Genuine Tax Payer Who Paid Substantial Amounts Of Dues By Prepaid Taxes Cannot Be Prosecuted For Non-Filing Of ITR: Madras HC
The Madras High Court observed that genuine tax payers who have paid substantial amounts of their tax dues by prepaid taxes cannot be prosecuted for offence under Section 276CC of the Income Tax Act for non-filing of Income Tax returns.
The Court observed thus while quashing the criminal proceedings initiated against a person under Section 276CC of Income Tax Act, 1961 for willful failure to file income-tax return.
Referring to the proviso (ii)(b) to Section 276CC, A Single Judge Bench of Justice G.K. Ilanthiraiyan observed that “proviso takes care of genuine assessees 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 prepaid taxes from the rigor of the prosecution under Section 276CC”.
Advocate P. Ramesh Kumar appeared for the Assessee while the Revenue was represented by Advocate L. Murali Krishnan.
The brief facts of the case were that the Revenue Department filed a complaint under Section 276CC for non-filing of income-tax return. In reply, the assessee contended that though he has filed return of income belatedly, since after receipt of show cause notice, the tax payable by him does not exceed a sum of Rs.3,000 rather there was a refund of Rs.460. Accordingly, the assessee claimed that no prosecution can be made under Section 276CC. The assessee further argued that Revenue Department had initiated prosecution even before completion of assessment which was premature. The Revenue Department opposed such claim and submitted that the assessee filed return after issuance of show cause notice under Section 276CC and thus, it cannot claim benefit under proviso (ii)(b) to Section 276CC.
After considering the submission, the Bench found that the asssessee had prepaid tax and being eligible for a refund, the proviso comes for rescue of the assessee from the rigor of the prosecution under Section 276CC.
Accordingly, the Bench observed that such an assessee shall not be prosecuted for not furnishing the return under Section 139(1).
Hence, while concluding that since the tax payable after credit of prepaid taxes is less than the prescribed sum, the High Court held that the prosecution under Section 276CC is not sustainable.
Cause Title: Manav Menon v. The Deputy Commissioner of Income Tax
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