Prosecution 276C(2) quashed as accused filed revised return which was assessed & refund granted

Prosecution u/s 276C(2) quashed as accused filed revised return which was assessed refund was granted by the Department

ABCAUS Case Law Citation
ABCAUS 3443 (2021) (01) AC

In the instant case, the Assistant Commissioner of Income Tax, (ACIT/AO) had filed a complaint against the accused assessee for the offence punishable u/s 276C(2) of the Income Tax Act, 1961 (the’Act).

The accused assessee had filed his return of income for the relevant assessment year. However, he failed to pay the tax on his declared income which was in violation of Section 140A of the Act.

The complainant Department had issued a letter to the accused directing him for payment of default tax along with interest of self assessment tax and also gave an opportunity to deposit the said tax immediately with interest by way of a letter.

However, the accused failed to comply with the notice. Thereafter, a proposal was made by ACIT accusing that the accused had willfully and intentionally evaded the payment of self assessed tax.

In reply to the show cause notice (SCN), the accused filed a reply stating that the ITR had been inadvertently filed and that accused was likely to file the revised tax return.

However, after considering the wilful default and attempt of the accused not to pay the outstanding tax dues, the Pr. CIT sanctioned the complaint for offence punishable u/s 276C(2) read with Section 278B of the Act.

Thereafter, a notice for the offence punishable u/s 276C(2) of the Act was served upon the accused by the Court of Additional Chief Metropolitan Magistrate  (ACMM) to which he pleaded not guilty and claimed trial.

However, during prosecution examination, the ACIT stated that the accused after the issue of SCN had filed a revised return within the time permissible under the provision of the Act for filing of revised return. It was further stated that the said revised return was assessed by the Department and an income tax refund was also issued by the complainant department to the accused and the order directing the refund was unchallenged till date.

The Accused stated that he was a bona fide taxpayer and he had filed the first return due to inadvertent error but later on had filed the revised return within the prescribed time limit time. He further stated that factum of filing of revised return and factum of refund made by the complainant department were clear from the evidence recorded by the Court. He stated that he was being victimized for no reason and the complaint be dismissed.

The Court noted that Section 139 of the Act contains various provisions related to late filing of various income tax returns. Section 139 also features the guidelines to file delayed / belated and revised returns.

The Hon’ble Court noted that the accused filed a reply to income tax authorities and stated that the first ITR had been inadvertently filed and that the accused filed a revised return within allowed time which according to the provisions of the Act amounted to withdrawal of first return.

In view of the above the Hon’ble Court opined that question of willful evasion of the payment of tax did not arise and the prosecution was not justified.

Furthermore, the Hon’ble Court stated that it was also proved that the revised return was assessed and an income tax refund was issued refunded by the complainant department to the accused which was unchallenged.

The Hon’ble Court opined that this testimony showed that the occasion to exercise his willingness to evade the payment of tax had never arisen as the income tax authority itself refunded the amount. It showed that accused did not commit any violation of the provisions of the Act. It further indicated that the complainant department instituted the complaint despite there being no case in view of filing of revised return, its acceptance and refund being made much prior to the filing of complaint.

Accordingly the accused was acquitted for the offence u/s276C(2) of the Act and the bail bond was cancelled and Surety was discharged.

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