The Madras High Court recently observed that the prosecution is not sustainable when tax payable after credit of prepaid taxes is less than Rs 3000.
The respondent, the Deputy Commissioner of Income Tax, filed complaint for the offence punishable under Section 276CC of the Income Tax Act for non filing of income tax return for the assessment year 2013-2014. The crux of the complaint is that the accused is an assessee within the jurisdiction of the respondent. During the course of proceedings for assessment, the respondent detected that the petitioner failed to file his return of income for the assessment year 2013-2014. As per Section 139(1) of Income Tax Act, the petitioner ought to have filed return of income on or before 30.09.2013.
Therefore, the petitioner was issued show cause notice dated 27.04.2016 to show cause why the proceedings under Section 276CC of Income Tax Act should not be initiated for his wilful failure to file the return of income. On receipt of the same, 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 counsel for the petitioner submitted that as per proviso of Section 276 sub-clause (CC) of the Income Tax Act, no person shall be proceed 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 has filed return of income belatedly, after receipt of show cause notice, the taxpayable 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 counsel further submitted that the respondent initiated prosecution even before completion of assessment and it is premature. The income of the petitioner has not exceeded the amount as required under the Income Tax Act which could be assessed to tax and as such, the prosecution initiated by the respondent is not maintainable.
A Single Bench of Justice GK Ilanthiraiyan observed that “The proviso in clause (ii) of b to Section 276CC provides that if the tax payable determined by regular assessment has reduced by advance tax paid and tax deducted at source does not exceed Rs.3,000/-, such an assessee shall not be prosecuted for not furnishing the return under Section 139(1) of the Income Tax Act. Therefore, this proviso 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 rigor of the prosecution under Section 276CC of the Income Tax Act.”
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