R.inbavalli v. Income Tax Officer,Business Ward X(1),Chennai – 600 006

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM R.Inbavalli .. Petitioner in all Crl.R.Cs./Accused Vs. Income Tax Officer,Business Ward X(1),Chennai – 600 006. .. Respondent in all Crl.R.Cs./Complainant Prayer in all Crl.R.Cs.:- Petitions filed under Section 397 r/w.401 of Cr.P.C, praying to set aside the order dated 04.03.2010passed in Crl.M.P.Nos.1769, 1770 and 1768 of 2008 inE.O.C.C.Nos.95, 96 and 94 of 2005 respectively by the learnedAdditional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai,calling for the records of the entire case and discharge thepetitioner/accused from the above cases. In all the three casesFor Petitioner : Mr.C.R.Sathindran For Respondent : Mr.K.Ramasamy, Senior Special Public Prosecutor for I.T. Cases.COMMON ORDER The revision petitioner in all these three cases is one andthe same. A complaint was filed against the petitioner in thesethree cases for not filing the income tax returns before thestatutory due date as per Section 139(1) of the Income Tax Act(hereinafter referred to as the Act) and thereby liable underSection 276CC of the Act, 1961. 2.In E.O.C.C.No.95 of 2005, a complaint was filed for notfiling the returns before the statutory due date i.e., on31.08.1996 but filed only on 24.03.1999 with a delay of 2 years and7 months; in E.O.C.C.No.96 of 2005, a complaint was filed for notfiling the returns before the statutory due date i.e., on31.10.1997 but filed only on 26.03.2001 with a delay of 41 monthsand in E.O.C.C.No.94 of 2005, a complaint was filed for not filingthe returns before the statutory due date i.e., on 30.11.1998 butfiled only on 26.03.2001 with a delay of 28 months. https://hcservices.ecourts.gov.in/hcservices/ 3.On the side of the prosecution, three witnesses wereexamined as P.Ws.1 to 3 and thereafter the petitioner had filed apetition before the learned Additional Chief MetropolitanMagistrate, E.O.I, Egmore, Chennai, under Section 245 of Cr.P.C. inall the three cases, seeking discharge and the said petitions weredismissed. Aggrieved by the order of the learned Magistrate, thepetitioner has preferred these three criminal revision cases. 4.The learned counsel for the petitioner submitted that inall theses three cases, subsequently a notice was issued to thepetitioner under Section 148 of the Act granting 30 days time tofile the returns. In the case in E.O.C.C.No.94 of 2005, a noticewas given under Section 148 of the Act on 23.03.1999 and thepetitioner filed the returns on 26.03.1999. Similarly, in othertwo cases, the returns were filed within the time, after receivingthe notice under Section 148 of the Act. Once the notice is givenunder Section 148 of the Act, the time for filing the returns isextended and as such, there is no violation of Section 139 of theAct and no prosecution could have been initiated against thepetitioner. The learned counsel for the petitioner also relied ona decision reported in 2001 247 ITR 528 Madras (K.Inbasagaran Vs.Assistant Commissioner of Income Tax) and also another decisionreported in 2004 270 ITR 312 Punjab and Hariana (Sudarshan Jain Vs.Assistant Commissioner). 5.The learned counsel for the petitioner has furthersubmitted that in the complaint filed by the respondent, it is notaverred as to how the petitioner committed wilful default in filingthe returns and even P.Ws.1 to 3 have not let in any evidence thatthere was a wilful default on the part of the petitioner in notfiling the income tax returns within the due date. 5.The learned counsel for the petitioner has furthersubmitted that in the complaint filed by the respondent, it is notaverred as to how the petitioner committed wilful default in filingthe returns and even P.Ws.1 to 3 have not let in any evidence thatthere was a wilful default on the part of the petitioner in notfiling the income tax returns within the due date. 6.Per contra, the learned Senior Special Public Prosecutorfor IT Cases submitted that 276CC of the Act is attracted if thereis a default in filing the returns within the statutory due date asper Section 139(1) or if there is default as per Section 142(1) orif there is default even after issuing notice under Section 148 ofthe Act. The petitioner would not be exonerated from the offencecommitted by him for not filing the income tax returns within thestatutory period prescribed as per Section 139(1) of the Act, byfiling returns subsequently beyond the statutory due date. Thereare separate ingrediants in Section 276(1)CC for contravention ofSections 139(1) or 142(1) or 148 of the Act. 7.The learned Senior Special Public Prosecutor also reliedon a decision of the Hon'ble Supreme Court reported in Income TaxReports Volume 266 page 1 (Prakash Nath Khanna and another Vs.Commissioner of Income Tax and another). 8.This Court has considered the submissions made by thelearned counsel on either side and perused the records. 9.The fact that the petitioner has not filed the income taxhttps://hcservices.ecourts.gov.in/hcservices/returns before the statutory due date as per Section 139 of the Act is not denied. It appears that even after the notice had beengiven under Section 142 of the Act, the returns were not filed butonly after issuance of the notice under Section 148 of the Act, thereturns were filed by the petitioner. 10.The question for consideration is that whether by issuinga notice under Section 148 of the Act to the petitioner andthereafter by filing the returns within the time prescribed as perthe said notice, he is exonerated from the prosecution underSection 276CC of the Act for not filing the returns within thestatutory due date as per Section 139(1) of the Act? 11.The decisions cited by the learned counsel for thepetitioner are not on the points raised by the learned counsel forthe petitioner. In the decision reported in 2001 247 ITR 528Madras (K.Inbasagaran Vs. Assistant Commissioner of Income Tax),the accused was only acquitted from the offence under Section 276CCon the ground that there was a misjoinder of charges and there wasdefect in framing of charge in violation of Sections 218 and 219 ofCr.P.C. As per the decision reported in 2004 270 ITR 312 Punjaband Hariana (Sudarshan Jain Vs. Assistant Commissioner), theproceedings against the accused were quashed for the reason thatthe penalties imposed on the accused under Section 271(1)(c) of theAct were struck down by the Tribunal and as such, the criminalprosecution would be only an idle and empty formality. 12.Section 276CC of the Income Tax Act reads as follows:- "If a person wilfully fails to furnish in due time[the return of fringe benefits which he is required tofurnish under sub-section (1) of section 115WD or bynotice given under sub-section (2) of the said section orsection 115WH or] the return of income which he isrequired to furnish under sub-section (1) of section 139or by notice given under [clause (i) of sub-section (1)of section 142] or section 148 [or section 153A], heshall 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 but whichmay extend to seven years and with fine; (ii) in any other case, with imprisonmentfor a term which shall not be less than threemonths but which may extend to three years andwith fine; (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 but whichmay extend to seven years and with fine; (ii) in any other case, with imprisonmentfor a term which shall not be less than threemonths but which may extend to three years andwith fine; Provided that a person shall not be proceeded againstunder this Section for failure to furnish in due time the[return of fringe benefits under sub-section (1) ofhttps://hcservices.ecourts.gov.in/hcservices/section 115WD or] return of income under sub-section (1) of section 139- (i) for any assessment year commencing priorto the 1[st] day of April, 1975; or (ii) for any assessment year commencing on orafter the 1[st] day of April 1975, if- (a) the return is furnished by him before theexpiry of the assessment year; or (b) the tax payable by him on the total incomedetermined on regular assessment, as reduced by theadvance tax, if any, paid, and any tax deducted atsource, does not exceed three thousand rupees.]" 13.The Hon'ble Supreme Court in the decision reported inIncome Tax Reports Volume 266 page 1 (Prakash Nath Khanna andanother Vs. Commissioner of Income Tax and another at page No.10has held as follows:- "The heading of the section or the marginal note maybe relied upon to clear any doubt or ambiguity in theinterpretation of the provision and to discern thelegislative intent. In CIT v. Ahmedbhai Umarbhai and Co.AIR 1950 SC 134:(1950) 18 ITR 472, after referring to theview expressed by Lord Macnaghten in Balraj Kunwar v.Jagatpal Singh (1904) I.L.R. 26 All 393(PC), it was heldthat marginal notes in an Indian statute, as in an Act ofParliament cannot be referred to for the purpose ofconstruing the statute. Similar view was expressed inBoard of Muslim Wakfs, Rajasthan v. Radha Kishan (1979)2SCC 468 and Kalawatibai v. Soiryabai AIR 1991 SC 1581.Marginal note certainly cannot control the meaning of thebody of the section if the language employed there isclear. (See Smt. Nandini Satpathy v. P.L. Dani, AIR 1978SC 1025). In the present case as noted above, theprovisions of Section 276-CC are in clear terms. There isno scope for trying to clear any doubt or ambiguity asurged by learned counsel for the appellants.Interpretation sought to be put on Section 276-CC to theeffect that if a return is filed under sub-section (4) ofSection 139 it means that the requirements of sub-section(1) of Section 139 (are satisfied) cannot be accepted formore reasons than one. One of the significant terms used in Section 276-CCis “in due time”. The time within which the return is tobe furnished is indicated only in sub-section (1) ofSection 139 and not in sub-section (4) of Section 139.That being so, even if a return is filed in terms of sub-section (4) of Section 139 that would not dilute theinfraction in not furnishing the return in due time asprescribed under sub-section (1) of Section 139.https://hcservices.ecourts.gov.in/hcservices/Otherwise, the use of the expression “in due time” would One of the significant terms used in Section 276-CCis “in due time”. The time within which the return is tobe furnished is indicated only in sub-section (1) ofSection 139 and not in sub-section (4) of Section 139.That being so, even if a return is filed in terms of sub-section (4) of Section 139 that would not dilute theinfraction in not furnishing the return in due time asprescribed under sub-section (1) of Section 139.https://hcservices.ecourts.gov.in/hcservices/Otherwise, the use of the expression “in due time” would lose its relevance and it cannot be said that the saidexpression was used without any purpose. Beforesubstitution of the expression “clause (i) of sub-section(1) of Section 142” by the Direct Tax Laws (Amendment)Act, 1987, with effect from April 1, 1989, the expressionused was “sub-section (2) of Section 139”. At therelevant point of time the assessing officer wasempowered to issue a notice requiring furnishing of areturn within the time indicated therein. That means theinfractions which are covered by Section 276-CC relate tonon-furnishing of return within the time in terms of sub-section (1) or indicated in the notice given under sub-section (2) of Section 139. There is no condonation ofthe said infraction, even if a return is filed in termsof sub-section (4). Accepting such a plea would mean thata person who has not filed a return within the due timeas prescribed under sub-section (1) or (2) of Section 139would get benefit by filing the return under Section 139(4) much later. This cannot certainly be the legislativeintent. Another plea which was urged with some amount ofvehemence was that the provisions of Section 276-CC areapplicable only when there is discovery of the failureregarding evasion of tax. It was submitted that since thereturn under sub-section (4) of Section 139 was filedbefore the discovery of any evasion, the provision has noapplication. The case at hand cannot be covered by theexpression “in any other case”. This argument thoughattractive has no substance. The provision consists of two parts. First relatesto the infractions warranting penal consequences and thesecond, measure of punishment. The second part in turnenvisages two situations. The first situation is wherethere is discovery of the failure involving the evasionof tax of a particular amount. For the said infractionstringent penal consequences have been provided. Secondsituation covers all cases except the first situationelaborated above. The term of imprisonment is higher when the amountof tax which would have been evaded but for the discoveryof the failure to furnish the return exceeds one hundredthousand rupees. If the plea of the appellants isaccepted, it would mean that in a given case where thereis infraction and where a return has not been furnishedin terms of sub-section (1) of Section 139 or even inresponse to a notice issued in terms of sub-section (2),the consequences flowing from non-furnishing of returnwould get obliterated. At the relevant point of timeSection 139(4)(a) permitted filing of return where returnhas not been filed within sub-section (1) and sub-section(2). The time-limit was provided in clause (b). Section276-CC refers to “due time” in relation to sub-sectionshttps://hcservices.ecourts.gov.in/hcservices/ (1) and (2) of Section 139 and not to sub-section (4).Had the legislature intended to cover sub-section (4)also, use of the expression “Section 139” alone wouldhave sufficed. It cannot be said that the legislaturewithout any purpose or intent specified only sub-sections(1) and (2) and the conspicuous omission of sub-section(4) has no meaning or purpose behind it. Sub-section (4)of Section 139 cannot by any stretch of imaginationcontrol the operation of sub-section (1) wherein a fixedperiod for furnishing the return is stipulated. The merefact that for purposes of assessment and carrying forwardand to set off losses it is treated as one filed withinsub-section (1) or (2) cannot be pressed into service toclaim it to be actually one such, though it is factuallyand really not by extending it beyond its legitimatepurpose." 14.In view of the ratio laid down by the Hon'ble SupremeCourt, the contention raised by the learned counsel for thepetitioner is only to be rejected. It was contended by the learnedcounsel for the petitioner that there is no mens rea on the part ofthe petitioner and the prosecution has not let in any evidence forwillful default. 15.Section 278E of the Income Tax Act reads as follows:-"278E. Presumption as to culpable mental state.-(1) In any prosecution for any offence under this Actwhich requires a culpable mental state on the part ofthe accused, the court shall presume the existence ofsuch mental state but it shall be a defence for theaccused to prove the fact that he had no such mentalstate with respect to the act charged as an offence inthat prosecution. Explanation.- In this sub-section, "culpable mentalstate" includes intention, motive or knowledge of a factor belief in, or reason to believe, a fact. (2) For the purposes of this section, a fact issaid to be proved only when the court believes it toexist beyond reasonable doubt and not merely when itsexistence is established by a preponderance ofprobability." As there is a statutory presumption prescribed, the burden ison the petitioner to show that there was no wilful default. TheCourt has to presume the existence of culpable mental state andabsence of such mental state can be pleaded by an accused as adefence and it is for the trial Court to decide the said issue atthe stage of conclusion of trial. https://hcservices.ecourts.gov.in/hcservices/ 16.This Court does not find any infirmity in the orderpassed by the learned Magistrate dismissing the petitions filed bythe petitioner. Therefore, these Criminal Revisions are dismissed.Consequently, the connected miscellaneous petitions are alsodismissed. Sd/-Asst. Registrar //true copy//Sub Asst.RegistrarjrlTo1.The Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai.2.The Income Tax Officer,Business Ward X(1),Chennai – 600 006.3.The Special Public Prosecutor for I.T. Cases,High Court, Madras.1 cc to Mr.C.R.Sathindran, Advocate, Sr.No.48731CRL.R.C.Nos.578 to 580 of 2010RS {CO}TP/22.7.2010.