DATE OF JUDGEMENT:
16.6.2022
JUDGES:
Justice G. Chandrasekharan
PARTIES:
Shri Dharampal R.Pandia
Assistant Commissioner of Income Tax
SUBJECT
The Court held that tmit is the duty of a person to disclose his income and to pay the requisite tax. Where such income is wilfully concealed, the offender would be liable for prosecution and filing return subsequent to notice under Section 148 will not be a ground to prevent prosecution.
OVERVIEW
- The petitioner had multiple sources of income such as business of chemicals, antibiotics, etc. In 2004, tax operations were conducted in his business premises. This pertained to the assessment year 1999-2000.
- It was discovered that the petitioner was not filing his returns timely and was not performing regular audit as envisaged under Section 44A-B of the Income Tax Act, 1961.
- The petitioner admitted to having concealed his income and subsequently notice was issued to him under Section 143 and penalty was imposed under Section 279(1)(C).
- Similarly violations on the part of the petitioner were ascertained for the assessment years 2000-2001, 2001-2002, 2002-2003, 2003-2004 and 2004-2005.
- The petitioner filed an appeal for quashing the proceedings relating to Assessment Year 2002-2003, 2003-2004, 2004-2005.
ARGUMENTS BY THE PETITIONER
- The petitioner contended that the return filed was accepted by the Tax Department and the assessment order was subsequently issued.
- Since the notice had already been issued and the petitioner had furnished a reply, another notice would amount to abuse of process of law.
- There were no allegations of wilful omission of disclosing income by the petitioner.
- The return was filed once the notice under Section 148 was issued. Furthermore, the petitioner was prepared to pay the requisite penalty.
- Hence, there was no cause of action against the petitioner.
ARGUMENTS BY THE RESPONDENT
- The respondents contended that the petitioner had wilfully concealed his true income. The petitioner deliberately did not file the true return.
- No limitation applies with respect to economic offences.
- On the basis of the "uncontroverted averments" specified in the complaint, there was sufficient ground for proceeding with the prosecution of the petitioner.
- Thus, the appeal of the petitioner should be dismissed.
RELEVANT PROVISIONS
Income Tax Act, 1961
- Section 148: Issue of notice where income has escaped assessment
COURT'S ANALYSIS
- The Court noted that in all the cases, the concealed income came to light only after a survey operation was conducted and notice was issued under Section 148.
- The petitioner would have not disclosed his income had there not been the survey operations. Thus, there was a specific allegation of wilful concealment of income.
- The Court held that it "is the duty of the petitioner to file return of income for every assessment year within the statutory due date".
- The Court referred to the judgment of Karnataka Income Tax Department v. D.K.Shivakumar and held that the ingredients for invoking prosecution under Section 276C(1) are
- Intention to evade penalty, interest or tax
- Wilful attempt to evade such impossible or chargeable tax, penalty or interest.
The Court noted that the instant case involved a significant amount of concealed income.
CONCLUSION
The Court thus held that there was sufficient ground for proceeding against the accused and directed that the matter must be taken to trial. It is at the trial stage that the evidence would be recorded and the guilt of the accused would be determined. The petition was therefore dismissed.
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