HC presumes existence of culpable mind in not filing return within time; confirms prosecution

HC presumes existence of culpable mind in not filing return within time; confirms prosecution    

Where assessee had not filed return of income timely, it could be prosecuted under section 276CC on presumption that there existed a culpable mental state as onus to prove that delay was not willful was on assessee and not on department

In the instant case, the assessee had filed the return of income on 1-5-1995 for assessment year 1994-95. The revenue's case was that inspite of several notices issued to assessee, she had filed the return of income beyond the statutory period. Therefore, delay in filing return was willful and deliberate and, thus, she was liable to be prosecuted and punished under section 276CC. However, the trial Court and the Sessions Court discharged the assessee. The revenue then filed the petition seeking reversal of orders of both the Courts.

The High Court held as under:

1) It was not in dispute that the assessee had not filed the return for the assessment year 1994-95 within prescribed period and not even within the period within which the revenue had required her to do so. The assessee had not even responded to the communications sent by the revenue requiring her to file return of income or to show the proof of filing. So, the offence under Section 276CC stood committed by that time and for that offence, the department could file a criminal complaint against her after obtaining requisite sanction from the competent authority which it did obtain and complaint was filed in Court;

2) It was for the respondent to establish during the trial that her failure to file return was not willful. The Courts went wrong in going into the question as to whether the explanation offered by the assessee before the filing of the complaint in Court was rightly rejected or not;

3) Once the complaint stood filed, the trial Court was only required to examine whether cognizance was to be taken or not and if it was decided to take cognizance, thereafter, trail Court was required to examine whether in the pre-charge evidence the complainant had been able to show that the assessee had not filed her return for the relevant assessment year within the prescribed period, which fact in the present case was not even disputed by the assessee;

4) So, after raising the presumption under section 278E, the trial Court should have framed the charge against the assessee leaving it to her to show thereafter that there was no willful default on her part. Just because the assessee had applied for the compounding of the offence before the filing of the complaint against her in Court, and the same had not been decided before the filing of the complaint, it could not be said that the complaint was not maintainable;

5) The trial Court was not required to examine at the stage of charge as to why the department was not compounding the offence in the case of the respondent herein. If she was aggrieved by any action or inaction on the part of the authority for compounding, she would have had recourse to legal remedies instead of waiting for the prosecution to be launched by the department;

6) The revisional Court also did not go into the aforesaid aspects and simply affixed its seal of approval to the order of the trail Court and, therefore, its order also couldn’t be sustained. This petition, accordingly, was allowed. The impugned orders of the trial Court and the revisional Court were set aside – ACIT V. NILOFAR CURRIMBHOY [2013] 35 taxmann.com 99 (Delhi)
   
   
   

Whether when assessee stands convicted for two AYs and complaint filed for 3rd u/s 276

 

Whether when assessee stands convicted for two AYs and complaint filed for third u/s 276B, any revision of compounding guidelines and intimation to assessee in this regard would mean that assessee is entitled to compounding even after complaint being filed - NO: Delhi HC

NEW DELHI, : THE issue before the Bench is - Whether when assessee has already been convicted for two AYs and the complaint filed for the third year u/s 276B, any revision of the compounding guidelines and an intimation to the assessee in this regard would mean that compounding is allowable even afer the compalint is filed. NO is the HC's answer.

Facts of the case

The Petitioner is the MD of M/s Anil Batra and Associates Private Limited. During the AY 1982-83, TDS by the company was deposited beyond the period prescribed by law. Similarly, during AY 1983-84 and 1984-85 also, the company deposited the tax beyond the period prescribed by law. That being so, the I.T Department filed complaints against the Company & Directors u/s 276B before the Court of CMM for all the three A.Y. The complaint for the A.Y 1982-83 was still at trial stage. As regards the complaints for the years 1983-84 and 1984-85, the ACMM convicted the two Directors of the company. Against this order, the Department filed a revision petition for enhancement of sentence, and the petitioner has filed appeal against the conviction, both of which were pending before the Addl. Session's Judge, Delhi. Two months after the complaint was filed by the I.T Department the petitioner moved an application before the department for compounding of offence u/s 276B, which was rejected by the CBDT. On 29.07.2003, the CBDT issued a Circular whereby Guidelines for Compounding were reviewed in the light of past experiences and future needs. The petitioner received a letter dated 25.09.2003 and copy of guidelines. The petitioner replied the same vide letter dated 29.09.2003, expressing his willingness to compound the offence and requesting the Department to communicate the amount of compounding fees so that the same could be deposited at the earliest. The petitioner, however, received no reply from the department in this regard. The petitioner thereafter filed two petitions before this court. This court disposed of the same with observation regarding compounding of offence. However, the competent authority vide its detailed order rejected the compounding petition of the petitioner.

Before the HC the petitioner contended that the CCIT was under an obligation to compound the offence in view of the order dated 28.07.2005 passed by this Court directing the CIT to adjudicate as to what amount was payable by the petitioner. He also contended that in view of the amended guidelines, the offences being technical in nature were eligible for compounding. He also contended that the proceedings for compounding of offence were proposed by the respondent itself vide its letter dated 25.09.2003. On the other hand, respondent counsel submitted that the offences were not compoundable since the complaints had already been filed against the petitioner and in two of those the petitioner stood convicted by the competent court.

On appeal, the HC held that,

++ with regard to the contention of the Petitioner's counsel that the CCIT has violated the order dated 28.07.2005 in failing to comply the terms and adjudicate as to the amount of compounding fee, it is seen that this order came to be passed by this Court on the submissions made by Petitioner counsel for the petitioner that the TDS amount has already been deposited and that the petitioner was ready and willing to deposit any additional cost and compounding fee that may be imposed. That order cannot be construed to mean that the terms were to be effected and compounding fee charged, even if the offence was not compoundable. The order also states that the Commissioner is to pass appropriate orders regarding compounding of the offence. This cannot be interpreted to mean that the Commissioner was directed to compound the offence without considering if the same was compoundable or not;

++ letter dated 25.09.2003 was nothing more than intimation to the petitioner regarding revision of guidelines for compounding of offences. The interpretation of the Clause as presented by Petitioner counsel is erroneous and misplaced. The plain and literal interpretation of the Clause would only mean that the amendments made in the existing guidelines on 29.07.2003 would be applicable to the future as well as to the cases pending at any stage and that the offences already compounded shall not be reconsidered. In other words it would mean that it was the applicability of the amendments to the future as also to the cases pending and not that the compounding would be allowed even after the filing of the complaint or where the person has already been convicted by a competent court. The conditions stipulated for compounding of a technical offence being very clear and unambiguous, compounding of such an offence was not permissible after filing of the complaint. Undisputedly, three complaints have already been filed against the petitioner and in two of those, the petitioner stands convicted by the competent court. The revisions for enhancement of punishment have been filed by the Department and the appeals against the conviction have also been filed by the petitioner. Those revisions and the appeals are pending before the Appellate Court. One of the complaints is also still pending trial before the ACMM. That being the factual matrix, offence could not be said to be compoundable at this stage. In that fact situation, the competent authority was not bound to effect compounding in violation of the mandatory prohibitions prescribed therefor. In view of all this, no directions can be given by this Court to the competent authority to affect compromise or adjudicate compounding fee.