IN THE 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
K.S. Radhakrishnan, J.
J U D G M E N T
REPORTABLE
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, a registered partnership firm,
of which Ms. J. Jayalalitha and Mrs. N. Sasikala are partners,
which relate to the assessment years 1991-92 and 1992-93
respectively. Criminal Appeal Nos.62 and 63 of 2007 relate to J.
Jayalalitha and N. Sasikala respectively for the assessment years
1993-94. Proceedings giving rise to these appeals originated from
the complaints filed by the Assistant Commissioner of Income Tax,
Chennai, before the Additional Chief Metropolitan Magistrate
1
(Egmore), Chennai, for the willful and deliberate failure to file
returns for the assessment years 1991-92, 1992-93 and hence
committing offences punishable under Section 276 CC of the
Income Tax Act, 1961 (for short “the Act”). Complaints were filed
on 21.8.1997 after getting the sanction from the Commissioner of
Income Tax, Central II, Chennai under Section 279(1) of the
Income Tax Act. Appellants filed two discharge petitions under
Section 245(2) Cr.P.C., which were dismissed by the Chief
Metropolitan Magistrate vide order dated 14.6.2006. Appellants
preferred Crl. R.C. Nos.781 to 786 of 2006 before the High Court of
Madras which were dismissed by the High Court vide its common
order dated 2.12.2006, which are the subject matters of these
appeals.
2. M/s Sasikala Enterprises was formed as a partnership firm
by a 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. The
firm did the business through two units, namely, M/s Fax
Universal and M/s J.S. Plan Printers, which, inter alia, included
the business in running all kinds of motor cars, dealing in vehicles
and goods etc. In the complaint E.O.C.C. No.202 of 1997 filed
before the Chief Metropolitan Magistrate, Egmore, M/s Sasi
2
Enterprises was shown as the 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 the day-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
3
the firm had not been finalized and no returns of the firm had been
filed.
4. 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
year 1992-93 on or before 31
August, 1991 and for the assessment
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.
The accused persons, it was pointed out, did not bother to file the
returns even before the end of the respective assessment years, nor
had they filed any return at the outer statutory limit prescribed
under Section 139(4) of the Act i.e. at the end of March of the
assessment year. It was also pointed out that a survey was
conducted in respect of the firm under Section 133A on
25.08.1992 and following that a notice under Section 148 was
served on the partnership firm on 15.2.1994 to file the return of
income tax for the years in question. Though notice was served
on 16.2.1994, no return was filed within the time granted in the
notice. Neither return was filed, nor particulars of the income were
4
furnished. For the assessment year 1991-92, it was stated that
pre-assessment notice was served on 18.12.1995, notice under
Section 142(1)(ii) giving opportunities was also issued on
20.07.1995. The department made the best judgment assessment
for the assessment year 1991-92 under Section 144 on a 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 the assessment year 1992-93, the best judgment
assessment under Section 144 was made on 9.2.1996 on the firm
on a total income of Rs.14,87,930/- and tax determined at
Rs.8,08,153/-, a demand notice was issued towards the tax and
interest payable.
6. We may indicate, so far as A-2 is concerned, the due date for
filing of return of income as per Section 139(1) of the Act for the
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. The 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 under Section 139(4) before
31.3.1995. The Department on 31.7.1995 issued notice under
5
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 show-cause 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
assessment. Neither the return of income was filed nor the
particulars of income were furnished. Best judgment assessment
under Section 144 was made on 8.2.1996 on a total income of
Rs.70,28,110/- and tax determined at Rs.26,86,445/-. The total
tax payable, inclusive of interest due was Rs.71,19,527/-. After
6
giving effect to the appellate order, the total income was revised by
Rs.19,25,000/-, resulting in tax demand of Rs.20,23,279/-,
inclusive of interest levied. Later, a 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. The Commissioner
of Income Tax accorded sanction for prosecution on 4.8.1997.
8. We may incidentally also point out, the final tax liability so
far as the firm is concerned, was determined as Rs.32,63,482/- on
giving effect to the order of the Income Tax Appellate Tribunal (B
Bench), Chennai dated 1.9.2006 and after giving credit of pre-paid
tax for the assessment year 1991-92. For the assessment year
1992-93 for the firm, final tax liability was determined at
Rs.52,47,594/- on giving effect to the order of the 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 the
assessment year 1993-94 final tax liability was determined at
Rs.12,54,395/- giving effect to the 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 the assessment
year 1993-94, final tax liability was determined as Rs.9,81,870/-
after giving effect to the order of Income Tax Appellate Tribunal (B
7
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 the various statutory provisions, prosecution
was initiated under Section 276CC of the Act against all the
accused persons and the complaints were filed on 21.08.1997
before the Chief Metropolitan Magistrate, which the High Court by
the impugned order has permitted to go on.
10. Shri Shekhar Naphade, learned senior counsel appearing for
the appellants, submitted that the High Court did not appreciate
the scope of Section 276CC of the Act. Learned senior counsel
pointed out that once it is established that on the date of the
complaint i.e. on 21.08.1997 the assessment had 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
8
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 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
the Act, learned senior counsel submitted that till the assessment
does not attain finality, Section 276CC is not complete and the
presumption under Section 278E is not attracted. Learned senior
counsel also submitted that the High Court has wrongly applied
the principles laid down by this Court in Prakash Nath Khanna
and another v. Commissioner of Income Tax and another
(2004) 9 SCC 686, in any view, which calls for reconsideration.
9
Learned senior counsel submitted that the said Judgment deals
with the factum of proviso to Section 276CC of the Act which lays
down that there is no offence if the tax amount does not exceed
Rs.3,000/-.
11. Shri Sidharth Luthra, learned Additional Solicitor General of
India, appearing for the Revenue, on the other hand, submitted
that Section 139 of the Act placed a statutory mandate on every
person to file an income tax return in the prescribed form and in
the prescribed manner before the due date i.e. 31
st
August of the
relevant assessment year. Learned ASG submitted that on breach
of Section 139(1) of the Act, cause of action to prosecute the
assessee arises subject to other ingredients of Section 276CC of
the Act. Learned ASG pointed out that what is relevant in the
proceedings, is not only the due date prescribed in Section 139(1)
of the Act, but also time prescribed under Section 142 and 148 of
the Act, by which further opportunities have been given to file the
return in the prescribed time. In other words, Section 276CC,
according to the learned ASG, applies to a situation where assessee
has failed to file the 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. Learned ASG also
submitted that the scope of proviso to Section 276CC to protect the
10
genuine assessees who either file their return belatedly but within
the end of the assessment year or those who paid substantial
amount of their tax dues by pre-paid taxes. Considerable reliance
was placed on the Judgment of this Court in Prakash Nath
Khanna and another (supra). Reliance was also placed on the
Judgment 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
11
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, which are as under:
(1) Whether an assessee has the liability/duty to file a
return under Section 139(1) of the Act within the due date
prescribed therein?
(2) What is the effect of best judgment assessment under
Section 144 of the Act and will it nullify the liability of the
assessee to file its return under Section 139(1) of the Act?
(3) Whether non-filing of return under Section 139(1) of the
Act, as well as non-compliance of the time prescribed under
Sections 142 and 148 of the Act are grounds for invocation of
the provisions of Section 276CC of the Act?
(4) Whether the pendency of the appellate proceedings
relating to assessment or non-attaining finality of the
assessment proceedings is a bar in initiating prosecution
proceedings under Section 276CC due to non-filing of
returns?
(5) What is the scope of Section 278E of the Act, and at
what stage the presumption can be drawn by the Court?
12
14. We may, at the outset, point out that the appellants had earlier
approached this Court and filed SLP(C) Nos.3655-3658 of 2005 which
were disposed of by this Court directing the trial court to dispose of the
petition for discharge within a period of two months by its order dated
03.03.2006. Learned Chief Metropolitan Magistrate rejected the
petitions vide its order dated 14.06.2006. Though the High Court
affirmed the 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 the question of non-
filing of returns by the appellants for the assessment year 1991-92,
1992-93 and 1993-94. Each and every order passed by the revenue as
well as by the Courts were taken up before the higher courts, either
through appeals, revisions or writ petitions. The details of the various
proceedings in respect of these appeals are given in paragraph 30 of
the written submissions filed by the revenue, which reveals the dilatory
tactics adopted in these cases. Courts, we caution, be guarded
against those persons who prefer to see it as a 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 the questions
which have been framed by us.
13
16. Section 139 of the Act prior to 1989-90 and after, placed a
statutory mandate on every person to file an income tax return in 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 234A made mandatory and the discretion of the
assessing officer to reduce or waive the interest was taken away. Non-
14
compliance with a notice under Section 142(1)(i) may attract
prosecution under Section 276CC.
17. The Income Tax Act, therefore, had stipulated both the penalty
under Section 271(1)(a) and prosecution under Section 276CC, the
former for depriving taxes due to the exchequer and later for the
offence/infraction committed. As already indicated by the Taxation
Laws (Amendment) Act, 1989, penalty provision under Section 271(1)
(a) had been deleted w.e.f. 01.04.1989 and a provision for levy of
mandatory/compulsory interest under Section 234A of the Act was
introduced. But, legislature has never waived or relaxed its
prosecuting provisions under Section 276CC of the Act for the
infraction or non-furnishing of return of income.
18. Section 139 of the Act, as it stood at the relevant time, reads as
under:
“139. (1) Every person, if his total income or the total
income of any other person in respect of which he is
assessable under this Act during the previous year
exceeded the maximum amount which is not chargeable to
income-tax, shall, on or before the due date, furnish a
return of his income or the income of such other person
during the previous year, in the prescribed form and
verified in the prescribed manner and setting forth such
other particulars as may be prescribed.
Explanation: In this sub-section, “due date” means(a)
where the assessee is a company, the 30
day of
November of the assessment year;
(b) where the assessee is a person, other than a
company.-
th
15
(i) in a case where the accounts of the assessee are
required under this Act or nay other law to be audited, or
where the report of any accountant is required to be
furnished under section 80HHC or Section 80HHD or in
the case of a co-operative society, the 31
st
day of October of
the assessment year:
(ii) in a case where the total income referred to in this
sub-section includes any income from business or
profession, not being a case falling under sub-clause (i),
the 31
st
day of August of the assessment year :
(iii) in any other case, the 30
th
day of June of the
assessment year.
xxx xxx xxx
xxx xxx xxx
(3) 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 (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 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 30
th
November of the assessment year. The
16
consequence of non-filing of return on time has also been
stipulated in the Act. 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. Inquiry before assessment.- (1) For the
purpose of making an assessment under this Act, the
Assessing Officer may serve on any person who has
made a return under section 139 or in whose case the
time allowed under sub- section (1) of that section for
furnishing the return has expired] a notice requiring
him, on a date to be therein specified,-
(i) where such person has not made a return within
the time allowed under sub-section (1) of section 139,
to furnish a return of his income or the income of any
other person in respect of which he is assessable
under this Act, in the prescribed form and verified in
the prescribed manner and setting forth such other
particulars as may be prescribed, or
xxx xxx xxx
xxx xxx xxx”
20. Section 148 refers to the issue of notice where income has
escaped assessment. Relevant portion of the same is also
extracted hereinbelow for ready reference:
“148. (1) Before making the assessment,
reassessment or recomputation under section 147,
the Assessing Officer shall serve on the assessee a
notice requiring him to furnish within such period,
not being less than thirty days, as may be specified
in the notice, a return of his income or the income of
any other person in respect of which he is assessable
under this Act during the previous year
corresponding to the relevant assessment year, in the
17
prescribed form and verified in the prescribed
manner and setting forth such other particulars as
may be prescribed; and the provisions of this Act
shall, so far as may be, apply accordingly as if such
return were a return required to be furnished under
section 139.
(2) The 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
the Act. Section 276CC is extracted as under:
“276CC. Failure to furnish returns of income. If
a person wilfully fails to furnish in due time the
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 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-
18
(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 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 the Constitution.
Section punishes the person who “willfully fails to furnish the
return of income in time”. The 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 the tax
payer ought to have done, knowing that to omit to do so was
wrong”. The assessee is bound to file the return under Section
139(1) of the Act on or before the due date. The outer limit is fixed
for filing of return as 31
st
August of the assessment year, over and
above, in the present case, not only return was not filed within the
due date prescribed under Section 139(1) of the Act, but also the
time prescribed under Section 142 and 148 of the Act and the
further opportunity given to file the return in the prescribed time
was also not availed of.
19
23. 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 gives some relief to genuine assesses. The proviso to
Section 276CC gives further time till the end of the assessment
year to furnish return to avoid prosecution. In other words, even
though the due date would be 31
st
August of the assessment year
as per Section 139(1) of the Act, an assessee gets further seven
months’ time to complete and file the return and such a return
though belated, may not attract prosecution of the assessee.
Similarly, the proviso in clause ii(b) to Section 276CC also provides
that if the tax payable determined by regular assessment has
reduced by advance tax paid and 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 Act.
Resultantly, the proviso under Section 276CC takes care of
genuine assesses who either file the returns belatedly but within
the end of the assessment year or those who have paid substantial
amounts of their tax dues by pre-paid taxes, from the rigor of the
prosecution under Section 276CC of the Act.
20
24. Section 276CC, it may be noted, takes in sub-section (1) of
Section 139, Section 142(1)(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 earlier. So far as the present case
is concerned, it is already noticed that the assessee had not filed
21
the return either within the time allowed under sub-section (1) to
Section 139 or within the time allowed under notices issued under
sub-section (1) to Section 142.
26. We have indicated that on failure to file the returns by the
appellants, 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 276CC
of the Act. Proviso to Section 276CC nowhere states that the
offence under Section 276CC has not been committed by the
categories of assesses 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 2(b) to the proviso, no doubt
has also committed the offence under Section 276CC, but is
exempted from prosecution since the tax falls below Rs.3,000/-.
Such an assessee may file belated return before the detection and
avail the benefit of the proviso. Proviso cannot control the main
section, it only confers some benefit to certain categories of
assesses. In short, the offence under Section 276CC is attracted
on failure to comply with the provisions of Section 139(1) or failure
22
to respond to the notice issued under Section 142 or Section 148
of the Act within the time limit specified therein.
27. We may indicate that the above reasoning has the support of
the Judgment of this Court in Prakash Nath Khanna (supra).
When we apply the above principles to the facts of the case in
hand, the contention of the learned senior counsel for the
appellant that there has not been any willful failure to file their
return cannot be accepted and on facts, offence under Section
276CC of the Act has been made out in all these appeals and the
rejection of the application for the discharge calls for no
interference by this Court.
28. We also find no basis in the contention of the learned senior
counsel for the appellant that pendency of the appellate
proceedings is a relevant factor for not initiating prosecution
proceedings under Section 276CC of the Act. Section 276CC
contemplates that an offence is committed on the non-filing of the
return and it is totally unrelated 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,
23
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 or Section
148 does not arise.
29. We are also of the view that 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
24
firm to file the return as per Section 139(1) of the Act. Appellants’
contention that since they had in their individual returns indicated
that the 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 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 278E to prove whether the assessee
has or has not committed willful default in filing the returns. Court
in a prosecution of offence, like Section 276CC 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.
31. We, therefore, find no reason to interfere with the order
passed by the High Court. The appeals, therefore, lack merits and
the same are dismissed and the Criminal Court is directed to
25
complete the trial within four months from the date of receipt of
this Judgment.
New Delhi,
January 30, 2014.
…….………………………J.
(K.S. Radhakrishnan)
…………………………….J.
(A.K. Sikri)
26
ITEM NO.1-B COURT NO.7 SECTION IIA
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
CRIMINAL APPEAL NO(s). 61 OF 2007
SASI ENTERPRISES Appellant (s)
VERSUS
ASSISTANT COMMISSIONER OF INCOME TAX Respondent(s)
WITH
CRIMINAL APPEAL NO. 62 OF 2007
CRIMINAL APPEAL NO. 63 OF 2007
CRIMINAL APPEAL NO. 64 OF 2007
Date: 30/01/2014 These Appeals were called on for pronouncement of
Judgment today.
For Appellant(s)
Mr. Pranab Kumar Mullick, Adv.
For Respondent(s)
Mr. Arijit Prasad, Adv.
Mr. Rajab Mathur, Adv.
for Mr. B.V. Balaram Das, Adv.
Hon'ble Mr. Justice K.S. Radhakrishnan pronounced
the judgment of the Bench comprising His Lordship and
Hon'ble Mr. Justice A.K. Sikri.
The appeals are dismissed.
(N.S.K. Kamesh)
Court Master
(Usha Sharma)
Court Master
(signed reportable judgment is placed on the file)
27
