MEGACITY (BANGALORE) BUILDERS & DEVELOPERS V. THE INCOME TAX DEPARTMENT

CRL.P/1997/2016

AI Insights

This case involves a criminal petition filed by Megacity (Bangalore) Builders and Developers and its Managing Director against the Income Tax Department, challenging the proceedings initiated under Section 276 CC of the Income Tax Act, 1961. The proceedings were based on allegations of delayed filing of income tax returns despite a notice under Section 153 of the IT Act. The petitioners argued that the prosecution was unjust as the returns were filed, and assessments were made, thus the delay should not attract criminal proceedings. The court agreed with this perspective, leading to the quashing of the proceedings.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 755345 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 04-01-2017
• Assessment Year: misc
• Laws Referred To: Code of Criminal Procedure, 1973, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALAGI
• Assessee Lawyers: KIRAN JAVALI
• Keywords: Delayed Return; Economic offences; Income Tax; Quash Proceedings; Malafide exercise
• Section: 153; 200; 279; 482; 276 CC

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 04TH DAY OF JANUARY 2017 BEFORE THE HON’BLE MR. JUSTICE ANAND BYRAREDDY CRIMINAL PETITION No.1997 OF 2016 BETWEEN: 1. Megacity (Bangalore) Builders and Developers, No.120, Mega Tower, K.H.Road, Bangalore – 560 027. Represented by its Director- Sri. C.P.Gangadhareshwara. 2. Shri C.P.Yogeshwara, Managing Director, Megacity (Bangalore) Builders and Developers, Son of Puttamadegowda, Aged 52 years, No.367, 1st “E” Cross, 7th Block, Banashankari 3rd State, Bangalore. …PETITIONERS (By Shri Kiran S. Javali, Advocate) 2 AND: The Income Tax Department, Assistant Commissioner of Income Tax, Central Circle 1(4), C.R.Buildings, Bangalore – 560 001. By Dr. Narendra Kumar Naik. …RESPONDENT (By Shri Jeevan Neeralagi, Advocate) ***** This Criminal Petition filed under Section 482 code of Criminal Procedure, 1973, praying to quash the entire proceedings in C.C.No.51/2012 on the file of the Special Court (Economic Offences), Bangalore. This Criminal Petition coming on for Admission this day, the court made the following: O R D E R The present petition is filed questioning the correctness of the order dated 27.02.2012 in C.C.No.51/2012 passed by the Special Court (Economic Offences), Bangalore, taking cognizance of offences alleged. 2. The complaint is filed under Section 200 of the Code of Criminal Procedure, 1973, after obtaining prior sanction 3 from the Commissioner of Income Tax in accordance with the provisions of Section 279 of the Income Tax Act, 1961 (hereinafter referred to as ‘the IT Act’, for brevity) alleging violation of Section 276 CC of the IT Act by the petitioners. As a result, a notice came to be issued to the petitioners under Section 153 of the IT Act calling upon them to file their return and in spite of the notice, the accused had not filed the return in response thereto. The Commissioner of Income Tax while having noticed that the return of income tax had been filed, but belatedly, had proceeded to express that notwithstanding such filing of return, since there has been deliberate delay on the part of the assessee in doing so in order to prevent the Department from proceeding with the assessment, the same therefore was a malafide exercise and has ignored the same in holding that sanction could be accorded. 3. In this view of the matter, having regard to the tenor of Section 276 CC of the IT Act which contemplates that if a person has failed to furnish the return of income in time, it is 4 then that the rigour of the section would be attracted. For, if the return of income had been filed belatedly or otherwise, the section cannot apply at all and therefore, the prosecution ranged against the petitioner is vitiated. It is also to be noticed that the section certainly reads that if the returns are not filed in due time, the rigour would be attracted. But, the fact remains that in the present case on hand, the returns are accepted and assessments are carried out, which would not be the same as holding that the returns filed belatedly have been held to have been nonest and therefore, the authorities have proceeded thereupon. This would make a difference to the situation and therefore, the contention that the section which prescribes that if the assessee fails to file the return within the time due, the rigour would be attracted, would stand diluted by virtue of the returns having been accepted and assessments having been carried out therein. 4. Consequently, the prosecution initiated against the petitioners in terms of Section 276 CC of the IT Act cannot be 5 sustained. The entire proceedings in C.C.51/2012 are quashed. The petition is allowed in terms as above. Sd/- JUDGE KS "