TMI Blog2014 (2) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... the sentence of the offence, the department may resort to best judgment assessment or otherwise to past years to determine the extent of the breach – The pendency of the assessment proceedings of the assessee doesnot relieve it from penalty prosecution. “The declaration or statement made in the individual returns by partners that the accounts of the firm are not finalized, hence no return has been filed by the firm”, will not absolve the firm in filing the ‘statutory return under section 139(1) of the Act - The firm is independently required to file the return and merely because there has been a best judgment assessment under Section 144 would not nullify the liability of the firm to file the return as per Section 139(1) of the Act. Further u/s 278E, the presumption as to culpable mental state, which was inserted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 – For offences u/s 276CC the court has to presume the existence of mens rea and it is for the accused to prove the contrary and that too beyond reasonable doubt - The appellants have to prove the circumstances which prevented them from filing the returns as per Section 139(1) or in response to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay-to-day business of the firm during the assessment years in question and were individually, jointly and severally made responsible and liable for all the activities of the firm. Partnership deed dated 04.05.1990 itself stated that the partners, A-2 and A-3 are responsible and empowered to operate bank accounts, have full and equal rights in the management of the firm in its business activities, deploy funds for the business of the firm, appoint staff, watchman etc. and to represent the firm before income tax, sales tax and other authorities. 3. M/s Sasi Enterprises, the firm, did not file any returns for the assessment year 1991-92 and 1992-93, for which the firm and its partners are being prosecuted under Section 276 CC of the Act. J. Jayalalitha and N. Sasikala did not file returns for the assessment year 1993-94 and hence they are being prosecuted for that breach (in their individual capacity) separately but not for the assessment years 1991- 92 or 1992-93 and their returns have been filed as individual assessee by them for the assessment years 1991-92 and 1992-93, though belatedly on 20.11.1994 and 23.02.1994 respectively. In those returns it was mentioned that accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minders were issued on 10.2.1994, 22.8.1994 and 23.8.1995. No return was filed as required under Section 139(4) before 31.3.1995. The Department on 31.7.1995 issued notice under Section 142(1)(ii) calling for particulars of income and other details for completion of assessment. Neither the return of income was filed nor the particulars of income were furnished. Best judgment assessment under Section 144 was made on 9.2.1996 on a total income of Rs.1,04,49,153/- and tax determined at Rs.46,68,676/- and demand of Rs.96,98,801/-, inclusive of interest at Rs.55,53,882/- was raised after adjusting pre-paid tax of Rs.5,23,756/-. The Department then issued showcause notice for prosecution under Section 276CC on 14.6.1996. Later, sanction for prosecution was accorded by the Commissioner of Income Tax on 3.10.1996. 7. A-3 also failed to file the return of income as per Section 139(1) for the assessment year 1993-94 before the due date i.e. 31.8.1993. Notice under Section 142(1)(i) was issued to A-3 calling for filing of return of income on 8.11.1995. Further, notice was also issued under Section 142(1)(ii) on 21.7.1995 calling for particulars of income and other details for completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attained finality, the complaint became pre-mature as on the date of the complaint and no offence had taken place and all the ingredients of offence under Section 276 of the Act were not satisfied. Learned senior counsel pointed out that unless and until it is shown that failure to file the return was willful or deliberate, no prosecution under Section 276CC could be initiated. Learned senior counsel pointed out that in fact, the second accused in her individual return had disclosed that the firm was doing the business and that it had some income and hence, it cannot be said that A-2 had concealed the fact that the firm had any intention to evade tax liability. Learned senior counsel also submitted that whether the assessee had committed any offence or not will depend upon the final assessment of income and tax liability determined by the appropriate authority and not on the assessment made by the assessing officer. Placing reliance on the proviso to Section 276CC learned senior counsel submitted that, that is the only interpretation that could be given to Section 276CC. In support of his contention reliance was placed on the Judgment of this Court in Commissioner of Wealth Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of this Court in Maya Rani Punj (Smt.) v. Commissioner of Income Tax, Delhi (1986) 1 SCC 445. 12. Learned ASG also explained the scope of Section 278E by placing reliance on P.R. Metrani v. Commissioner of Income Tax, Bangalore (2007) 1 SCC 789, Kumar Exports v. Sharma Carpets (2009) 2 SCC 513, and submitted that pendency of the appellate proceedings is not a relevant factor in relation to prosecution under Section 276CC. Reference was also made to Ravinder Singh v. State of Haryana (1975) 3 SCC 742 and Standard Chartered Bank and others v. Directorate of Enforcement and others (2006) 4 SCC 278. Learned ASG submitted that the Judgment in Prakash Nath Khanna (supra) calls for no reconsideration, as the same has been uniformly applied by this Court as well as by the various High Courts. Learned ASG also pointed out that the appellants have been indulging in litigative exercises by which they could hold up the proceedings for almost two decades and that the trial court has rightly rejected the application for discharge, which was affirmed by the High Court and the same calls no interference by this Court. 13. We may formulate the questions that arise for our consideration, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed form and in the prescribed manner. The Direct Tax Laws (Amendment) Act, 1987 with effect from 01.04.1989 made various amendments to the Income Tax Act, by which the assessing officer has no power to extend the time for filing a return of income under Section 139(1) and to extend the time for filing under Section 139(3), a return of loss intended to be carried forward. The time prescribed for filing a belated return under Section 139(4) or a revised return under Section 139(5) was reduced to one year from the end of the relevant assessment year. The provision of Section 139(2) stood incorporated in Section 142(1)(i). The notice under Section 142(1)(i) to furnish a return of income cannot be issued in the course of the assessment year itself and need not give the person concerned a minimum period of 30 days for furnishing the return. When a return is furnished pursuant to a notice under Section 142(1)(i), the assessment may be made under Section 143 without recourse to Section 147. Further, with the deletion of Section 271(1)(a), a penalty for failure to furnish in due time a return of income under Section 139(1), is abolished. Levy of punitive interest under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or subsection (1) or sub-section (3) of section 74, or subsection (3) of section 74A, he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1). (4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: xxx xxx xxx xxx xxx xxx 19. A plain reading of the above provisions indicates that it is mandatory on the part of the assessee to file the return before the due date. Explanation (a) to the said section defines the term due date , which is 30th November of the assessment year. The consequence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of sub-section (1) of section 142 or section 148, he shall be punishable,- (i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine: Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of income under sub-section (1) of section 139- (i) for any assessment year commencing prior to the 1st day of April, 1975 ; or (ii) for any assessment year commencing on or after the 1st day of April, 1975 , if (a) the return is furnished by him before the expiry of the assessment year; or (b) the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source, does not exceed three thousand rupees. 22. The constitutional validity of Section 276CC, was upheld by the Karnataka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) and Section 148. But, the proviso to Section 276CC takes in only sub-section (1) of Section 139 of the Act and the provisions of Section 142(1)(i) or 148 are conspicuously absent. Consequently, the benefit of proviso is available only to voluntary filing of return as required under Section 139(1) of the Act. In other words, the proviso would not apply after detection of the failure to file the return and after a notice under Section 142(1)(i) or 148 of the Act is issued calling for filing of the return of income. Proviso, therefore, envisages the filing of even belated return before the detection or discovery of the failure and issuance of notices under Section 142 or 148 of the Act. 25. We may in this respect also refer to sub-section (4) to Section 139 wherein the legislature has used an expression whichever is earlier . Both Section 139(1) and Sub-Section (1) of Section 142 are referred to in sub-section (4) to Section 139, which specify time limit. Therefore, the expression whichever is earlier has to be read with the time if allowed under sub-section (1) to Section 139 or within the time allowed under notice issued under sub-section (1) of Section 142, whichever is ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nrelated to the pendency of assessment proceedings except for second part of the offence for determination of the sentence of the offence, the department may resort to best judgment assessment or otherwise to past years to determine the extent of the breach. The language of Section 276CC, in our view, is clear so also the legislative intention. It is trite law that as already held by this Court in B. Permanand v. Mohan Koikal (2011) 4 SCC 266 that the language employed in a statute is the determinative factor of the legislative intent. It is well settled principle of law that a court cannot read anything into a statutory provision which is plain and unambiguous . If it was the intention of the legislature to hold up the prosecution proceedings till the assessment proceedings are completed by way of appeal or otherwise the same would have been provided in Section 276CC itself. Therefore, the contention of the learned senior counsel for the appellant that no prosecution could be initiated till the culmination of assessment proceedings, especially in a case where the appellant had not filed the return as per Section 139(1) of the Act or following the notices issued under Section 142 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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