TITLE: Prosecution for offence u/s
276CC for failure to file ROI can be initiated during the pendency of
assessment proceedings. The statement in the individual returns of the partners
that the firm has not filed a ROI as its’ accounts are not finalized does not absolve
the firm of prosecution for non-filing of ROI
CASE: Sasi Enterprises vs. ACIT
(Supreme Court)
The
assessee, a registered partnership firm, of which Ms. J. Jayalalitha and Mrs.
N. Sasikala are partners, did not furnish returns of income despite several
opportunities. The AO made a best judgement assessment u/s 144 and filed a
complaint with the Megistrate against the assessee for committing offences
punishable u/s 276CC. The assessee challenged the filing of the complaint on
the ground that as the assessment had not attained finality no offence had
taken place and so the complaint was pre-mature. It was also pointed out that
in the individual returns of the partners it was stated that as the accounts of
the assessee-firm had not been finalized, its return of income could not be
filed. The Magistrate and High Court dismissed the challenge to the complaint.
On
appeal by the assessee to the Supreme Court, HELD dismissing the appeal:
“(i) The offence u/s 276CC is attracted on
failure to comply with the provisions of s. 139(1) or failure to respond to the
notice issued u/s 142 or s. 148 within the time limit specified therein. The
contention that pendency of the appellate proceedings is a relevant factor for
not initiating prosecution proceedings u/s 276CC is not acceptable. S. 276CC
contemplates that an offence is committed on the non-filing of the return and
it is totally unrelated to the pendency of assessment proceedings except for
second part of the offence for determination of the sentence of the offence,
the department may resort to best judgment assessment or otherwise to past
years to determine the extent of the breach. The language of s. 276CC is clear
so also the legislative intention. If it was the intention of the legislature
to hold up the prosecution proceedings till the assessment proceedings are
completed by way of appeal or otherwise the same would have been provided in s.
276CC itself. Therefore, the contention that no prosecution could be initiated
till the culmination of assessment proceedings, especially in a case where the
appellant had not filed the return as per s. 139(1) of the Act or following the
notices issued u/s 142 or s. 148 does not arise;
(ii) The declaration or statement made in the
individual returns by partners that the accounts of the firm are not finalized,
hence no return has been filed by the firm, will not absolve the firm in filing
the statutory return u/s 139(1) of the Act. The firm is independently required
to file the return and merely because there has been a best judgment assessment
u/s 144 would not nullify the liability of the firm to file the return as per
s. 139(1) of the Act. The contention that since they had in their individual
returns indicated that the firm’s accounts had not been finalized, hence no
returns were filed would mean that failure to file return was not willful,
cannot be accepted;
(iii) S. 278E deals with the presumption as to
culpable mental state. The question is on whom the burden lies, either on the
prosecution or the assessee u/s 278E to prove whether the assessee has or has
not committed willful default in filing the returns. Court in a prosecution of
offence, like s. 276CC has to presume the existence of mens rea and it is for
the accused to prove the contrary and that too beyond reasonable doubt.
Resultantly, the appellants have to prove the circumstances which prevented
them from filing the returns as per s. 139(1) or in response to notices u/s 142
and 148 of the Act;
(iv) The details of the various proceedings
reveal the dilatory tactics adopted in these cases. Courts must be guarded
against those persons who prefer to see it as a medium for stalling all legal
processes. The Criminal Court is directed to complete the trial within four
months from the date of receipt of this Judgment.”