Tax Payable After Credit Of Prepaid Taxes Is Less Than Rs.3,000, Prosecution Not Sustainable; Madras High Court
The Madras High Court has held that prosecution under Section 276CC of the Income Tax Act is not sustainable as the tax payable after crediting prepaid taxes was less than the prescribed sum of Rs. 3,000.The bench of Justice G.K. Ilanthiraiyan has observed that proviso (ii)(b) to Section 276CC takes care of genuine assessees who either file the returns belatedly but within the end of...
The Madras High Court has held that prosecution under Section 276CC of the Income Tax Act is not sustainable as the tax payable after crediting prepaid taxes was less than the prescribed sum of Rs. 3,000.
The bench of Justice G.K. Ilanthiraiyan has observed that proviso (ii)(b) to Section 276CC takes care of genuine assessees who either file the returns belatedly but within the end of the assessment year or those who have paid substantial amounts of their tax dues by prepaid taxes from the rigour of the prosecution under Section 276CC.
The accused or petitioner is an assessee within the jurisdiction of the respondent or department. During the course of proceedings for assessment, the department detected that the petitioner failed to file his return of income for the assessment year 2013–2014. As per Section 139(1) of the Income Tax Act, the petitioner ought to have filed a return of income on or before September 30, 2013. It was also noticed that the petitioner had earned income.
The petitioner was issued a show cause notice to show cause why the proceedings under Section 276CC of the Income Tax Act should not be initiated for his wilful failure to file the return of income. On receipt of it, the petitioner did not send any reply. Therefore, the petitioner is liable to be prosecuted for the offence under Section 276CC of the Income Tax Act.
The petitioner contended that, as per the proviso of Section 276 sub-clause (CC) of the Income Tax Act, no person shall be proceeded against if the tax payable on the total income determined less the tax deducted at source does not exceed Rs. 3,000/-. The petitioner, though he has filed a return of income belatedly, after receipt of the show cause notice, the tax payable by him does not exceed a sum of Rs. 3,000/-, but on the other hand, there is a refund of Rs. 460/- claimed by the petitioner. The respondent initiated prosecution even before the completion of the assessment, which is premature. The income of the petitioner has not exceeded the amount required under the Act, which could be assessed as tax, and as such, the prosecution initiated by the respondent is not maintainable.
The department has contended that the petitioner failed to file his income tax returns for the assessment year 2013–2014. Even after the issuance of notice under Section 276 CC of the Income Tax Act, the petitioner did not come forward to file his return of income. Therefore, the respondent rightly initiated prosecution against the petitioner under Section 276CC of the Income Tax Act. Therefore, the petitioner cannot claim any benefit under sub-clause ii(b) of Section 276CC of the Income Tax Act.
The court said that the petitioner had paid taxes under the Heads of Advance Tax, TDS, TCS, and Self Assessment Tax to the tune of Rs. 23,75,066. According to the returns, the total tax and interest payable by him is Rs. 23,74,610/-. Therefore, he claimed a refund of Rs. 460, and proviso (ii) b of Section 276CC comes for the rescue of the petitioner from the rigour of the prosecution under Section 276CC of the Income Tax Act.
Counsel For Petitioner: P.Ramesh Kumar
Counsel For Respondent: Murali Krishnan
Case Title: Manav Menon Versus DCIT
Citation: 2023 LiveLaw (Mad) 365
Case No.: CRL.O.P.No.26013 of 2021 and Crl.M.P.Nos.14387 & 14390 of 2021