M/S World Bridge Logistics Private Ltd.,Rep. By Its Director , J.hilda Mary v. The Deputy Commissioner Of Income Tax Corporate Circle – 3 (2)Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED ON 28.01.2022 CORAM: THE HONOURABLE MR.JUSTICE N.SATHISH KUMAR M/s World Bridge Logistics Private Ltd.,Rep. By its Director , J.Hilda Mary...Petitioner Vs The Deputy Commissioner of Income Tax Corporate Circle – 3 (2)Room No. 414, 4[th] Floor Wanaparthy Block, Aaykar Bhavan No.121, M.G.Road, Nungambakkam Chennai 600 034...Respondent PRAYER: Petition filed under Section 482 of Cr.P.C.to call theentire records in E.O.C.C.No.422 of 2017 pending on the file ofthe Additional Chief Metropolitan Magistrate, (E.O.II), Egmore,at Allikulam Road, Chennai and quash all further proceedingsagainst the accused. For Respondent : Mr. P. Murali Krishnan Special Public Prosecutor O R D E R This Petition has been filed to quash the prosecutioninitiated for the offence under Section 276CC of the Income TaxAct. 2.The allegation in the complaint shows that the petitioneris assessee, he has not filed Return of Income for theAssessment Year 2014-15. The same ought to have been filed onor before 31.7.2014. Individual Transaction Statement with thedepartment reveals that the accused earned substantial income ofRs.2,32,94,353/- for which TDS has been deducted under Section194C and 194H of the Incme Tax Act during the Financial year2013-14. But return of income as mandated under Section 139 ofthe Income Tax Act, 1964 was not filed by the accused. Hence ashow casue dated 26.7.2017 was issued which was not replied. Hence, prosecution has been launched for non-filing of Returnunder Section 276CC of the Income Tax Act. 3. The learned counsel appearing for the Petitioner thoughraised several grounds, he focused mainly on the ground thatwithout any assessment order the prosecution cannot be launchedunder Section 276CC of IT Act. Much reliance have been placedon the proviso to 276 CC of the Act. Therefore, his contentionis that unless Assessment Order is passed under Section 143 and148 of the Act, the prosecution is not maintainable. It is hisfurther contention that unless the amount of tax payable exceedsRs.3,000/- at the relevant point of time, the prosecution is notmaintainable. 4. Whereas the learned counsel for the Respondent submittedthat a person who willfully failed to file return of incomewhich is required to furnish under sub-section (1) of the 139 ofthe Act or by a notice given under clause (i) sub-section (1) of142 or Section 148 or section 133(A), the prosecution is verymuch maintainable. 5. Heard both sides. 6. Section 276CC of the Income Tax Act reads as follows: “276CC. Failure to furnish returns of income Ifa person wilfully fails to furnish in due time thereturn of income which he is required to furnishunder sub- section (1) of section 139 or by noticegiven under [1]clause (i) of subsection (1) of section142 or section 148, he shall be punishable,- (i)in a case where the amount of tax, whichwould have been evaded if the failure had notbeen discovered, exceeds one hundred thousandrupees, with rigorous imprisonment for a termwhich shall not be less than six months butwhich may extend to seven years and with fine;(ii)in any other case, with imprisonment for aterm which shall not be less than three monthsbut which may extend to three years and withfine: Provided that a person shall not beproceeded against under this section for failureto furnish in due time the return of incomeunder subsection (1) of section 139- (i)for any assessment year commencingprior to the 1st day of April, 1975 ; or (ii)for any assessment year commencingon, or after the 1st day of April, 1975 ,if- (a)the return is furnished by himbefore the expiry of theassessment year; or (b)the tax payable by him on thetotal income determined onregular assessment, as reduced bythe advance tax, if any, paid,and any tax deducted at source,does not exceed three thousandrupees.” (i)for any assessment year commencingprior to the 1st day of April, 1975 ; or (ii)for any assessment year commencingon, or after the 1st day of April, 1975 ,if- (a)the return is furnished by himbefore the expiry of theassessment year; or (b)the tax payable by him on thetotal income determined onregular assessment, as reduced bythe advance tax, if any, paid,and any tax deducted at source,does not exceed three thousandrupees.” 7.On a careful reading of the above section makes it veryclear that if the assessee failed to file Return as requiredunder Section 139 of the Income Tax Act, he can be prosecuted orin response to the notice issued to the assessee under Section142 or 148 of the Act is also can be prosecuted. The first partdeals with wilful failure to furnish the Return in due time asrequired under Section 139 of the Act. The second part of theSection 276CC deals with the failure to file a Return inresponse to the notice issued under section 142 or Section 148of the Act. In both scenarios the prosecution is certainlymaintainable. The proviso however, makes it very clear that ifthe tax payable does not exceed Rs.25000/- at present, orRs.3,000/- at the relevant point of time of statute give aprotection to the assessee from prosecution. Whereas proviso(1) protects the genuine assessee if the amount of tax does notexceed Rs.25000/- or Rs.3000/- in this case. But proviso (2)provide for punishment for any other case which shall not beless than three months but extend to three years. Therefore,the only criteria to initiation of prosecution is that theremust be a wilful failure to furnish Return as required underSection 139(1) or failure to file Return after notices issuedunder Section 142 or 148 of the Act. The first part dealswilful failure to furnish a Return in due time as required underSection 139(1) of the Act. Section 139 of the Act shall make itvery clear that the Return shall be filed before the due date.Section 138 mandates filing of Return on or before the due date.Part 2 of Section 276CC of the Act deals with the filing ofReturn after issuance of notice under section 142 or 148 of theAct. Therefore, when the prosecution alleged that there is awilful failure to file a return as required under Section 139 ofthe Act, the proviso will not helpful to the petitioner tocontend that without assessment order being made he cannot beprosecuted. 8.In Sasi Enterprises vs. Assistant Commissioner of IncomeTax [(2014) 5 SCC 139] the Honourable Apex Court has held asfollows: “25. Section 276CC applies to situationswhere an assessee has failed to file a return ofincome as required under Section 139 of the Act orin response to notices issued to the assessee under Section 142 or Section 148 of the Act. Theproviso to Section 276CC gives some relief togenuine assesses. The proviso to Section276CC gives further time till the end of theassessment year to furnish return to avoidprosecution. In other words, even though the duedate would be 31st August of the assessment yearas per Section 139(1) of the Act, an assessee getsfurther seven months’ time to complete and filethe return and such a return though belated, maynot attract prosecution of the assessee.Similarly, the proviso in clause ii(b) to Section276CC also provides that if the tax payabledetermined by regular assessment has reduced byadvance tax paid and tax deducted at source doesnot exceed Rs.3,000/-, such an assessee shall notbe prosecuted for not furnishing the returnunder Section 139(1) of the Act. Resultantly, theproviso under Section 276CC takes care of genuineassesses who either file the returns belatedly butwithin the end of the assessment year or those whohave paid substantial amounts of their tax dues bypre-paid taxes, from the rigor of the prosecutionunder Section 276CC of the Act. 26. Section 276CC, it may be noted, takes insub-section (1) of Section 139, Section 142(1)(i) and Section 148. But, the proviso to Section276CC takes in only sub-section (1) of Section139 of the Act and the provisions of Section 142(1)(i) or148areconspicuouslyabsent.Consequently, the benefit of proviso is availableonly to voluntary filing of return as requiredunder Section 139(1) of the Act. In other words,the proviso would not apply after detection of thefailure to file the return and after a noticeunder Section 142(1)(i) or 148 of the Act isissued calling for filing of the return of income.Proviso, therefore, envisages the filing of evenbelated return before the detection or discoveryof the failure and issuance of noticesunder Section 142 or 148 of the Act.” 9.Similarly, in para 28, the Apex court further held thatProviso cannot control the main section, it only confers somebenefit to certain categories of assesses. In short, the offenceunder Section 276CC is attracted on failure to comply with theprovisions of Section 139(1) or failure to respond to the noticeissued under Section 142 or Section 148 of the Act within thetime limit specified therein. 10.Considering the above provision of law, the veryallegation in the complaint itself indicate that the assesseehas not filed their Return of Income for the Assessment Year2014-15.The statement also indicates that the assessee hasearned substantial income of Rs.2,36,94,353/- for which TDS hasbeen deducted under Section 194C and 194H of the Income Tax Actduring the financial year 2013-14. Show cause notice also issuedon 26.07.2017. Despite the above Return has not been filed.Therefore, it is alleged that there is a wilful failure to filea Return. 11.Considering the penal provision which makes it punishableunder Sections 276-CC for non filing of Return and wilfullyconcealed its true and correct income. This Court is of theview that the contention of the leanred counsel for thepetitioner cannot be countenanced. Accordingly, the Petition isliable to be dismissed. 12.In the result, the Criminal Original Petition isdismissed. The trial can proceed with the trial and decide thematter without being influenced by any observation made by thisCourt while disposing the case. Connected Miscellaneous Petitionis closed. Sd/- Assistant Registrar //True Copy// ggs Sub Assistant Registrar To The Additional Chief Metropolitan Magistrate(E.O.II)Egmore, Allikulam Road, Chennai. Copy To The Section Officer,Criminal Section, High Court, Madras. +1cc to Mr.L.Muralikrishnan, Advocate, S.R.No.5569 MT(CO)RGA(07/03/2022) Crl.O.P.No.11998 of 2018 and Crl.M.P.No.6336 of 2018