The Karnataka High Court observed that merely for the reason that the petitioner has paid the penalty levied by the Competent Authority for the delay in filing of the returns, the same does not exonerate him from being prosecuted as provided under Chapter 22 of the Income Tax Act 1961.

The petitions before the High Court were filed under section 482 of Cr.P.C by the petitioner-assessee assailing the impugned criminal proceedings registered against the petitioner for an offence punishable under section 276CC of the Income Tax Act.

The Single Bench of Justice S.Vishwajith Shetty explained, “From a reading of Section 278E of the Act, it is apparent that there is a presumption available as against the accused and the Court before which proceedings are initiated for offence punishable under section 276CC is required to raise a presumption against the accused and it is for the accused assessee to successfully rebut the said presumption by producing necessary material before the said court, failing which he shall be liable to be punished.”

Advocate Kadloor Satyanarayanacharya represented the Petitioner while Advocate M. Thirumalesh represented the Respondent.

Factual Background

It was alleged that the petitioner had willfully failed to submit his income tax returns in time for the Assessment Years 2012- 13 to 2015-16 and thereby committed the alleged offence. The Magistrate, having taken cognizance of the alleged offence, had issued summons to the petitioner accused. Being aggrieved by the same, the petitioner approached the High Court.

Reasoning

The Bench noted the undisputed fact that there was a delay on the part of the petitioner assessee in submitting his income tax returns for the assessment years 2012-13 to 2015-16 and penalty was levied on the petitioner which was paid by him. It was further noted that the proviso to Section 276 CC envisages the filing of even belated return before detection of discovery of the failure and issuance of notice under Section 142 or Section 148 of the Act.

Referring to Chapters 21 & 22 of the Act, the Bench said, “A reading of the aforesaid two chapters would make it very clear that delay in filing of the income tax returns would not only result in payment of penalty, but it also results in prosecution as provided under Chapter 22 of the Act. Therefore, merely for the reason that petitioner has paid the penalty levied by the Competent Authority for the delay in filing of the returns, the same does not exonerate the petitioner from being prosecuted as provided under Chapter 22 of the Act of 1961.”

Reference was also made to the judgment of the Delhi High Court in V.P.Punj vs. Assistant Commissioner of Income Tax and Another reported in (2002) wherein it has been observed that prosecution for offence punishable under section 276CC of the Act of 1961 can be initiated against an accused for willful and deliberate delay in filing the returns and since there is a presumption available under section 278E of the act with regard to the culpable mental status of the accused, it is for the accused to rebut the said presumption in accordance with law.

“Under the circumstances, the explanation sought to be offered on behalf of the petitioner before this Court cannot be accepted and it is for the petitioner to lead evidence and produce necessary material before the learned Magistrate in support of his defence and rebutt the presumption available against him under Section 278E of the Act”, the Bench held. Thus, the Bench dismissed the Petition while granting liberty to the petitioner to raise all such grounds before the Magistrate in support of his defence.

Cause Title: Rajkumar Agarwal v. Income Tax Department (Neutral Citation: 2025:KHC-K:238)

Appearance:

Petitioner: Advocate Kadloor Satyanarayanacharya

Respondent: Advocate M. Thirumalesh

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