The Madras High Court upheld the Proceedings under section 276CC of the Income Tax Act, 1961 due to the Non-Filing of Income Tax Return(ITR) even after issuing notice. Even after issuing repeated notices, the assessee failed to file a return on proper time and filed belatedly without stating any valid reason for delay.
P.Arulmudi, the petitioner sought to quash the proceedings in EOCC.No.23 of 2019 pending on the file of the Additional Chief Metropolitan Magistrate Court (E.O-II), Egmore, thereby taken cognizance for the offence under Section 276CC of Income Tax Act, 1961, as against the petitioner.
The respondent filed a complaint for the offence punishable under Section 276 CC of the Income Tax Act, 1961 (‘the Act’). The crux of the complaint is that the petitioner failed to file his return of income for the assessment year 2013-2014 as required under Section 139 of the Act. He is duty-bound to file his return of income on or before 30.09.2013 for the assessment year 2013-2014.
A search was conducted as per Section 132 of the Act on 03.09.2013. After the search, a notice was issued as contemplated under Section 153A of the Act, thereby calling upon them to file his return of income within 30 days from the date of receipt of the notice. It was duly received and the petitioner failed to file his return of income within the time mentioned in the notice. Once again, a reminder letter was also sent to the petitioner dated 15.07.2014 and 02.06.2015. The petitioner filed a reply on 08.06.2016, but no valid reasons were stated for the non-filing of the return of income.
With a delay of more than 15 months declared his total income. Non-filing of the income tax return within the time limit is wilful and deliberate on the part of the petitioner. The assessment proceedings were completed for the assessment year 2013-2014 on 12.08.2016 thereby the total income of Rs.3,98,72,510/- was determined against the returned income filed by the petitioner to the tune of Rs.2,32,48,580/-. Therefore, the penalty proceedings were initiated and imposed penalty under Section 271F of the Act on 28.02.2017 for non-filing of the return of income under Section 139(1) of the Act.
The petitioner explained that he had already made payment of taxes in the form of Tax Deduction at Sources (TDS) and requested not to accord sanction for prosecution. The application filed before the settlement commission was dismissed twice.
Mr C.Emalias, the counsel who appeared for the petitioner submitted that as per Section 245C of the Act, the petitioner filed an application declaring his income before the settlement commission in March 2016 by making a further deposit of Rs.38,49,956/- as an additional payment of taxes—however, the application before the settlement commission was rejected on technical grounds.
It was argued that the authority without application of mind, mechanically accorded sanction to prosecute the petitioner. The initiation of prosecution is premature since the appeal filed by the petitioner against the order of assessment is still pending. Therefore, delay in filing the income tax return is not wilful but due to the exigency of a situation.
Mrs M. Sheela, the Special Public Prosecutor for Income Tax submitted that the petitioner in his capacity having substantial income both as a legal consultant and Director in various companies had to file his return of income as mandated under Section 139(1) of the Act.
Only after filing the return of income, the assessment can be completed within the time. Therefore, the provision under Section 153B is applicable only for completion of assessment by the assessment officer proceedings post search. The TDS was deducted by their parties and not by the petitioner.
A single bench of Justice G K Ilanthiraiyan held that the respondent rightly initiated prosecution against the petitioner and the Court finds no grounds to quash the same. Accordingly, this criminal original petition is dismissed.
“Considering the age of the petitioner, the personal appearance of the petitioner is dispensed with and he shall be represented by a counsel after filing appropriate application. However, the petitioner shall be present before the Court at the time of furnishing of copies, framing charges, questioning under Section 313 Cr.P.C. and at the time of passing judgment.”, the court held.
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