High Court Of Madras
R. Inbavalli vs. ITO
Section 276CC, 278E
T. Sudanthiram, J.
Criminal R.C. Nos. 578 to 580 of 2010 & M.P. No. 1 of 2010
7th July, 2010
Counsel Appeared :
C.R. Sathindran, for the Petitioner : K. Ramasamy, for the Respondent
JUDGMENT
T. Sudanthiram, J. :
The revision petitioner in all these three cases is one and the same. A complaint was filed against the petitioner in these three cases for not filing the income tax returns before the statutory due date as per s. 139(1) of the IT Act (hereinafter referred to as the Act) and thereby liable under s. 276CC of the Act, 1961.
In E.O.C.C. No. 95 of 2005, a complaint was filed for not filing the returns before the statutory due date i.e., on 31st Aug., 1996 but filed only on 24th March, 1999 with a delay of 2 years and 7 months; in E.O.C.C. No. 96 of 2005, a complaint was filed for not filing the returns before the statutory due date i.e., on 31st Oct., 1997 but filed only on 26th March, 2001 with a delay of 41 months and in E.O.C.C.No. 94 of 2005, a complaint was filed for not filing the returns before the statutory due date i.e., on 30th Nov., 1998 but filed only on 26th March, 2001 with a delay of 28 months.
On the side of the prosecution, three witnesses were examined as P.Ws. 1 to 3 and thereafter the petitioner had filed a petition before the learned Addl. Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai, under s. 245 of Cr. P.C. in all the three cases, seeking discharge and the said petitions were dismissed. Aggrieved by the order of the learned Magistrate, the petitioner has preferred these three criminal revision cases.
The learned counsel for the petitioner submitted that in all theses three cases, subsequently a notice was issued to the petitioner under s. 148 of the Act granting 30 days time to file the returns. In the case in E.O.C.C. No. 94 of 2005, a notice was given under s. 148 of the Act on 23rd March, 1999 and the petitioner filed the returns on 26th March, 1999. Similarly, in other two cases, the returns were filed within the time, after receiving the notice under s. 148 of the Act. Once the notice is given under s. 148 of the Act, the time for filing the returns is extended and as such, there is no violation of s. 139 of the Act and no prosecution could have been initiated against the petitioner. The learned counsel for the petitioner also relied on a decision reported in K. Inba
The learned counsel for the petitioner has further submitted that in the complaint filed by the respondent, it is not averred as to how the petitioner committed wilful default in filing the returns and even P.Ws.1 to 3 have not let in any evidence that there was a wilful default on the part of the petitioner in not filing the IT returns within the due date. Per contra, the learned senior Special Public Prosecutor for IT cases submitted that s. 276CC of the Act is attracted if there is a default in filing the returns within the statutory due date as per s. 139(1) or if there is default as per s. 142(1) or if there is default even after issuing notice under s. 148 of the Act. The petitioner would not be exonerated from the offence committed by him for not filing the income tax returns within the statutory period prescribed as per s. 139(1) of the Act, by filing returns subsequently beyond the statutory due date. There are separate ingrediants in s. 276 (1)CC for contravention of ss. 139(1) or 142(1) or 148 of the Act.
The learned senior Special Public Prosecutor also relied on a decision of the Hon’ble Supreme Court reported in Prakash Nath Khanna & Anr. vs. CIT & Anr. (2004) 187 CTR (SC) 97 : (2004) 266 ITR 1 (SC). This Court has considered the submissions made by the learned counsel on either side and perused the records.
The fact that the petitioner has not filed the income tax returns before the statutory due date as per s. 139 of the Act is not denied. It appears that even after the notice had been given under s. 142 of the Act, the returns were not filed but only after issuance of the notice under s. 148 of the Act, the returns were filed by the petitioner.
The question for consideration is that whether by issuing a notice under s. 148 of the Act to the petitioner and thereafter by filing the returns within the time prescribed as per the said notice, he is exonerated from the prosecution under s. 276CC of the Act for not filing the returns within the statutory due date as per s. 139(1) of the Act?
The decisions cited by the learned counsel for the petitioner are not on the points raised by the learned counsel for the petitioner. In the decision reported in K. Inba Sagaran vs. Asstt. CIT (supra) the accused was only acquitted from the offence under s. 276CC on the ground that there was a misjoinder of charges and there was defect in framing of charge in violation of ss. 218 and 219 of CrPC. As per the decision reported in Punjab & Hariyana Sudarshan Jain vs. Asstt. CIT (supra), the proceedings against the accused were quashed for the reason that the penalties imposed on the accused under s. 271(1)(c) of the Act were struck down by the Tribunal and as such, the criminal prosecution would be only an idle and empty formality. Sec. 276CC of the IT Act reads as follows :
“If a person wilfully fails to furnish in due time [the return of fringe benefits which he is required to furnish under sub- s. (1) of s. 115WD or by notice given under sub-s. (2) of the said section or s. 115WH or] the return of income which he is required to furnish under sub-s. (1) of s. 139 or by notice given under [cl. (i) of sub-s. (1) of s. 142) or s. 148 (or s. 153A), he shall be punishable,— (i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with imprisonment for a term which shall not be less than three months but Provided that a person shall not be proceeded against under this s. for failure to furnish in due time the [return of fringe benefits under sub-s. (1) of s. 115WD or] return of income under sub-s. (1) of s. 139— (i) for any assessment year commencing prior to the 1st April, 1975; or (ii) for any assessment year commencing on or after the 1st April 1975, if— (a) the return is furnished by him before the expiry of the assessment year; or (b) the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source, does not exceed three thousand rupees.)”
13. The Hon’ble Supreme Court in the decision reported in Prakash Nath Khanna & Anr. vs. CIT & Anr. (supra) at page No. 10 has held as follows :
“The heading of the section or the marginal note may be relied upon to clear any doubt or ambiguity in the interpretation of the provision and to discern the legislative intent. In CIT vs. Ahmedbhai Umarbhai & Co. AIR 1950 SC 134 : (1950) 18 ITR 472 (SC), after referring to the view expressed by Lord Macnaghten in Balraj Kunwar vs. Jagatpal Singh (1904) ILR 26 All 393 (PC), it was held that marginal notes in an Indian statute, as in an Act of Parliament cannot be referred to for the purpose of construing the statute. Similar view was expressed in Board of Muslim Wakfs, Rajasthan vs. Radha Kishan (1979) 2 SCC 468 and Kalawatibai vs. Soiryabai AIR 1991 SC 1581. Marginal note certainly cannot control the meaning of the body of the section if the language employed there is clear. (See Smt. Nandini Satpathy vs. P.L. Dani AIR 1978 SC 1025). In the present case as noted above, the provisions of s. 276CC are in clear terms. There is no scope for trying to clear any doubt or ambiguity as urged by learned counsel for the appellants. Interpretation sought to be put on s. 276CC to the effect that if a return is filed under sub-s. (4) of s. 139 it means that the requirements of sub-s. (1) of s. 139 (are satisfied) cannot be accepted for more reasons than one.
One of the significant terms used in s. 276CC is ‘in due time’ The time within which the return is to be furnished is indicated only in sub-s. (1) of s. 139 and not in sub-s. (4) of s. 139. That being so, even if a return is filed in terms of sub-s. (4) of s. 139 that would not dilute the infraction in not furnishing the return in due time as prescribed under sub-s. (1) of s. 139. Otherwise, the use of the expression ‘in due time’ would lose its relevance and it cannot be said that the said expression was used without any purpose. Before substitution of the expression ‘cl. (i) of sub-s. (1) of s. 142’ by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989, the expression used was ‘sub-s. (2) of s. 139’. At the relevant point of time the AO was empowered to issue a notice requiring furnishing of a return within the time indicated therein. That means the infractions which are covered by s. 276CC relate to non-furnishing of return within the time in terms of sub-s. (1) or indicated in the notice given under sub-s. (2) of s. 139. There is no condonation of the said infraction, even if a return is filed in terms of sub-s. (4). Accepting such a plea would mean that a person who has not filed a return within the due time as prescribed under sub-s. (1) or (2) of s. 139 would get benefit by filing the return under s. 139(4) much later. This cannot certainly be the legislative intent. Another plea which was urged with some amount of vehemence was that the provisions of s. 276CC are applicable only when there is discovery of the failure regarding evasion of tax. It was submitted that since the return under sub-s. (4) of s. 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
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.
The term of imprisonment is higher when the amount of tax which would have been evaded but for the discovery of the failure to furnish the return exceeds one hundred thousand rupees. If the plea of the appellants is accepted, it would mean that in a given case where there is infraction and where a return has not been furnished in terms of sub-s. (1) of s. 139 or even in response to a notice issued in terms of sub-s. (2), the consequences flowing from non-furnishing of return would get obliterated. At the relevant point of time s. 139(4)(a) permitted filing of return where return has not been filed within sub-s. (1) and sub-s. (2). The time-limit was provided in cl. (b). Sec. 276CC refers to ‘due time’ in relation to sub-ss. (1) and (2) of s. 139 and not to sub-s. (4). Had the legislature intended to cover sub-s. (4) also, use of the expression ‘s. 139’ alone would have sufficed. It cannot be said that the legislature without any purpose or intent specified only sub-ss. (1) and (2) and the conspicuous omission of sub-s. (4) has no meaning or purpose behind it. Subs. (4) of s. 139 cannot by any stretch of imagination control the operation of sub-s. (1) wherein a fixed period for furnishing the return is stipulated. The mere fact that for purposes of assessment and carrying forward and to set off losses it is treated as one filed within sub-s. (1) or (2) cannot be pressed into service to claim it to be actually one such, though it is factually and really not by extending it beyond its legitimate purpose.”
In view of the ratio laid down by the Hon’ble Supreme Court, the contention raised by the learned counsel for the petitioner is only to be rejected. It was contended by the learned counsel for the petitioner that there is no mens rea on the part of the petitioner and the prosecution has not let in any evidence for willful default. Sec. 278E of the IT Act reads as follows : “278E. 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.”
As there is a statutory presumption prescribed, the burden is on the petitioner to show that there was no wilful default. 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 and it is for the trial Court to decide the said issue at the stage of conclusion of trial.
16. This Court does not find any infirmity in the order passed by the learned Magistrate dismissing the petitions filed by the petitioner. Therefore, these Criminal Revisions are dismissed. Consequently, the connected miscellaneous petitions are also dismissed.
[Citation : 327 ITR 226]
