TMI Blog2018 (10) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... h may be presented as “unavoidable” and in case of such difficulties for the managing director to abide by the requirements of law on behalf of the company, the responsibility of other directors – the provision noticeably uses the expression “any director thereof” – cannot be ignored. In the reply dated 03.11.2014 in answer to the show cause notice, there was no explanation offered for failure on the part of the managing director to furnish income-tax return. Whether or not there was any difficulty on the part of managing director would be a matter of his defence at the trial. It cannot be assumed at this stage that such would be his defence, but if such defence were to be presented, it would be the responsibility of the directors to explain the default. Be that as it may, there is no escape from the conclusion that the directors are also equally responsible for furnishing of return on behalf of the company as is the case of the managing director. The petitions are found devoid of substance. - CRL.M.C. 602/2015 & Crl.M.A. 2345/2015, CRL.M.C. 603/2015 & Crl.M.A. 2348/2015, CRL.M.C. 606/2015 & Crl.M.A. 2353/2015, CRL.M.C. 606/2015 & Crl.M.A. 2353/2015, CRL.M.C. 607/2015 & Crl.M.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having been computed and assessed in the sum of ₹ 30,15,90,603/- for AY 2011-12. It was pointed out that by the said assessment penalty proceedings under Section 271 (1) (C) of IT Act were also separately initiated on account of inaccurate particulars of income having been furnished. It is further pointed out on behalf of the petitioners that in the said assessment order no penalty as envisaged in Section 271F of IT Act (for failure to furnish return of income) was imposed by the assessing authority i.e. the Deputy Commissioner of Income Tax (DCIT). 3. It is also not in dispute, and this being the basis of some argument raised by the petitioners, that prior to the filing of the criminal complaint by the respondent Assistant Commissioner of Income Tax (ACIT) sanction for prosecution had been granted under Section 279 (1) of IT Act on 14.01.2015 by the Commissioner of Income Tax (CIT), the said authority (CIT) having earlier issued the show cause notice on 16.07.2014, calling upon the company accused to respond as to why the prosecution for willful failure to file return of income be not launched. 4. It is the argument of the petitioners that it was improper on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time stipulated under Section 139 (1) or in response to the notice under Section 142 (1). Whether or not there was justification for such default is a matter of defence which may be agitated during the trial. The assessment proceedings are independent of this matter and they would not come in the way of criminal prosecution [ Sasi Enterprises v. Assistant Commissioner of Income Tax (2014) 5 SCC 139 ]. 7. The following observations of the Supreme Court in Sasi Enterprises (supra) are germane to the issue raised:- 28. We have indicated that on failure to file the returns by the appellants, the Income Tax Department made a best judgment assessment under Section 144 of the Act and later show-cause notices were issued for initiating prosecution under Section 276-CC of the Act. The proviso to Section 276-CC nowhere states that the offence under Section 276-CC has not been committed by the categories of assessees who fall within the scope of that proviso, but it is stated that such a person shall not be proceeded against. In other words, it only provides that under specific circumstances subject to the proviso, prosecution may not be initiated. An assessee who comes within cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment year, the Assessing Officer may direct that such person, shall pay, by way of penalty, a sum of five thousand rupees. 10. It is clear from bare reading of the above provision that whether or not the penalty as envisaged in Section 271 F is to be imposed, is a matter to be determined by the Assessing Officer/authority (DCIT) within the meaning of the section. He may direct such penalty to be paid and conversely, it would be correct to say, he may choose not to so direct for such penalty to be paid. At any rate, the omission on the part of the assessing officer to impose such penalty by itself does not mean that, in his opinion, the default was not willful. To determine whether the default was willful or otherwise, the explanation offered, may be in response to the show cause notice, will have to be seen and construed. 11. It was fairly conceded at the hearing by the learned senior counsel for the petitioners that there is no requirement in law that prior to sanction for prosecution being accorded under Section 279 (1) of IT Act, the complainant authority of income tax must issue show cause notice. Be that as it may, since show cause notice was issued fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the door of the managing director of the company and, consequently, it is inappropriate and unfair to rope in the directors of the company. 16. It does appear, on first blush, that the prime responsibility of furnishing the return of income of the company is of the managing director of such company. But then, it is not correct to read the above provision so as to conclude that it is always or invariably the responsibility of the managing director alone and of no other. In a situation where the managing director may not be in a position to verify or submit the return of income, this on account of numerous reasons which may be presented as unavoidable and in case of such difficulties for the managing director to abide by the requirements of law on behalf of the company, the responsibility of other directors the provision noticeably uses the expression any director thereof cannot be ignored. 17. Pertinent to note that in the reply dated 03.11.2014 in answer to the show cause notice, there was no explanation offered for failure on the part of the managing director to furnish income-tax return. Whether or not there was any difficulty on the part of managing director wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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