Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (10) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (10) TMI 796 - HC - Income TaxProsecution proceeding u/s 276CC - Economic Offences - not filing returns of income without giving any reasonable cause and noncompliance of the notices of the AO - liability of directors for such economic offence as alleged - HELD THAT:- As in view of the subsequent orders passed by the competent authority under the said Act, it appears that no additional tax liability was fastened upon the assessing company. Tax was already deposited and thereafter, the prosecution has been initiated. This is not a case that after initiation of the prosecution the tax has been deposited. Further, in view of the subsequent orders passed by the competent authority, there is no tax liability against the petitioners who happened to be Directors of M/s Santpuria Alloys Private Limited. Looking into the averments made in the complaint petition, there is no disclosure of the fact as to how these two petitioners were looking into the day to day affairs of the company and section 278B of the said Act speaks of offences by the company whereas the liability has been fastened upon the person who is looking to day to day affairs of the company. Even the petitioners have not been made accused in the complaint case, however, by way of the information provided along with the letter, learned court has added these petitioners as accused in the complaint and the role how these petitioners are looking into the day to day affairs of the company is not disclosed and the requirement of disclosing the role with regard to day to day affairs of the company is one of the mandatory requirement, in view of the judgment of Sushil Sethi and Another v. State of Arunachal Pradesh and Others [2020 (1) TMI 1445 - SUPREME COURT] If the penalty has been struck off, whether a criminal case can survive or not? - As this aspect of the matter was considered in the case of K.C. Builders and Another [2004 (1) TMI 7 - SUPREME COURT] The case of the petitioners is fully covered as against the petitioners there is no penalty or assessment further in view of the subsequent orders passed by the competent authority in the said statute. There is no doubt that the willful failure occur in section 276 CC can attract if the willfulness brings in the element of guilt and thus, the requirement of mens-rea will come into force. In the case in hand, the petitioners have already deposited the tax and thereafter the said prosecution has been initiated. Looking into clause(ii)(b) of section 276 CC, it is crystal clear that if the tax payable determined on regular assessment is reduced by advance tax paid and the tax deducted at source does not exceed Rs.3,000/- such an assessee shall not be prosecuted for not furnishing the return under section 139(1) of the said Act. In the case in hand, in view of subsequent orders passed by the concerned authority under the statute, there is no assessment against the petitioners. Thus, the tax liability is not there even to the tune of Rs.3,000/- in view of the said proviso - There is no doubt that the penal provision is required to be dealt with as it is, and the court is not required to shift the language of penal provision, however, in the case in hand, the facts are otherwise. Thus entire criminal proceeding including order taking cognizance passed by learned Special Judge, Economic Offences hereby cognizance has been taken u/s 276 of CC of the Income Tax Act, 1961 is quashed.
|