Sasi Enterprises v. Assistant Commissioner of Income-tax
[Citation -2014-LL-0130-135]

Citation 2014-LL-0130-135
Appellant Name Sasi Enterprises
Respondent Name Assistant Commissioner of Income-tax
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 30/01/2014
Assessment Year 1991-92
Judgment View Judgment
Keyword Tags interest under section 234a • best judgment assessment • failure to file return • business or profession • appropriate authority • co-operative society • income from business • individual capacity • regular assessment • show-cause notice • prescribed time • statutory limit • issue of notice • belated return • demand notice • advance tax • sales tax • evade tax • mens rea
Bot Summary: The Assistant Commissioner of Income Tax in his complaint stated that the firm through its partners ought to have filed its returns under Section 139(1) of the Act for the assessment year 1991-92 on or before 31 st August, 1991 and Page 4 5 for the assessment year 1992-93 on or before 31 st August, 1992 and A-2 in her individual capacity also should have filed her return for the year 1993-94 under Section 139(1) on or before 31.08.1993 and A-3 also ought to have filed her return for the assessment year 1993-94 on or before 31 st August, 1993, as per Section 139(1) of the Act. Xxx xxx xxx xxx xxx xxx If any person who has sustained a loss in any previous year under the head Profits and gains of business or profession or under the head Capital gains and claims that the loss or any part thereof should be carried forward under sub-section of section 72, or sub-section of section 73, or sub- section or sub-section of section 74, or sub- section of section 74A, he may furnish, within the time allowed under sub-section, 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. Further a reference to Sections 142 and 148 is also necessary to properly understand the scope of Section 276CC. Relevant portion of Section 142, as it stood at the relevant time, is quoted below: 142. Sub-section of Section 139, clause sub-section of Section 142 and Section 148 are mentioned in Section 276CC of the Act. Section 276CC 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 276CC takes in only sub-section of Section 139 of the Act and the provisions of Section 142(1)(i) or 148 are conspicuously absent. In short, the offence under Section 276CC is attracted on failure to comply with the provisions of Section 139(1) or failure to respond to the notice issued under Section 142 or Section 148 of the Act within the time limit specified therein.


REPORTABLE IN SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO.61 OF 2007 Sasi Enterprises Appellant Versus Assistant Commissioner of Income Tax Respondent WITH CRIMINAL APPEAL NOs.62, 63 & 64 OF 2007 JUDGMENT K.S. Radhakrishnan, J. 1. We are concerned with four Criminal Appeals No.61 to 64 of 2007, out of which two Criminal Appeals No.61 of 2007 and 63 of 2007 relate to M/s Sasi Enterprises, registered partnership firm, of which Ms. J. Jayalalitha and Mrs. N. Sasikala are partners, which relate to assessment years 1991-92 and 1992-93 respectively. Criminal Appeal Nos.62 Page 1 2 and 63 of 2007 relate to J. Jayalalitha and N. Sasikala respectively for assessment years 1993-94. Proceedings giving rise to these appeals originated from complaints filed by Assistant Commissioner of Income Tax, Chennai, before Additional Chief Metropolitan Magistrate (Egmore), Chennai, for willful and deliberate failure to file returns for assessment years 1991-92, 1992-93 and hence committing offences punishable under Section 276 CC of Income Tax Act, 1961 (for short Act ). Complaints were filed on 21.8.1997 after getting sanction from Commissioner of Income Tax, Central II, Chennai under Section 279(1) of Income Tax Act. Appellants filed two discharge petitions under Section 245(2) Cr.P.C., which were dismissed by Chief Metropolitan Magistrate vide order dated 14.6.2006. Appellants preferred Crl. R.C. Nos.781 to 786 of 2006 before High Court of Madras which were dismissed by High Court vide its common order dated 2.12.2006, which are subject matters of these appeals. Page 2 3 2. M/s Sasikala Enterprises was formed as partnership firm by deed dated 06.02.1989 with N. Sasikala and T.V. Dinakaran as its partners, which was later reconstituted with effect from 04.05.1990 with J. Jayalalitha and N. Sasikala as partners. firm did business through two units, namely, M/s Fax Universal and M/s J.S. Plan Printers, which, inter alia, included business in running all kinds of motor cars, dealing in vehicles and goods etc. In complaint E.O.C.C. No.202 of 1997 filed before Chief Metropolitan Magistrate, Egmore, M/s Sasi Enterprises was shown as first accused (A-1) and J. Jayalalitha and N. Sasikala were shown as (A-2) and (A-3) respectively, who were stated to be responsible for day-to-day business of firm during assessment years in question and were individually, jointly and severally made responsible and liable for all activities of firm. Partnership deed dated 04.05.1990 itself stated that partners, A-2 and A-3 are responsible and empowered to operate bank accounts, have full and equal rights in management of firm in its business activities, deploy funds for business of firm, appoint Page 3 4 staff, watchman etc. and to represent firm before income tax, sales tax and other authorities. 3. M/s Sasi Enterprises, firm, did not file any returns for assessment year 1991-92 and 1992-93, for which firm and its partners are being prosecuted under Section 276 CC of Act. J. Jayalalitha and N. Sasikala did not file returns for assessment year 1993-94 and hence they are being prosecuted for that breach (in their individual capacity) separately but not for assessment years 1991- 92 or 1992-93 and their returns have been filed as individual assessee by them for 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 firm had not been finalized and no returns of firm had been filed. 4. Assistant Commissioner of Income Tax in his complaint stated that firm through its partners ought to have filed its returns under Section 139(1) of Act for assessment year 1991-92 on or before 31 st August, 1991 and Page 4 5 for assessment year 1992-93 on or before 31 st August, 1992 and A-2 in her individual capacity also should have filed her return for year 1993-94 under Section 139(1) on or before 31.08.1993 and A-3 also ought to have filed her return for assessment year 1993-94 on or before 31 st August, 1993, as per Section 139(1) of Act. accused persons, it was pointed out, did not bother to file returns even before end of respective assessment years, nor had they filed any return at outer statutory limit prescribed under Section 139(4) of Act i.e. at end of March of assessment year. It was also pointed out that survey was conducted in respect of firm under Section 133A on 25.08.1992 and following that notice under Section 148 was served on partnership firm on 15.2.1994 to file return of income tax for years in question. Though notice was served on 16.2.1994, no return was filed within time granted in notice. Neither return was filed, nor particulars of income were furnished. For assessment year 1991-92, it was stated that pre-assessment notice was served on 18.12.1995, notice under Section Page 5 6 142(1)(ii) giving opportunities was also issued on 20.07.1995. department made best judgment assessment for assessment year 1991-92 under Section 144 on total income of Rs.5,84,860/- on 08.02.1996 and tax was determined as Rs.3,02,434/- and demand notice for Rs.9,95,388/- was issued as tax and interest payable on 08.02.1996. 5. For assessment year 1992-93, best judgment assessment under Section 144 was made on 9.2.1996 on firm on total income of Rs.14,87,930/- and tax determined at Rs.8,08,153/-, demand notice was issued towards tax and interest payable. 6. We may indicate, so far as A-2 is concerned, due date for filing of return of income as per Section 139(1) of Act for assessment year 1993-94 was 31.8.1993. Notice under Section 142(1)(i) was issued to A-2 calling for return of income on 18.1.1994. said notice was served on her on 19.1.1994. Reminders were issued on 10.2.1994, 22.8.1994 and 23.8.1995. No return was filed as required Page 6 7 under Section 139(4) before 31.3.1995. 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 return of income was filed nor particulars of income were furnished. Best judgment assessment under Section 144 was made on 9.2.1996 on 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/-. Department then issued show- cause notice for prosecution under Section 276CC on 14.6.1996. Later, sanction for prosecution was accorded by Commissioner of Income Tax on 3.10.1996. 7. A-3 also failed to file return of income as per Section 139(1) for assessment year 1993-94 before 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 Page 7 8 other details for completion of assessment. Neither return of income was filed nor particulars of income were furnished. Best judgment assessment under Section 144 was made on 8.2.1996 on total income of Rs.70,28,110/- and tax determined at Rs.26,86,445/-. total tax payable, inclusive of interest due was Rs.71,19,527/-. After giving effect to appellate order, total income was revised by Rs.19,25,000/-, resulting in tax demand of Rs.20,23,279/-, inclusive of interest levied. Later, show- cause notice for prosecution under Section 276CC was issued to A-3 on 7.8.1996. A-3 filed replies on 24.11.1996 and 24.3.1997. Commissioner of Income Tax accorded sanction for prosecution on 4.8.1997. 8. We may incidentally also point out, final tax liability so far as firm is concerned, was determined as Rs.32,63,482/- on giving effect to order of Income Tax Appellate Tribunal (B Bench), Chennai dated 1.9.2006 and after giving credit of pre-paid tax for assessment year 1991-92. For assessment year 1992-93 for Page 8 9 firm, final tax liability was determined at Rs.52,47,594/- on giving effect to order of Income Tax Appellate Tribunal (B Bench), Chennai dated 1.9.2006 and after giving credit of pre-paid tax. So far as A-2 is concerned, for assessment year 1993-94 final tax liability was determined at Rs.12,54,395/- giving effect to order of Income Tax Appellate Tribunal (B Bench), Chennai dated 11.10.2008 after giving credit to pre-paid tax. So far as A-3 is concerned, for assessment year 1993-94, final tax liability was determined as Rs.9,81,870/- after giving effect to order of Income Tax Appellate Tribunal (B Bench), Chennai dated 14.9.2004 and after giving credit to pre-paid tax. 9. We have already indicated, for not filing of returns and due to non-compliance of various statutory provisions, prosecution was initiated under Section 276CC of Act against all accused persons and complaints were filed on 21.08.1997 before Chief Metropolitan Magistrate, Page 9 10 which High Court by impugned order has permitted to go on. 10. Shri Shekhar Naphade, learned senior counsel appearing for appellants, submitted that High Court did not appreciate scope of Section 276CC of Act. Learned senior counsel pointed out that once it is established that on date of complaint i.e. on 21.08.1997 assessment had not attained finality, complaint became pre-mature as on date of complaint and no offence had taken place and all ingredients of offence under Section 276 of Act were not satisfied. Learned senior counsel pointed out that unless and until it is shown that failure to file return was willful or deliberate, no prosecution under Section 276CC could be initiated. Learned senior counsel pointed out that in fact, second accused in her individual return had disclosed that firm was doing business and that it had some income and hence, it cannot be said that A-2 had concealed fact that firm had any intention to evade tax liability. Page 10 11 Learned senior counsel also submitted that whether assessee had committed any offence or not will depend upon final assessment of income and tax liability determined by appropriate authority and not on assessment made by assessing officer. Placing reliance on proviso to Section 276CC learned senior counsel submitted that, that is only interpretation that could be given to Section 276CC. In support of his contention reliance was placed on Judgment of this Court in Commissioner of Wealth Tax, Gujarat v. Vimlaben Vadilal Mehta (Smt.) (1983) 4 SCC 692, Commissioner of Wealth Tax, Gujarat, Ahmedabad v. Vadilal Lallubhai & Ors. (1983) 4 SCC 697 and State of H.P. and others v. Gujarat Ambuja Cement Ltd. and another (2005) 6 SCC 499. Referring to Section 278E of Act, learned senior counsel submitted that till assessment does not attain finality, Section 276CC is not complete and presumption under Section 278E is not attracted. Learned senior counsel also submitted that High Court has wrongly applied principles laid down by this Court in Prakash Nath Khanna Page 11 12 and another v. Commissioner of Income Tax and another (2004) 9 SCC 686, in any view, which calls for reconsideration. Learned senior counsel submitted that said Judgment deals with factum of proviso to Section 276CC of Act which lays down that there is no offence if tax amount does not exceed Rs.3,000/-. 11. Shri Sidharth Luthra, learned Additional Solicitor General of India, appearing for Revenue, on other hand, submitted that Section 139 of Act placed statutory mandate on every person to file income tax return in prescribed form and in prescribed manner before due date i.e. 31 st August of relevant assessment year. Learned ASG submitted that on breach of Section 139(1) of Act, cause of action to prosecute assessee arises subject to other ingredients of Section 276CC of Act. Learned ASG pointed out that what is relevant in proceedings, is not only due date prescribed in Section 139(1) of Act, but also time prescribed under Section 142 and 148 of Act, by which Page 12 13 further opportunities have been given to file return in prescribed time. In other words, Section 276CC, according to learned ASG, applies to situation where assessee has failed to file return of income as required under Section 139 of Act or in response to notices issued to assessee under Section 142 or Section 148 of Act. Learned ASG also submitted that scope of proviso to Section 276CC to protect genuine assessees who either file their return belatedly but within end of assessment year or those who paid substantial amount of their tax dues by pre-paid taxes. Considerable reliance was placed on Judgment of this Court in Prakash Nath Khanna and another (supra). Reliance was also placed on Judgment of this Court in Maya Rani Punj (Smt.) v. Commissioner of Income Tax, Delhi (1986) 1 SCC 445. 12. Learned ASG also explained 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 Page 13 14 submitted that pendency of appellate proceedings is not 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 Judgment in Prakash Nath Khanna (supra) calls for no reconsideration, as same has been uniformly applied by this Court as well as by various High Courts. Learned ASG also pointed out that appellants have been indulging in litigative exercises by which they could hold up proceedings for almost two decades and that trial court has rightly rejected application for discharge, which was affirmed by High Court and same calls no interference by this Court. 13. We may formulate questions that arise for our consideration, which are as under: Page 14 15 (1) Whether assessee has liability/duty to file return under Section 139(1) of Act within due date prescribed therein? (2) What is effect of best judgment assessment under Section 144 of Act and will it nullify liability of assessee to file its return under Section 139(1) of Act? (3) Whether non-filing of return under Section 139(1) of Act, as well as non-compliance of time prescribed under Sections 142 and 148 of Act are grounds for invocation of provisions of Section 276CC of Act? (4) Whether pendency of appellate proceedings relating to assessment or non-attaining finality of assessment proceedings is bar in initiating prosecution proceedings under Section 276CC due to non-filing of returns? (5) What is scope of Section 278E of Act, and at what stage presumption can be drawn by Court? Page 15 16 14. We may, at outset, point out that appellants had earlier approached this Court and filed SLP(C) Nos.3655- 3658 of 2005 which were disposed of by this Court directing trial court to dispose of petition for discharge within period of two months by its order dated 03.03.2006. Learned Chief Metropolitan Magistrate rejected petitions vide its order dated 14.06.2006. Though High Court affirmed said order vide its judgment dated 02.12.2006, these appeals were kept pending before this Court over six years for one reason or another. 15. We are, in these appeals, concerned with question of non-filing of returns by appellants for assessment year 1991-92, 1992-93 and 1993-94. Each and every order passed by revenue as well as by Courts were taken up before higher courts, either through appeals, revisions or writ petitions. details of various proceedings in respect of these appeals are given in paragraph 30 of written submissions filed by revenue, which reveals dilatory tactics adopted in these Page 16 17 cases. Courts, we caution, be guarded against those persons who prefer to see it as medium for stalling all legal processes. We do not propose to delve into those issues further since at this stage we are concerned with answering questions which have been framed by us. 16. Section 139 of Act prior to 1989-90 and after, placed statutory mandate on every person to file income tax return in prescribed form and in prescribed manner. Direct Tax Laws (Amendment) Act, 1987 with effect from 01.04.1989 made various amendments to Income Tax Act, by which assessing officer has no power to extend time for filing return of income under Section 139(1) and to extend time for filing under Section 139(3), return of loss intended to be carried forward. time prescribed for filing belated return under Section 139(4) or revised return under Section 139(5) was reduced to one year from end of relevant assessment year. provision of Section 139(2) stood incorporated in Section 142(1)(i). notice under Page 17 18 Section 142(1)(i) to furnish return of income cannot be issued in course of assessment year itself and need not give person concerned minimum period of 30 days for furnishing return. When return is furnished pursuant to notice under Section 142(1)(i), assessment may be made under Section 143 without recourse to Section 147. Further, with deletion of Section 271(1)(a), penalty for failure to furnish in due time return of income under Section 139(1), is abolished. Levy of punitive interest under Section 234A made mandatory and discretion of assessing officer to reduce or waive interest was taken away. Non-compliance with notice under Section 142(1)(i) may attract prosecution under Section 276CC. 17. Income Tax Act, therefore, had stipulated both penalty under Section 271(1)(a) and prosecution under Section 276CC, former for depriving taxes due to exchequer and later for offence/infraction committed. As already indicated by Taxation Laws (Amendment) Act, 1989, penalty provision under Section 271(1)(a) had been Page 18 19 deleted w.e.f. 01.04.1989 and provision for levy of mandatory/compulsory interest under Section 234A of Act was introduced. But, legislature has never waived or relaxed its prosecuting provisions under Section 276CC of Act for infraction or non-furnishing of return of income. 18. Section 139 of Act, as it stood at relevant time, reads as under: 139. (1) Every person, if his total income or total income of any other person in respect of which he is assessable under this Act during previous year exceeded maximum amount which is not chargeable to income-tax, shall, on or before due date, furnish return of his income or income of such other person during previous year, in prescribed form and verified in prescribed manner and setting forth such other particulars as may be prescribed. Explanation: In this sub-section, due date means- (a) where assessee is company, 30 th day of November of assessment year; (b) where assessee is person, other than company.- (i) in case where accounts of assessee are required under this Act or nay other law to be Page 19 20 audited, or where report of any accountant is required to be furnished under section 80HHC or Section 80HHD or in case of co-operative society, 31st day of October of assessment year: (ii) in case where total income referred to in this sub-section includes any income from business or profession, not being case falling under sub- clause (i), 31st day of August of assessment year : (iii) in any other case, 30 th day of June of assessment year. xxx xxx xxx xxx xxx xxx (3) If any person who has sustained loss in any previous year under head Profits and gains of business or profession or under head Capital gains and claims that loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub- section (1) or sub-section (3) of section 74, or sub- section (3) of section 74A, he may furnish, within time allowed under sub-section (1), return of loss in prescribed form and verified in prescribed manner and containing such other particulars as may be prescribed, and all provisions of this Act shall apply as if it were return under sub-section (1). (4) Any person who has not furnished return within time allowed to him under sub-section (1), or within time allowed under notice issued under sub-section (1) of section 142, may Page 20 21 furnish return for any previous year at any time before expiry of one year from end of relevant assessment year or before completion of assessment, whichever is earlier: xxx xxx xxx xxx xxx xxx 19. plain reading of above provisions indicates that it is mandatory on part of assessee to file return before due date. Explanation (a) to said section defines term due date , which is 30 th November of assessment year. consequence of non-filing of return on time has also been stipulated in Act. Further reference to Sections 142 and 148 is also necessary to properly understand scope of Section 276CC. Relevant portion of Section 142, as it stood at relevant time, is quoted below: 142. Inquiry before assessment.- (1) For purpose of making assessment under this Act, Assessing Officer may serve on any person who has made return under section 139 or in whose case time allowed under sub- section (1) of that section for furnishing return has expired] notice requiring him, on date to be therein specified,- Page 21 22 (i) where such person has not made return within time allowed under sub-section (1) of section 139, to furnish return of his income or income of any other person in respect of which he is assessable under this Act, in prescribed form and verified in prescribed manner and setting forth such other particulars as may be prescribed, or xxx xxx xxx xxx xxx xxx 20. Section 148 refers to issue of notice where income has escaped assessment. Relevant portion of same is also extracted hereinbelow for ready reference: 148. (1) Before making assessment, reassessment or recomputation under section 147, Assessing Officer shall serve on assessee notice requiring him to furnish within such period, not being less than thirty days, as may be specified in notice, return of his income or income of any other person in respect of which he is assessable under this Act during previous year corresponding to relevant assessment year, in prescribed form and verified in prescribed manner and setting forth such other particulars as may be prescribed; and provisions of this Act shall, so far as may be, apply accordingly as if such return were return required to be furnished under section 139. Page 22 23 (2) Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. 21. Sub-section (1) of Section 139, clause (i) sub-section (1) of Section 142 and Section 148 are mentioned in Section 276CC of Act. Section 276CC is extracted as under: 276CC. Failure to furnish returns of income. If person wilfully fails to furnish in due time return of income which he is required to furnish under sub-section (1) of section 139 or by notice given under clause (i) of sub-section (1) of section 142 or section 148, he shall be punishable,- (i) in case where amount of tax, which would have been evaded if failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for 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 term which shall not be less than three months but which may extend to three years and with fine: Provided that person shall not be proceeded against under this section for failure to furnish in due time return of income under sub-section (1) of section 139- (i) for any assessment year commencing prior to 1st day of April, 1975 ; or (ii) for any assessment year commencing on or after 1st day of April, 1975 , if- Page 23 24 (a) return is furnished by him before expiry of assessment year; or (b) tax payable by him on total income determined on regular assessment, as reduced by advance tax, if any, paid, and any tax deducted at source, does not exceed three thousand rupees. 22. constitutional validity of Section 276CC, was upheld by Karnataka High Court in Sonarome Chemicals Pvt. Ltd. and others v. Union of India and others (2000) 242 ITR 39 (Kar) holding that it does not violate Article 14 of 21 of Constitution. Section punishes person who willfully fails to furnish return of income in time . explanation willful default, as observed by Wilber Force J. in Wellington v. Reynold (1962) 40 TC 209 is some deliberate or intentional failure to do what tax payer ought to have done, knowing that to omit to do so was wrong . assessee is bound to file return under Section 139(1) of Act on or before due date. outer limit is fixed for filing of return as 31 st August of assessment year, over and above, in present case, not Page 24 25 only return was not filed within due date prescribed under Section 139(1) of Act, but also time prescribed under Section 142 and 148 of Act and further opportunity given to file return in prescribed time was also not availed of. 23. Section 276CC applies to situations where assessee has failed to file return of income as required under Section 139 of Act or in response to notices issued to assessee under Section 142 or Section 148 of Act. proviso to Section 276CC gives some relief to genuine assesses. proviso to Section 276CC gives further time till end of assessment year to furnish return to avoid prosecution. In other words, even though due date would be 31st August of assessment year as per Section 139(1) of Act, assessee gets further seven months time to complete and file return and such return though belated, may not attract prosecution of assessee. Similarly, proviso in clause ii(b) to Section 276CC also provides that if tax payable determined by regular Page 25 26 assessment has reduced by advance tax paid and tax deducted at source does not exceed Rs.3,000/-, such assessee shall not be prosecuted for not furnishing return under Section 139(1) of Act. Resultantly, proviso under Section 276CC takes care of genuine assesses who either file returns belatedly but within end of assessment year or those who have paid substantial amounts of their tax dues by pre-paid taxes, from rigor of prosecution under Section 276CC of Act. 24. Section 276CC, it may be noted, takes in sub-section (1) of Section 139, Section 142(1)(i) and Section 148. But, proviso to Section 276CC takes in only sub-section (1) of Section 139 of Act and provisions of Section 142(1)(i) or 148 are conspicuously absent. Consequently, benefit of proviso is available only to voluntary filing of return as required under Section 139(1) of Act. In other words, proviso would not apply after detection of failure to file return and after notice under Section 142(1)(i) or 148 of Act is issued calling for filing of return of income. Page 26 27 Proviso, therefore, envisages filing of even belated return before detection or discovery of failure and issuance of notices under Section 142 or 148 of Act. 25. We may in this respect also refer to sub-section (4) to Section 139 wherein legislature has used 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, expression whichever is earlier has to be read with time if allowed under sub-section (1) to Section 139 or within time allowed under notice issued under sub-section (1) of Section 142, whichever is earlier. So far as present case is concerned, it is already noticed that assessee had not filed return either within time allowed under sub-section (1) to Section 139 or within time allowed under notices issued under sub-section (1) to Section 142. 26. We have indicated that on failure to file returns by appellants, income tax department made best judgment assessment under Section 144 of Act and later Page 27 28 show cause notices were issued for initiating prosecution under Section 276CC of Act. Proviso to Section 276CC nowhere states that offence under Section 276CC has not been committed by categories of assesses who fall within scope of that proviso, but it is stated that such person shall not be proceeded against. In other words, it only provides that under specific circumstances subject to proviso, prosecution may not be initiated. assessee who comes within clause 2(b) to proviso, no doubt has also committed offence under Section 276CC, but is exempted from prosecution since tax falls below Rs.3,000/-. Such assessee may file belated return before detection and avail benefit of proviso. Proviso cannot control main section, it only confers some benefit to certain categories of assesses. In short, offence under Section 276CC is attracted on failure to comply with provisions of Section 139(1) or failure to respond to notice issued under Section 142 or Section 148 of Act within time limit specified therein. Page 28 29 27. We may indicate that above reasoning has support of Judgment of this Court in Prakash Nath Khanna (supra). When we apply above principles to facts of case in hand, contention of learned senior counsel for appellant that there has not been any willful failure to file their return cannot be accepted and on facts, offence under Section 276CC of Act has been made out in all these appeals and rejection of application for discharge calls for no interference by this Court. 28. We also find no basis in contention of learned senior counsel for appellant that pendency of appellate proceedings is relevant factor for not initiating prosecution proceedings under Section 276CC of Act. Section 276CC contemplates that offence is committed on non-filing of return and it is totally unrelated to pendency of assessment proceedings except for second part of offence for determination of sentence of offence, department may resort to best judgment Page 29 30 assessment or otherwise to past years to determine extent of breach. language of Section 276CC, in our view, is clear so also legislative intention. It is trite law that as already held by this Court in B. Permanand v. Mohan Koikal (2011) 4 SCC 266 that language employed in statute is determinative factor of legislative intent. It is well settled principle of law that court cannot read anything into statutory provision which is plain and unambiguous . If it was intention of legislature to hold up prosecution proceedings till assessment proceedings are completed by way of appeal or otherwise same would have been provided in Section 276CC itself. Therefore, contention of learned senior counsel for appellant that no prosecution could be initiated till culmination of assessment proceedings, especially in case where appellant had not filed return as per Section 139(1) of Act or following notices issued under Section 142 or Section 148 does not arise. Page 30 31 29. We are also of view that declaration or statement made in individual returns by partners that accounts of firm are not finalized, hence no return has been filed by firm, will not absolve firm in filing statutory return under section 139(1) of Act. firm is independently required to file return and merely because there has been best judgment assessment under Section 144 would not nullify liability of firm to file return as per Section 139(1) of Act. Appellants contention that since they had in their individual returns indicated that firm s accounts had not been finalized, hence no returns were filed, would mean that failure to file return was not willful, cannot be accepted. 30. Section 278E deals with presumption as to culpable mental state, which was inserted by Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986. question is on whom burden lies, either on prosecution or assessee, under Section 278E to prove whether assessee has or has not committed willful Page 31 32 default in filing returns. Court in prosecution of offence, like Section 276CC has to presume existence of mens rea and it is for accused to prove contrary and that too beyond reasonable doubt. Resultantly, appellants have to prove circumstances which prevented them from filing returns as per Section 139(1) or in response to notices under Sections 142 and 148 of Act. 31. We, therefore, find no reason to interfere with order passed by High Court. appeals, therefore, lack merits and same are dismissed and Criminal Court is directed to complete trial within four months from date of receipt of this Judgment. . J. (K.S. Radhakrishnan) .J. (A.K. Sikri) New Delhi, January 30, 2014. Page 32 Sasi Enterprises v. Assistant Commissioner of Income-tax
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