SADA KESAVA REDDY V. THE DY COMMISSIONER INCOME TAX REP BY SPL P.P FOR INCOME TAX

CRLRC/2922/2017

AI Insights

The case involves Sada Kesava Reddy, the petitioner-accused, who was charged under Sections 276CC and 278E of the Income Tax Act, 1961, for failing to file his income tax return for the assessment year 2013-14 within the prescribed time. The petitioner contested the charges, arguing that the prosecution was premature and that he had filed his returns, which should exempt him from prosecution under the specific proviso of Section 276CC. The trial court dismissed his discharge petition, leading to this revision case. The High Court's decision relied on the interpretation of the Income Tax Act and previous judgments, affirming that the petitioner had indeed committed an offence by not filing the return in time and that the prosecution was justified.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 753148 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 31-10-2022
• Assessment Year: misc
• Other Referred Cases: Prakash Nath Khanna and Another v. Commissioner of Income Tax and Another, K.T.M.S. Mohd. and another v. Union of India, Sasi Enterprises v. Assistant Commissioner of Income Tax, Rameshwar Prasad Sunderlal and Others v. Union of India (UOI)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Assessee Lawyers: CH KIRAN
• Keywords: Criminal Revision; Economic offences; Income Tax; Non-filing of returns
• Section: 139(1); 276CC; 278E

Judgement Text

"IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD \" MONDAY, THE THIRTY FIRST DAY OF OCTOBER TWO THOUSAND AND TWENTYTWO PRESENT THE HONOURABLE DR. JUSTICE G.RADHA RANI CRIMINAL REVISION CASE NO: 2922 OF 2017 Between: Sada Kesava Reddy, S/o. Late S. Venkat Reddy, Occ: Business, No. 2-4-51152, Chandulal Bowli, Kukmmaragutta, Tadbund, Secunderabad And ...Petitioner/Accused The Dy Commissioner lncome Tax, Circle - 10 (1), l.T. Towers, Ac guards, Masab Tank, Hyderabad., Rep. by the Special Public Prosecutor for lncome Tax, Hyderabad ...RespondenUCom plainant Revision filed under Section 397 and 401 of Cr.P.C., aggrieved by the order made in Criminal Miscellaneous Petition no. 441 of 2017 in C.C. No. 210 of 2016, dated 26.10.2017, on the file of the Special Judge for Economic Offences, Hyderabad. I.A NO: 10F2 017 CRLRCMP. NO:4757 OF 20171 Petition under Section 482 of Cr.P.C., praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay all further proceedings including the appearance of the Petitioner in C.C. No. 210 of 2016 on the file of Special Judge for Economic Offences, Hyderabad. For the Petitioner : Sri Ch. Pushyam Kiran, Advocate For the Respondent: Sri B. Narasimha Sarma, The Court made the following: ORDER 1 DT.GRR, I CRLRC 2922 2017 THI II()N'BLE DR. JUSTICE G. RADH,.I. R1 I CR NTINAL REVISION CASE No.2921t-)F 2t)11 ORDER: l. This (lrin'ri ral Revision Case is filed by the trre:jt ion,:r-accused under Sections 397 and 401 of Cr.P.C. for revision of the Orler dated 26.10.2017 passed in Crl.M.P No.44l of 2017 in C.C.No.210 of 201ri,rn the file of Special Judge for Econon ic Offences Wing cum VIII Additional Iv{etr,cpolitan Sessions Judge, Flydcrabar in dismissing the discharge petiti,orr Frled by him under Section245(l)C.P.C 2. l-he case oi the revision petitioner was that the rt:s rondt:nt filed a private complaint against nim for prosecution for the offence urid:r Ser:tion 27 6CC read with Section 278I c,f the Income Tax Act, 1961 for norr-iling of retums withrn time for the asses rrrent year 2013-14 as per Section 139 (l) of the Income Tax Act, 1961. 'fhe re titioner-accused derived rental incc,nr,: frcm the properties let-out to thc var ous tenants. The said fact was shcurr in the statement of income filed alon, , rvith returns of income. Ex.D1 woulc stolr the name of the tenant and total re rt received for the period 2012-1?. At ht: tirne of payment of rent, the tenant h d to deduct the tax and remit the sa-nLr: to the Government. The petitioner-acr used had shown service tax retLtrns c:rrtairting Service Tax details. Z . D..GRR, J CRLRC 2922 2017 2.1. The complainant was examined as PWI and he stated in his examination in chief that as per the information available, the accused had deposited cash of Rs.20,00,000/- in savings bank account and reported a tumover of Rs.I,22,27 ,37 6/- in its service tax retums. The receipt of interest from his fixed deposits was Rs.2,88,864/- and income from rents was Rs.58,24,2941-. The Department was in possession of information about Service Tax Retums but not filed any document to show that the petitioner-accused reported a turnover of Rs.1,22,27,3761-. The complainant had not brought any material on record giving details of tumover and nature of turnover to prove that the accused had any income other than the income which was retumed in the Retura of Income and the Service Tax Returns filed by the accused. PWl admitted in his cross- examination, when he was shown the Service Tax Returns filed by the accused online before the Service Tax Department, that; \"The record shown to him was containing service tax returns from 01.04.2012 to 31.03.2013 in three spells fo, Rs.60,70,440/- in the gross amount where the tax payable was Rs.7,55,780/- and Service Tax Returns for the financial year 2012-13 receipt for Central Service Tax payment said to be made on line were not bnown to htm as the same were not available in his ffice.\" 2.2. PWl also admitted that as per the returns filed by the accused on 20.06.2016, the petitioner-accused claimed for refund of Rs.6,370l-. The copy of income tax retums filed by the accused ot20.06.2016 was marked as Ex.Dl. I Dr.GRR, J cRLRC_2922_2017 He also admitte, i that even if an assessee failed :.o llle his retums, the department could assess his income and could pass an ())(-pafte order for his income. PW I als r admitted that the sanction order had b,r:.en issued not taking into account the r, ttrm filed by the accused wherein as l)€r i.he retum of income, there was a refun, t of Rs.6,370/- and hence proviso (b) c1'Section 276-CC was squarely applicat le and the accused was not liable .o be prosecuted and contended that thr c'omplainant failed to ascertain the inttrtmation before filing the complaint an I mechanically issued sanction ordcr l:lx.I)3 and hled the complaint. 2.3. He lirrther contended that the procedure for ser\"zice of notice under section 282 of ln' one Tax Act was not followed and it <:r.rulcl not be said that the seruice of noti, e was a valid service and prayed for htis clischarge. 3. The ::esponr ent/complainant filed counter contendirri:l that the petitioner- accused had not iled his retum of income for the assr:l;,;ment year 2013-14 within the tirne, though he had the following income/receipts/in zestments/expenses during the relevarLt pr:rio,1: A1 b) c) d) Deposit of Cash in Savings Bank ]ls.20,00,000/- Turnover from services reported in Sertice Tax returns Rs.I ,22,27,376/- lnterest as per TDS return - Rs.2,88,864/. l?eceipt ofrent as per TDS return- Rs.58,24,294/- 4 OLGRR, ! cRLRC_2922_2017 3.1. He further contended that sub-Section (1) of Section 139 of the Act, would provide inter-alia that every person being a company or a firm; or being a person other than a company or a frrm, if his total income exceeded the maximum amount which was not chargeable to the income tax, should on or before the due daterfumish a retum of income in the prescribed form. In terms of Explanation 2 to sub-section (l) of Section 139 of the Act, the due date would mean, where an assessee was an individual or HUF, generally the 3lst day of July of the Assessment Year was the due date. The maximum amount which was not chargeable to income tax during the period relevant to Assessment Year 2013-14 was Rs.2,00,000/-. Accordingly, the accused was required to file the retum of income for the Assessment Year 2013-14 on or before 3lst July, 2013. The Accused willfully failed to file the return of income in due time under sub-section (1) of Section 139 of the Act and thereby committed an offence punishable under Section 276CC of the Act. Further Section 278E of the Act would state that culpable mental state on the part of the accused should be presumed for any offence committed under the Act. A show cause notice dated, 02.06.2016 was issued and served on the accused on 08.06.2016. Having received the show cause notice, the accused neither appeared on the date of hearing nor given any written submissions to the show cause notice for default of non-filing of his return of income for the Assessment Year 2013-14. ;>- 5 Dr.GRR, J CRLRC 2922 2017 3.2. He fufther conlended that as per the provisions un(ier Section 139(a) of the Income 'fax , r.ct, 1961, the assessee should have f.lerl his retum of income on or before 31.(1.2015 for the relevant Assessment )ltar 20 13-14. However, the assessee had rot filed his retum of income either ott tr belbre 3 1 .07.201 3 as prescribed under liection 139(1) of the Income Tar 1 ct or on or before 31.03.2015 as pr 'scribed under Section 139(4) of the Inr:'lrne Tax Act' but filed only on 20.06.21 15. Hence, the return of income filt rl by the assessee was invalid and couk rLot be acted upon and any claim o1'the accused for refund or brought-forrvard iosses had to be ignored. Hence, the t(,rtl.ention of the accused that the retum of income filed Sould be assessed by th,: I.rriscictional Assessing Officer and thr same was not brought to the noltce of the Principal Comnrissioner r. ar; ttot tenable as the satne was filt:c lreyond the due dates including the cx.e.rded period. He denied that the sart,:t.ion order was issued mechanically. t e further contended that, the notice rvi.t; served on the wife of the accuseC by .he Notice Server of the Department who was authorized to serve the notice zLncl the same was duly entered in t]rt r:oti,:e service register. Hence, the setvi re of notice was indeed a valid service it'r per the provisions of the Income Tax ct and prayed to dismiss the petition 4 \" on hearir g both the learned counsel for the p'e .it ionr:r-accused and the Special Public )r.osecutor for the complainant, the tr ial c,rurt dismissed the petition reiying upol the judgment of the Hon'ble lrtr(:i: Crurt in the case of 6 Dr.GRR,l CRLRC 2922 2017 Prakash Nath Khanna and Another v. Commissioner of Incomd Tax and Another l, where in it was held that: \" Infractions covered by under Section 276-CC being related to non-furnishing of return within time in terms of sub-section (l) /sub-section (2) of Section lj9 there could not be any condonation of infraction even if return was filed in terms of sub-section (4) ofSection 139\". 4.1. On the contention of the petitioner-accused that PWl admined in his cross-examination that if the department held that the assessee was entitled for refund of tax, the return filed by the assessee would be a valid retum, the trial court observed that the complainant departmerrt did not hold that the accused was entitled for refund of tax and the same could not be decided at that stage. With regard to the validity of the service of notice, the trial court observed that it was a mixed question of law and fact which could be decided only after trial and that the petitioner was not entitled for discharge on the said ground. 5. Aggrieved by the said order of dismissal of discharge petition filed by him, the petitioner-accused preferred this revision contending that the trial court failed to appreciate that neither the complaint nor the sanction order would show computation as to determination of income of the petitioner viz., the income assessed, tax thereon, interest thereon and the demand payable by the petitioner, in the absence of which the petitioner could not be put to suffer the rigours of criminal trial for the alleged offence under Section 27 6-CC of the ' lzool; c.it-l tez n 7 , Dr.GRR, l .RLRC 2922 2017 Act. The trial co rr: failed to appreciate that Sectitrn 27,i-t:.C of the Act could not be made appl cable without determination of quanturrr of r.ax if any evaded by the petitioner. The trial court erred in not apprer:itting the fact that the sanction ordcr dar xt,02.06.2016 passed under Section ,179' (1) of the Act by the Principal Con'rmir sioner of Income Tax was vitiatcd fi;r l,rck of application of mind. The Trial ( loun failed to appreciate that the petiticrLr,:r filed the returns on 20.06.2016 and tl e sanction order for initiating criminal :t cse;ution against the petitioner was pa: sed on 24. 10.2016 rvhich would show t rat there was sufficient time with the res rondent to pass an assessment order. I lence, the inevitable conclusion rvhicl <:ould be drawn from it was that th: respondent was pre- determined to r rulct the petitioner with criminai liability without even determining the tr x liability of the petitioner. 5.1. He furlher contended that the trial court failed to ir1;prr:ciate that even if the petitioncr di I not file retums for the Assessme:r1 -tlear 20i3-14 before 01.07.2013, the r:spondent had arnple power to issue ror.ice:; and even pass a best judgment arsessment which the respondent did nrt do. The trial court failed to apprec ate that the petitioner at no point o[ tinre was given an opportunity to r ,but the evidence fited by the respcrr,J::nt in respect of its tumover allcgedl u lrom provisions of services in a duly ,1,)nslituted assessment proceedings. 'l'l e trial court ought to have applecizLtt:rl that the punishment under the decle :ation was linked to the tax eva