against the assessee for offence u/s 276CC, as it had detected that assessee had earned income/made investment. Despite having earned substantial income, the assessee failed to file his returns. When a show cause notice was issued to the assessee asking as to why prosecution u/s 276CC should not be launched for failing to file the return. In reply, the assessee stated some reasons as to why he missed out in filing the returns. The ITO was not satisfied with the reply and prime facie found that the non-filing of the return was wilful and hence, proceeded to file complaint against the assessee for alleged offence u/s 276CC. The same has been put to challenge in a quashing petition.

The Bench found that the assessee did not file the returns u/s 139(1) for the A.Y 2014-2015 on or before July 31, 2014, and had for the first time, reacted only after notice u/s 148 was issued to him.

The Bench clarified that the notice u/s 148 has nothing to do with the return of income to be filed u/s 139(1), and this notice is issued only for the purpose of assessing escaped income.

Stating that till the year 2017, the assessee did not file the returns for the F.Y 2013-2014 and also did not declare his total income, the Bench observed that the assessee cannot be permitted to take a defence that the Income Tax department issued the notice u/s 148 with delay and if such a notice had been issued earlier, the assessee would have immediately responded to the same and also filed the returns.

There is no connection between the notice issued u/s 148 and the duty of the assessee to file the returns u/s 139(1), added the Bench.

The Bench also pointed that even after the notice was issued u/s 148, the assessee filed returns declaring his total income as Rs.29,50,000/-, however, the AO after the completion of the assessment proceedings, found that the total income of assessee was 54,09,683/- and the tax liability after adjustment of TDS was Rs.10,11,169/-.

Therefore, the Bench observed that the present is not a case as if the assessee has paid the tax and there was only a delay in filing the returns.

“The assessee cannot assume that the Tax Deducted at Source will cover the entire tax liability for the relevant Assessment Year even without filing his returns and declaring his total income”, added the Bench.

Hence, finding that the trial has already commenced, the High Court refused to interfere with the criminal proceedings which was initiated in the year 2017.

Counsel for Petitioner/ Assessee: P V Ravi Kumar

Counsel for Respondent/ Revenue: L Murali Krishnan

Case Title: Vinayagam Sabarisanthanakrishnan verses ACIT

Citation: 2024 LiveLaw (Mad) 118

Case Number: CRL. O.P. No.6219 of 2023

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