IN THE HIGH COURT OF JUDICATURE AT PATNA Cr. Misc. No.43543 of 2008 ***** Sharad Keshri son of Sri Satish Kumar Keshari, C/o M/s Hira Panna Jewellers, opposite Maurya Lok Complex, P.S.-Kotwali, at present residing at 154, Patliputra Colony, P.S.-Patliputra, District- Patna. …. …. Petitioner Versus 1. The Union of India. 2. Deputy Commissioner of Income Tax, Central Circle-1, Patna. …. …. Opposite parties ----------- 3. 13.5.2009. Petitioner is seeking quashing of the order taking cognizance dated 02.07.2007 passed in Complaint Case No.315(C) of 2007 by the Special Judge, Economic Offence, Patna under Section 276CC of the Income Tax Act, 1961, on a complaint lodged by the Income Tax Department. The basic facts are that a search and seizure operation was carried out by the Income Tax Department against the assessee on 15.12.2004 at the residential and business premises. The raiding party seized books of accounts and other documents and the follow-up action was taken by the Department. To enable the assessee to file the return under Section 153A of the Income Tax Act, 1961 (hereinafter to be referred to as „the Act‟), a petition was filed before the Deputy Director of Income Tax (Investigation), Patna on 15.2.2005 for return of the documents or at least supply the copies thereof. On 17.2.2005 a formal notice under Section 153A came to be issued directing filing of the returns of income for the assessment years indicated therein. It is stated in the petition and also argued that in absence of the seized materials, books of accounts etc. it was not possible to file the - 2 - return and, therefore, the demands came to be made for supply of copies. It is not in dispute that copies of documents demanded have come to be issued to the assessee from time to time which is stretched between April, 2005 till October, 2005. The said fact is also reflected in Annexure-A to the counter affidavit filed on behalf of the Revenue. It is urged that steps thereafter have been taken, the return made ready and filed on 7th March, 2006. A day prior to the filing of the returns, a letter dated 6th March, 2006 contained in Annexure-7 also came to be issued to the assessee. The subject matter of the letter reads, „show-cause for launching prosecution u/s 276CC of the Income-tax Act, 1961‟. The letter is reproduced hereinbelow because it has significance for the decision of the matter: - “Notice u/s 153A of the Income-tax Act, 1961 was issued to you for filing the return of income for the assessment years 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05 on 17.2.05. On your request copies of the seized documents have also been handed over to you long time back. A reminder was also issued to you on 27.12.2005 to file return of income immediately without any delay. However, till date you have not filed the return of income for block period. You are directed to appear either personally or through your authorized representative on 13.3.2006 at 11:AM and show cause why the prosecution u/s 276CC of the Income-tax Act, 1961 should not be launched against you. You are further directed to file the return of income for the block period immediately without any delay.” Learned counsel for the assessee thereafter submits that despite compliance of the direction of the Department, in terms of the letter dated 6th March, 2006 an uncalled for step was taken by the Revenue as they have filed a complaint case for breach of Section 276CC. Cognizance has been taken and the assessee has been asked to appear to - 3 - face trial. In this background the application has come to be filed under Section 482 of the Code of Criminal Procedure challenging the said order of cognizance. Besides the factual aspect of the matter learned counsel for the petitioner submits that the prosecution under Section 276CC can be sustained provided the ingredient of offence is made out. Section 276CC is reproduced hereinbelow for ready reference: - “276CC. If a person willfully fails to furnish in due time. [the return of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or by notice given under sub-section (2) of the said section or section 115WH or] 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 [or section 153A], 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 fringe benefits under sub-section (1) of section 115WD or] 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- (a) the return is furnished by him before the expiry of the assessment year; or - 4 - (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.]” In the light of the provisions contained in Section 276 CC it is submitted by learned counsel for the petitioner that there is neither a “willful” act on the part of the assessee nor is there a “failure” on his part to file the return in “due” time. The facts according to him speak for themselves. He submits that the department has taken its own sweet time in furnishing the documents and since filing of a return is a serious business, which entails many other liabilities under the Act, an assessee has to be doubly careful about the declaration. Since last of the documents came to be furnished by the Department in October, 2005 coupled with the fact that on 6th March, 2006, the Department itself gave time to the assessee to file the return „immediately‟ and also fixed 13th March, 2006 as the date for personal appearance to show cause as to why prosecution should not be initiated, there is no willful default as the assessee complied with the direction, the very next date, by filing the return. Past notices directing the assessee to file the returns for the period in question merged in the notice dated 6th March, 2006. The time was extended by the Department itself to comply with the earlier directions. In the light of the above, the question raised, is whether there is any element of a willful default on the part of the assessee or failure to file the return within the time fixed by the Department? In addition to this learned counsel for the assessee also - 5 - relies on an additional submission based on a decision rendered by the Calcutta High Court in the case of Gopalji Shaw v. I.T.O. (Cal.), (1988) 173 ITR 554, for the proposition that criminal prosecution for offences under Special Statute ought not to be initiated as a matter of course and if under the Statute itself the Assessing Officer has imposed interest and charges thereto, therefore, no case for prosecution is made out. The relevant part of the judgment is reproduced hereinbelow for ready reference: “A criminal prosecution for an offence under a special statute must not be initiated as a matter of course where the prosecution would involve intricate questions of interpretation of the Income-tax Act. The Department should not rush with the prosecution without any determination by the Income-tax Officer of the liability of the accused-assessee which is sought to be made the basis for prosecution. In this case, though penalty proceeding under Section 271(1)(a) was initiated against the petitioner for delay in filing the return, no order has been passed. In other words, the Income-tax Officer did not find any reason to penalize the petitioner for delay in filing the return. In Dooars Transport‟s case (1986) 162 ITR 383, this court held that once interest under section 139(8) of the Act has been charged up to the date of filing of the return, it must be presumed that the time to file a return was in fact extended. A proceeding under the Income-tax Act for imposition of penalty is quasi-criminal in nature. If the quasi-criminal proceeding, that is to say, the proceeding for imposition of penalty cannot be sustained when the Income-tax Officer, while making the assessment, charges interest under section 139(8) of the Act, on a parity of reasoning, no criminal prosecution either can be launched in such a case.” Learned counsel for the petitioner submits that demand notices have come to be issued on 29.12.2006 and that also has a reflection on prosecution, which is uncalled for, in light of the ratio of Gopalji Shaw case (supra). - 6 - Learned counsel representing the Revenue submits that it is a gross case of indifference on the part of the assessee and he has deliberately delayed filing of the returns because the first notice in this regard came to be issued on 17.2.2005 under Section 153A. The time given under the statute is 30 days and the assessee chose not to file the returns for a long time. He has filed the return only on 7th March, 2006 which on the face of it is delayed. The only answer for such conduct of the assessee is prosecution under Section 276CC of the Income Tax Act. Learned counsel representing the Revenue further submits that yet another reminder was issued on 27.12.2005 and many oral demands had also been made upon the assessee which was ignored all the while. This is the circumstance under which the Department was left with no option but to launch prosecution in terms of the statute. Learned counsel also relies on a decision in the case of A.Y.Prabhakar (Kartha) HUF v. Assistant Commissioner of Income Tax, 262 ITR 287 (Mad.) for the proposition that whether a delay is willful or not is a matter to be gone into by the trial Court and the same cannot be tested or tried or commented upon in an application under Section 482 of the Code of Criminal Procedure. Prosecution of an assessee under the act of criminal kind has to be within the parameters of law or the provision enacted by the legislators. The conduct of the assessee will have to be seen in the light and ingredients of the provisions of Section 276 CC, whether there is a willful, deliberate delay in filing of the returns on his part. The stand taken by the Revenue for filing of the return within 30 days being - 7 - mandatory is not borne out from the fact that they themselves have extended the time on many a occasions either orally or in writing, last of them being on 6th March, 2006. Merely because the assessee pushed the matter to the brink, it does not mean that he has crossed the line for which he has to be prosecuted. It is not denied that the letter dated 6th March, 2006 is a letter which is composite in nature, demanding filing of the return by the assessee as also a show cause for launching of prosecution and the assessee immediately thereafter complied the dictates or direction of the Revenue on 7th March, 2006. In light of above it cannot be said that there is deliberate delay in filing the return and the ingredients are available for prosecution under Section 276CC. The petitioner has made out a case for interference. The order taking cognizance 02.07.2007 passed in Complaint Case No.315(C) of 2007 pending in the Court of Special Judge, Economic Offence, Patna stands quashed. The application is allowed. Pawan/- (Ajay Kumar Tripathi, J.)