IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:07.07.2010 CORAM THE HON'BLE MR.JUSTICE T.SUDANTHIRAM CRL.R.C.Nos.578 to 580 of 2010 and M.P.Nos.1 to 1 of 2010 R.Inbavalli .. Petitioner in all Crl.R.Cs./Accused Vs. Income Tax Officer, Business Ward X(1), Chennai – 600 006. .. Respondent in all Crl.R.Cs./Complainant Prayer in all Crl.R.Cs.:- Petitions filed under Section 397 r/w. 401 of Cr.P.C, praying to set aside the order dated 04.03.2010 passed in Crl.M.P.Nos.1769, 1770 and 1768 of 2008 in E.O.C.C.Nos.95, 96 and 94 of 2005 respectively by the learned Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai, calling for the records of the entire case and discharge the petitioner/accused from the above cases. In all the three cases For Petitioner : Mr.C.R.Sathindran For Respondent : Mr.K.Ramasamy, Senior Special Public Prosecutor for I.T. Cases. COMMON ORDER The revision petitioner in all these three cases is one and the same. A complaint was filed against the petitioner in these three cases for not filing the income tax returns before the statutory due date as per Section 139(1) of the Income Tax Act (hereinafter referred to as the Act) and thereby liable under Section 276CC of the Act, 1961. 2. In E.O.C.C.No.95 of 2005, a complaint was filed for not filing the returns before the statutory due date i.e., on 31.08.1996 but filed only on 24.03.1999 with a delay of 2 years and 7 months; in E.O.C.C.No.96 of 2005, a complaint was filed for not filing the returns before the statutory due date i.e., on 31.10.1997 but filed only on 26.03.2001 with a delay of 41 months and in E.O.C.C.No.94 of 2005, a complaint was filed for not filing the returns before the statutory due date i.e., on 30.11.1998 but filed only on 26.03.2001 with a delay of 28 months. https://hcservices.ecourts.gov.in/hcservices/ 3. On the side of the prosecution, three witnesses were examined as P.Ws.1 to 3 and thereafter the petitioner had filed a petition before the learned Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai, under Section 245 of Cr.P.C. in all the three cases, seeking discharge and the said petitions were dismissed. Aggrieved by the order of the learned Magistrate, the petitioner has preferred these three criminal revision cases. 4. The learned counsel for the petitioner submitted that in all theses three cases, subsequently a notice was issued to the petitioner under Section 148 of the Act granting 30 days time to file the returns. In the case in E.O.C.C.No.94 of 2005, a notice was given under Section 148 of the Act on 23.03.1999 and the petitioner filed the returns on 26.03.1999. Similarly, in other two cases, the returns were filed within the time, after receiving the notice under Section 148 of the Act. Once the notice is given under Section 148 of the Act, the time for filing the returns is extended and as such, there is no violation of Section 139 of the Act and no prosecution could have been initiated against the petitioner. The learned counsel for the petitioner also relied on a decision reported in 2001 247 ITR 528 Madras (K.Inbasagaran Vs. Assistant Commissioner of Income Tax) and also another decision reported in 2004 270 ITR 312 Punjab and Hariana (Sudarshan Jain Vs. Assistant Commissioner). 5. The learned counsel for the petitioner has further submitted that in the complaint filed by the respondent, it is not averred as to how the petitioner committed wilful default in filing the returns and even P.Ws.1 to 3 have not let in any evidence that there was a wilful default on the part of the petitioner in not filing the income tax returns within the due date. 6. Per contra, the learned Senior Special Public Prosecutor for IT Cases submitted that 276CC of the Act is attracted if there is a default in filing the returns within the statutory due date as per Section 139(1) or if there is default as per Section 142(1) or if there is default even after issuing notice under Section 148 of the Act. The petitioner would not be exonerated from the offence committed by him for not filing the income tax returns within the statutory period prescribed as per Section 139(1) of the Act, by filing returns subsequently beyond the statutory due date. There are separate ingrediants in Section 276(1)CC for contravention of Sections 139(1) or 142(1) or 148 of the Act. 7. The learned Senior Special Public Prosecutor also relied on a decision of the Hon'ble Supreme Court reported in Income Tax Reports Volume 266 page 1 (Prakash Nath Khanna and another Vs. Commissioner of Income Tax and another). 8. This Court has considered the submissions made by the learned counsel on either side and perused the records. 9. The fact that the petitioner has not filed the income tax returns before the statutory due date as per Section 139 of the Act https://hcservices.ecourts.gov.in/hcservices/ is not denied. It appears that even after the notice had been given under Section 142 of the Act, the returns were not filed but only after issuance of the notice under Section 148 of the Act, the returns were filed by the petitioner. 10. The question for consideration is that whether by issuing a notice under Section 148 of the Act to the petitioner and thereafter by filing the returns within the time prescribed as per the said notice, he is exonerated from the prosecution under Section 276CC of the Act for not filing the returns within the statutory due date as per Section 139(1) of the Act? 11. The decisions cited by the learned counsel for the petitioner are not on the points raised by the learned counsel for the petitioner. In the decision reported in 2001 247 ITR 528 Madras (K.Inbasagaran Vs. Assistant Commissioner of Income Tax), the accused was only acquitted from the offence under Section 276CC on the ground that there was a misjoinder of charges and there was defect in framing of charge in violation of Sections 218 and 219 of Cr.P.C. As per the decision reported in 2004 270 ITR 312 Punjab and Hariana (Sudarshan Jain Vs. Assistant Commissioner), the proceedings against the accused were quashed for the reason that the penalties imposed on the accused under Section 271(1)(c) of the Act were struck down by the Tribunal and as such, the criminal prosecution would be only an idle and empty formality. 12. Section 276CC of the Income Tax Act reads as follows:- "If a person wilfully 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) https://hcservices.ecourts.gov.in/hcservices/ 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 (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.]" 13. The Hon'ble Supreme Court in the decision reported in Income Tax Reports Volume 266 page 1 (Prakash Nath Khanna and another Vs. Commissioner of Income Tax and another at page No.10 has held as follows:- "The heading of the section or the marginal note may be relied upon to clear any doubt or ambiguity in the interpretation of the provision and to discern the legislative intent. In CIT v. Ahmedbhai Umarbhai and Co. AIR 1950 SC 134:(1950) 18 ITR 472, after referring to the view expressed by Lord Macnaghten in Balraj Kunwar v. Jagatpal Singh (1904) I.L.R. 26 All 393(PC), it was held that marginal notes in an Indian statute, as in an Act of Parliament cannot be referred to for the purpose of construing the statute. Similar view was expressed in Board of Muslim Wakfs, Rajasthan v. Radha Kishan (1979)2 SCC 468 and Kalawatibai v. Soiryabai AIR 1991 SC 1581. Marginal note certainly cannot control the meaning of the body of the section if the language employed there is clear. (See Smt. Nandini Satpathy v. P.L. Dani, AIR 1978 SC 1025). In the present case as noted above, the provisions of Section 276-CC are in clear terms. There is no scope for trying to clear any doubt or ambiguity as urged by learned counsel for the appellants. Interpretation sought to be put on Section 276-CC to the effect that if a return is filed under sub-section (4) of Section 139 it means that the requirements of sub-section (1) of Section 139 (are satisfied) cannot be accepted for more reasons than one. One of the significant terms used in Section 276-CC is “in due time”. The time within which the return is to be furnished is indicated only in sub-section (1) of Section 139 and not in sub-section (4) of Section 139. That being so, even if a return is filed in terms of sub- section (4) of Section 139 that would not dilute the infraction in not furnishing the return in due time as prescribed under sub-section (1) of Section 139. Otherwise, the use of the expression “in due time” would https://hcservices.ecourts.gov.in/hcservices/ lose its relevance and it cannot be said that the said expression was used without any purpose. Before substitution of the expression “clause (i) of sub-section (1) of Section 142” by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989, the expression used was “sub-section (2) of Section 139”. At the relevant point of time the assessing officer was empowered to issue a notice requiring furnishing of a return within the time indicated therein. That means the infractions which are covered by Section 276-CC relate to non-furnishing of return within the time in terms of sub- section (1) or indicated in the notice given under sub- section (2) of Section 139. There is no condonation of the said infraction, even if a return is filed in terms of sub-section (4). Accepting such a plea would mean that a person who has not filed a return within the due time as prescribed under sub-section (1) or (2) of Section 139 would get benefit by filing the return under Section 139 (4) much later. This cannot certainly be the legislative intent. Another plea which was urged with some amount of vehemence was that the provisions of Section 276-CC are applicable only when there is discovery of the failure regarding evasion of tax. It was submitted that since the return under sub-section (4) of Section 139 was filed before the discovery of any evasion, the provision has no application. The case at hand cannot be covered by the expression “in any other case”. This argument though attractive has no substance. The provision consists of two parts. First relates to the infractions warranting penal consequences and the second, measure of punishment. The second part in turn envisages two situations. The first situation is where there is discovery of the failure involving the evasion of tax of a particular amount. For the said infraction stringent penal consequences have been provided. Second situation covers all cases except the first situation elaborated above. The term of imprisonment is higher when the amount of tax which would have been evaded but for the discovery of the failure to furnish the return exceeds one hundred thousand rupees. If the plea of the appellants is accepted, it would mean that in a given case where there is infraction and where a return has not been furnished in terms of sub-section (1) of Section 139 or even in response to a notice issued in terms of sub-section (2), the consequences flowing from non-furnishing of return would get obliterated. At the relevant point of time Section 139(4)(a) permitted filing of return where return has not been filed within sub-section (1) and sub-section (2). The time-limit was provided in clause (b). Section 276-CC refers to “due time” in relation to sub-sections https://hcservices.ecourts.gov.in/hcservices/ (1) and (2) of Section 139 and not to sub-section (4). Had the legislature intended to cover sub-section (4) also, use of the expression “Section 139” alone would have sufficed. It cannot be said that the legislature without any purpose or intent specified only sub-sections (1) and (2) and the conspicuous omission of sub-section (4) has no meaning or purpose behind it. Sub-section (4) of Section 139 cannot by any stretch of imagination control the operation of sub-section (1) wherein a fixed period for furnishing the return is stipulated. The mere fact that for purposes of assessment and carrying forward and to set off losses it is treated as one filed within sub-section (1) or (2) cannot be pressed into service to claim it to be actually one such, though it is factually and really not by extending it beyond its legitimate purpose." 14. In view of the ratio laid down by the Hon'ble Supreme Court, the contention raised by the learned counsel for the petitioner is only to be rejected. It was contended by the learned counsel for the petitioner that there is no mens rea on the part of the petitioner and the prosecution has not let in any evidence for willful default. 15. Section 278E of the Income Tax Act reads as follows:- "278E. Presumption as to culpable mental state.- (1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation.- In this sub-section, "culpable mental state" includes intention, motive or knowledge of a fact or belief in, or reason to believe, a fact. (2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability." As there is a statutory presumption prescribed, the burden is on the petitioner to show that there was no wilful default. The Court has to presume the existence of culpable mental state and absence of such mental state can be pleaded by an accused as a defence and it is for the trial Court to decide the said issue at the stage of conclusion of trial. https://hcservices.ecourts.gov.in/hcservices/ 16. This Court does not find any infirmity in the order passed by the learned Magistrate dismissing the petitions filed by the petitioner. Therefore, these Criminal Revisions are dismissed. Consequently, the connected miscellaneous petitions are also dismissed. Sd/- Asst. Registrar //true copy// Sub Asst.Registrar jrl To 1. The Additional Chief Metropolitan Magistrate, E.O.I, Egmore, Chennai. 2. The Income Tax Officer, Business Ward X(1), Chennai – 600 006. 3. The Special Public Prosecutor for I.T. Cases, High Court, Madras. 1 cc to Mr.C.R.Sathindran, Advocate, Sr.No.48731 CRL.R.C.Nos.578 to 580 of 2010 RS {CO} TP/22.7.2010. https://hcservices.ecourts.gov.in/hcservices/