Prosecution u/s 276CC-Failure to file ITR was not willful due to seizure of documents required by assessee for examination before filing the return u/s 153A
ABCAUS Case Law Citation:
ABCAUS 3260 (2020) (02) HC
Prosecution u/s 276CC-Failure to file ITR held not willful
In the instant case, the Income Tax Department (Revenue) had filed the petition impugning order passed by the Special Judge CBI acquitting the respondent assessee of the sentence passed by the ACMM for offence punishable u/s 276CC of the Income Tax Act, 1961 ( ‘the Act’).
The allegation of the revenue was that the respondent had willfully defaulted in filing a return pursuant to the notices issued under Section 153A of the Act and thus, committed the offence punishable under Section 276CC of the Act.
A search and seizure operations under Section 132 of the Act was conducted in the premises occupied by the respondent and his brother. Thereafter, a notice u/s 153A of the Act was issued to the respondent calling upon the petitioner to furnish return of income in respect of the company in which he was assessable.
Thereafter, a show cause notice was issued. Subsequently, another notice u/s 153A of the Act was issued, calling upon the respondent to file a return of income in respect of individual/company capacity.
Later, a show cause notice calling upon the respondent to show cause as to why action should not be taken against him for not filing the return as required. The respondent stated that the complete records relating to IT Returns including relevant data, photocopies and relevant documents were in possession of his brother, who was responsible for income tax compliances and filing of income tax returns for the whole family.
The respondent further stated that there were certain disputes between his family and his brother and the complete records had not been returned by him. He stated that he had no copies of the earlier returns and/or related documents. However, he further stated that the return filed earlier be treated as a return in response to the notice under Section 153A of the Act.
The respondent assessee contended that due to family disputes and unavoidable reasons, he did not have the details or copies of the returns. And, there was no malafide intention on his part for the non-compliance of the notices under Section 153A of the Act. Subsequently, the respondent filed the requisite return.
The Revenue filed a complaint under Section 276CC of the Act on account of failure on the part of the respondent to file return in compliance with the notice under Section 153A of the Act.
During the Trial u/s 276CC of the Act, the assessee inter alia pleaded that there was no willful default on his part as he did not have necessary documents for filing the return.
However, the Metropolitan Magistrate convicted him of the offence u/s 276CC of the Act and sentenced to undergo simple imprisonment for a period of one year with a fine.
Aggrieved by the same, the respondent preferred an appeal before the Appellate Court which was allowed. The appellate court, essentially, accepted the respondent’s contention that he did not have the necessary documents and although he had applied for the copies of the documents seized by the income tax authorities, the same were not supplied to him and therefore, his failure to file the return in response to the notice under Section 153A of the Act could not be held to be willful.
Before the Hon’ble High Court, the Revenue contended that in terms of Section 278E of the Act, existence of a culpable mental state on the part of the accused was assumed. It was submitted that, therefore, the failure to file the return would necessarily have to be assumed as willful, unless established to the contrary.
It was also submitted that the respondent had not led any evidence to establish that the default was not willful and he had not pointed out any specific document that was not provided to him and had impeded his filing the return as required.
The Hon’ble High Court observed that it was an admitted case that the copies of all the documents, which were seized during the search and seizure operations, were not provided to the respondent.
Also, the Hon’ble High Court observed that during trial, the Clerk of the Company Law Board had deposed as a witness for defence and his testimony established that there were disputes between the respondent and his brother relating to the affairs of their companies in which businesses were carried out.
The Hon’ble High Court further observed that without doubt, the respondent had issued a letter requesting for inspection and copies of the seized material in reference to the notice under Section 158A of the Act. The request was not only for the material documents seized from the part of the premises occupied by the respondent, but also for the material seized during search, which also included the documents seized from the floor of the premises occupied by his brother. The respondent had specifically indicated that the said documents were required for the purpose of complying and preparing the returns.
The Hon’ble High Court noted that the respondent had sent several lettersseeking copies of the documents for the purpose of filing the returns. But copies of all the documents seized had not been provided to the respondent. The respondent had sent letter under RTI Act and had also paid the fee asked for. However, the copies of all material/ documents seized during the search and seizure operations were not provided to the respondent. The respondent was also not provided the copy of the panchnama in respect of the documents seized from the premises occupied by his brother.
The Hon’ble High Court dismissed the contention that the respondent was further required to specify the document which was required by him for filing the return, to rebut the presumption of culpable mental state.
Prosecution u/s 276CC – Failure to file ITR was not willful
The Hon’ble High Court pointed out that returns for the relevant assessment year had already been filed in due course. The respondent was called upon to once again file the return pursuant to the allegedly incriminating material seized during the search and seizure operations. In such circumstances, it would be necessary for the respondent to examine all material documents seized during the search and seizure operations before filing the return. The respondent had already indicated his difficulty in doing so in view of the family disputes and had requested for inspection and copies of all documents seized during the raid.
The Hon’ble High Court upheld the order of the appellate court that the respondent’s failure to file the return at the material time could not be considered as willful.
The petition was dismissed.
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