TMI Blog2023 (10) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 08 of 2012 has been filed by Opposite Party No.2 against one M/s Santpuria Alloys Pvt. Ltd., in which the present petitioners are Directors. In the said complaint case, commission of offence under section 276 CC has been alleged on the following allegations:- (i) It has been alleged that a search under section 132 of the Income Tax Act was undertaken in Mongia Group of cases by the Investigation Wing, Jharkhand and during the course of search operation, various incriminating documents relating to M/s Santpuria Alloys Pvt. Ltd, were found and seized. (ii) It has been further alleged that notices under section 153A of the Income Tax Act for filing of returns of income for the Assessment Years 2005-06 to 2009-10 and 2010-11 were issued by the Assistant Commissioner of Income Tax, Central Circle, Dhanbad and the same were served on 15.02.2011 for compliance within 30 days from the receipt of the notice. (iii) It has been further alleged that the assessee company, on 15.02.2011, had requested for the copy of the stock statement during the search and survey operation, which was duly provided to the Assessee-company on 16.03.2011. (iv) It has been further alleged that afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2011 but the same was not complied by the assessee company. On 19.07.2021, a show cause notice under section 276 CC of the said Act was issued by the assessing officer to M/s Santpuria Alloys Private Limited which was not complied with. The assessee company filed return for the period 2005-06 and 2010-11 on 22.8.2011, 02.09.2011 and 20.09.2011 respectively. He submits that despite after filing of the returns the assessing officer submitted a proposal by letter dated 30.09.2011 for initiation of prosecution. He submits that the assessing officer itself informed the Commissioner of Income Tax, Central, Patna that the assessee has filed its returns and said communication was made by letter dated 14.10.2011. He submits that inspite of that, the sanction was accorded under section 279 of the Income Tax Act by Commissioner of Income Tax, Central, Patna on 08.12.2011. He submits that on 31.01.2012 the complaint case no.08 of 2012 was filed by the O.P.no. 2. He further submits that the said complaint was filed only against the assessing company namely M/s Santpuria Alloys Private Limited and the Directors were not impleaded as accused and the petitioners were not the accused. However, on 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice was already issued to the petitioners. He submits that if the case under section 276 CC of the said Act is made out, the case can go on as has been held by the Hon ble Supreme Court in the case of Sasi Enterprises v. Assistant Commissioner of Income Tax, (2014) 5 SCC 139 and relied on paragraph nos.28, 29, 30 and 32 of the said judgment, which are quoted below: 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 clause (ii)(b) to the proviso, no doubt has also committed the offence under Section 276-CC, but is exempted from prosecution since the tax falls below Rs 3000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been provided in Section 276-CC 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 or Section 148 does not arise. 32. Section 278-E deals with the presumption as to culpable mental state, which was inserted by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986. The question is on whom the burden lies, either on the prosecution or the assessee, under Section 278-E to prove whether the assessee has or has not committed willful default in filing the returns. The Court in a prosecution of offence, like Section 276-CC has to presume the existence of mens rea and it is for the accused to prove the contrary and that too beyond reasonable doubt. Resultantly, the appellants have to prove the circumstances which prevented them from filing the returns as per Section 139(1) or in response to notices under Sections 142 and 148 of the Act. 6. Relying on this judgment, he submits that the case of the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 278(B) of the Income Tax Act, 1961, and he submits that when the company is the offender, every person who is in-charge of the company are liable to be prosecuted. He submits that in view of that, the petitioners have been rightly prosecuted and this Court may not interfere at this stage and submits that the case is fit to be rejected. 8. In view of the above submission of the learned counsel for the parties, the Court has gone through the materials on record, including the contents of the complaint case, the order taking cognizance, the counter affidavit of the Income Tax Department and the rejoinder to the counter affidavit filed by the petitioners as well as the reply to the rejoinder filed by the Income Tax Department. 9. It is an admitted fact that for not filing the returns from 2005-06 to 2010-11, the present case has been filed. It is further an admitted fact that the return was filed by the petitioners on 22.8.2011, 02.09.2011 and 20.09.2011 respectively. However, the proposal for prosecution was initiated on 30.09.2011. The same was also informed by the assessing officer about the filing of the return by the petitioners to the Commissioner of Income Tax, Central, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hon ble Supreme Court in the case of Sushil Sethi and Another v. State of Arunachal Pradesh and Others, (2020) 3 SCC 240 and the same was held in paragraph no.8.2 of the said judgment, which is quoted below: 8.2. It is also required to be noted that the main allegations can be said to be against the company. The company has not been made a party. The allegations are restricted to the Managing Director and the Director of the company respectively. There are no specific allegations against the Managing Director or even the Director. There are no allegations to constitute the vicarious liability. In Maksud Saiyed v. State of Gujarat [Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668 : (2008) 2 SCC (Cri) 692] , it is observed and held by this Court that the Penal Code does not contain any provision for attaching vicarious liability on the part of the Managing Director or the Directors of the company when the accused is the company. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w that levy of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic. In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supersedes the order of the Assessing Officer under Section 143(3) more so when the Assessing Officer cancelled the penalty levied. In our view, once the finding of concealment and subsequent levy of penalties under Section 271(1)(c) of the Act has been struck down by the Tribunal, the Assessing Officer has no other alternative except to correct his order under Section 154 of the Act as per the directions of the Tribunal. As already noticed, the subject matter of the complaint before this Court is concealment of income arrived at on the basis of the finding of the Assessing Officer. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e two partners for concealment of the said income. The Tribunal found that, under law, a protective order of assessment can be passed but not of penalty. The learned counsel for the Revenue was unable to challenge this view of the Tribunal and frankly conceded that he was not able to cite any provision of law or decided case which warranted a protective order of penalty. That apart, no finding was recorded by the IAC that there was any wilful concealment of the income and in the absence of such a finding, the order of penalty would be unsustainable. The other reason given for deleting the penalty was that the income did not accrue to the present firm. As is apparent from the facts stated above, the amount received by the firm was not credited in its account and instead credited to the accounts of Lachhman Dass and Sat Parkash who were partners in the earlier firm. The assessee-firm, therefore, did not treat the said amount as its own and it being a firm different from the one to whom the refund had been made could not be held guilty of any concealment. The Tribunal, therefore, rightly deleted the penalty and questions Nos. 1 and 3 are accordingly answered against the Revenue and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 and this aspect of the matter has already been considered by the Hon ble Supreme Court in the case of Sasi Enterprises(supra) on which much force has been made by the learned counsel for the Income Tax Department and the said aspect was discussed in paragraph no.25 of the said judgment which is quoted as under: 25. Section 276-CC applies to situations where an assessee has failed to file a return of income as required under Section 139 of the Act or in response to notices issued to the assessee under Section 142 or Section 148 of the Act. The proviso to Section 276-CC gives some relief to genuine assessees. The proviso to Section 276-CC gives further time till the end of the assessment year to furnish return to avoid prosecution. In other words, even ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
