Concealment of Income by not filing Income Tax Return is an Offence: Madras HC upholds Criminal Proceedings [Read Order]

The Madras High Court has held that the act of deliberate concealment of income by the assessee by not filing the income tax return is an offence and therefore, upheld the criminal proceedings.

The Petitioner/accused, Mr. Dharampal R Pandia is an individual having business income from his property concerned in the name and style of M/s.Herms India Limited. He is engaged in the business as a dealer in antibiotics, chemicals, prawn feeds and derives income thereof, besides having income from other sources. There was survey action/operation under Section 133(A) of Income Tax Act, 1961 on 20.10.2004, 14.12.2004 and 15.12.2004 in the business premises of the petitioner.

After survey, it was found that the accused despite having huge taxable income, has not been in the habit of filing return on or before the due date and pay the tax. He was not discharging his statutory obligation in compulsory maintenance of accounts and auditing under Section 44 A-B of the Income Tax Act, 1961 by furnishing to the department tax report in the form C-3(d) within the stipulated time limit and therefore, criminal proceedings were initiated.

Justice G Chandrasekharan observed that in all these cases, the concealment of income by the petitioner came to light only after a survey operation under Section 133(A) of Income Tax Act on 20.10.2004, 14.12.2004 and 15.12.2004.

“After finding concealment of income, a statutory notice under Section 148 of Income Tax Act was given. Then the petitioner filed his return of income. Thereafter the tax payable was determined. It is not in dispute that in all the cases, the return of income was filed in consequence of survey operation under section 133(A) of the Act and in response to notice under section 148 of the Income Tax Act, with the delay of several months, as indicated earlier. It is the claim of the learned counsel for the petitioner that there is no specific allegation of suppression of income in the complaint. However, the reading of the complaint shows that there is a specific allegation that the petitioner concealed the income, but for the survey operation, would not have filed the return of income and paid the taxes. By concealing the income, petitioner deprived the exchequer, payment of tax for several months. Thus, this Court is of the view that there are enough and specific allegations made with regard to concealment of income by the petitioner,” the Court said.

Upholding the proceedings, the Court held that “In the judgment referred above, the amounts involved are insignificant amounts. In the case before hand, the amount of income suppressed is substantial. The concealment/suppression of income came to light only after the survey. If the survey was not conducted, the concealment of income would not have come to light at all. Only after the statutory notice under section 148 was issued, petitioner filed a return of income and then, it was assessed. The wilful and deliberate concealment of true and correct income by not filing the return of income within the time stipulated is clearly and plainly evident from the facts of this case. From the case laws pressed into service, it was found that there was no wilful intention to conceal the income and there was no wilful delay in filing the return. However, facts of this case are totally different and therefore, this Court is of the view that the judgments relied by the learned counsel for the petitioner are not applicable to the facts and circumstances of this case.”

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