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2022 (9) TMI 195 - HC - Income TaxCognizance of offence against the petitioner u/s 276CC - non filing of ITR - assessment u/s 153A - requirement of mens rea - criminal prosecution for an offence under a special statute - proof of willful failure on the part of the defaulter and the nature of penalty required - petitioner submits that a criminal prosecution for an offence under a special statute must not be initiated as a matter of course where the prosecution would involve intricate questions of interpretation of the Income Tax Act - whether once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276CC is automatic and the petitioner cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law HELD THAT:- It is an admitted fact that the petitioner's premises was searched on a particular date subsequent thereto, certain documents have been seized. The petitioner has not filed return on time. It is also an admitted fact that the petitioner has filed the return along with interest, which has been accepted by the authority concerned. The subsequent protective assessment has been laid upon the petitioner, which was the subject matter before the first appellate authority, which has exonerated entire further assessment of the petitioner vide order dated 03.07.2019, which has been brought on record by way of filing supplementary affidavit. This is a case arising out of the Special Act statute. Admittedly, no penalty proceeding has been initiated against the petitioner. There is provision of initiation of penalty proceeding. However, the Department has not chosen to invoke Section 271(1)(A) under the statute. When the amount in question along with the interest has already been paid, no sentence can be imposed under that provision unless the element of mens rea is established and the intention of the Legislature is that the penalty should serve as a deterrent. In the Act, it has been provided how to proceed if a particular assessee is not filing the return on time, which suggests that it is civil obligation. As held in Autofil case [1990 (4) TMI 50 - ANDHRA PRADESH HIGH COURT] that the willful failure occurring in Section 276CC of the Income Tax Act held that willfulness certainly brings in the element of guilt and thus the requirement of mens rea will come into force. In the case in hand, the first appellate authority has set aside the further assessment and it is an admitted fact as to whether the criminal proceedings can be sustained or not. In the similar circumstance, in the case of G.L. Didwania [1993 (11) TMI 3 - SUPREME COURT] has held that if that is the position then the Court is unable to see as to how criminal proceedings can be sustained. The same view was again taken in the case of K.C. Builders [2004 (1) TMI 7 - SUPREME COURT] The argument of Ms. Amrita Sinha, learned counsel for the opposite parties about willful delay in filing the return has been considered by the Calcutta High Court in the case of Gopal Ji Shaw (supra). Identical is the situation here as the authority concerned has accepted the return along with interest filed by the petitioner and subsequently the first appellate authority has set aside the further assessment. Thus on reasons and analysis, to allow the criminal proceedings to continue will amount to abuse of process of law. Accordingly, the entire criminal proceedings including the order taking cognizance passed by the learned Special Judge, Economic Offence, Dhanbad in connection with Complaint Case pending in the court of the learned Special Judge, Economic Offence, Dhanbad is, hereby, quashed.
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