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ASSISTANT COMMISSIONER OF INCOME TAX Vs. NILOFAR CURRIMBHOY
March, 21st 2013
* IN THE HIGH COURT OF DELHI AT NEW DELHI

%                        Crl. M.C. No.2110/2010
+                              Date of Decision: 13th March, 2013

#      ASSTT.COMMISSIONER OF INCOME TAX...Petitioner
!                      Through:Mr. Tiger Singh, Advocate

                                Versus

$      NILOFAR CURRIMBHOY                ....Respondent
                  Through: Mr. H.R.Khan Suhel, Advocate


      CORAM:
*     HON'BLE MR. JUSTICE P.K.BHASIN


                               ORDER
P.K. BHASIN, J:
       The respondent was discharged by the Court of Additional Chief
Metropolitan Magistrate, Delhi vide order dated 22nd August,2008 for
the commission of the offence punishable under Section 276-CC of the
Income Tax Act, 1961 on the ground that the complainant(Income Tax
Department) had failed to establish in its pre-charge evidence adduced
by it in its complaint case(being Complaint Case no. 35/1999) that her
failure to submit the income tax return for the assessment year 1994-95
was wilful. That decision of the learned Additional Chief Metropolitan
Magistrate was affirmed by the Sessions Court vide order dated 29th
September,2009 when it was challenged by the complainant by way of a
revision petition(being Revision Petition No. 06/2008). The complainant




Crl. M.C. No.2110/2010                                     Page 1 of 9
felt aggrieved by the revisional Court's order also and so it filed the
present petition under Section 482 of the Code of Criminal
Procedure,1973 and Article 227 of the Constitution of India for setting
aside the orders of the trial Court as well as of the revisional Court.

2.     The      relevant facts stated in the complaint of the petitioner-
complainant are as follows: -

          "4. That for the assessment year 1994-1995, the accused
          was to file the Income Tax return by 31.10.1994 but it was
          found by scanning the relevant records of the Income tax
          Department that she had not furnished the Income Tax
          Returns and, therefore, a Caution Notice dated 7.11.1994
          was sent to the accused-respondent and the same was duly
          served upon the assessee/accused through the process-
          server of the Income tax Department. The copy of the said
          Caution Notice is attached herewith and is marked as
          Annexure B. The said notice had made it clear that in case
          she (accused/Assessee) had filed the Income tax Returns
          else-where in that event the copy of the Income Tax
          Return alongwith the proof of filing of the said return
          should be furnished by 25.11.1994.
          5. The said caution notice, however, was not complied
          withby the accused-respondent and no representation/reply
          was received.Another statutory notice u/s 142(1) of the
          Income Tax Act dated 9.1.1995 was duly served upon the
          Assessee/Accused/ respondent on 11.1.1995 by the
          Process-Server of the Income tax Department. By virtue of
          the service of the said notice, the Assessee/Accused was to
          file the Income Tax return within 30 days from the receipt
          of the said notice, but the said notice sent by the Income
          tax Department of the complainant was not complied with
          by the accused-assessee and no response of any nature
          whatsoever was received from the Assessee-accused
          respondent.
          6. That the Assessee/accused filed the Income Tax return
          for the relevant Assessment year 1994-1995 only on 1 st
          May, 1995 whereas the Assessee/Accused was required



Crl. M.C. No.2110/2010                                           Page 2 of 9
          statutorily to file the said returns latest by 31 st October,
          1994..................................................................................
          7. That a show-cause notice dated 21.8.1998 was served
          upon the Assessee/Accused seeking the explanation of the
          accused/Assessee for late filing of the returns..............
          The accused/Assessee had replied to the said show-cause
          notice     vide        his       reply         dated         4 th     September,
          1998.................................................................
          8. That the accused/Assessee has not rendered any valid
          and cogent reasons for filing the Income Tax Return for
          the Assessment year, 1994-95 after the lapse of 7 months.
          The delay on the part of the accused/Assessee in filing the
          Return for the relevant Assessment years, mentioned
          hereinabove, is wilful, deliberate, malicious and the
          accused has not demonstrated any paucity of funds or any
          valid and cogent reasons beyond her control. It is
          pertinent to mention here that the accused/Assessee is a
          habitual defaulter in filing the late returns.
          9. That the accused-respondent has, thus, committed the
          offence under Section 276-CC of the Income Tax Act,
          1961, as amended upto date and she is liable to be
          prosecuted and punished for the same."

3.     After examining the complaint the trial Court summoned the
respondent vide order dated 11th February,1999. However, after the
respondent entered appearance before the trial Court and pre-charge
evidence of the petitioner-complainant had been recorded the trial
Court, as noticed already, discharged the respondent vide impugned
order dated 22nd August, 2008 which was affirmed by the Sessions
Court when challenged by the petitioner-complainant by way of a
revision petition.

4.     The present petition was then filed by the petitioner-
complainant seeking reversal of the orders of both the Courts below.


Crl. M.C. No.2110/2010                                                                 Page 3 of 9
5.     Mr. Tiger Singh, learned counsel for the petitioner had
submitted that there was admittedly long delay on part of the
respondent herein in filing her income tax return for the assessment
year 1994-95 and, therefore, the trial Court should have presumed
the delay to be wilful relying upon the provisions of Section 278-E
of the Income Tax Act instead of holding that in the pre-charge
evidence adduced by the Department it had failed to establish that
the delay was wilful and discharging g the respondent. In support of
his submission learned counsel placed reliance on one judgment of
the Supreme Court in "Prakash Nath Khanna and Anr. v.
Commissioner of Income Tax and Anr.", 2004 Cri.L.J. 3362 and
one judgment of this Court in "V.P. Punj v. Asst. Commissioner
of Income Tax & Anr.", 2001 VI AD (Delhi) 501.

6.     On the other hand it was submitted by Mr. H.R.Khan Suhel,
the learned counsel appearing on behalf of the respondent that the
Courts below had rightly discharged the respondent. It was also
submitted that the Department having accepted the delayed return
and penalty etc. for the delayed filing of the return and that too
before the issuance of the final show cause notice before launching
her prosecution could not have subsequently proceeded to prosecute
the respondent. It was also argued that the respondent's request for
compounding of the offence was also arbitrarily rejected by the
Department even though in routine such like offences were
compounded by the Department almost in every case on payment of
some penalty which the respondent was ready to pay even now.

Crl. M.C. No.2110/2010                                  Page 4 of 9
7.     After having considered the record of the trial Court and the
submissions made by the counsel for the parties this Court is of the
view that the learned trial had wrongly discharged the respondent
and the revisional Court also erred in affirming the trial Court's
order. It is not in dispute that the respondent had not filed the return
for the assessment year 1994-95 within prescribed period and not
even within the period within which the petitioner-complainant was
required her to do so on it being found that she had not filed her
return. The respondent        had   not even      respondent    to    the
communications, as referred to in the complaint, sent to her by the
petitioner-complainant requiring her to file her return or to show the
proof of filing if it had been filed within the prescribed time.      So,
the offence under Section 276 CC stood committed by that time and
for that offence the Department could file a criminal complaint
against her after obtaining requisite sanction from the competent
authority which it did obtain and complaint was filed in Court. After
the complaint had been filed the trial Court had found a prima facie
for taking cognizance of the said offence and so the respondent was
summoned. In the pre-charge evidence adduced by the Department
the aforesaid facts were reiterated by the departmental witnesses and
the same were not challenged also during their cross-examination on
behalf of the respondent. However, the learned trial Court on an
erroneous view that it was for the complainant Department to show
that failure to file the return within time discharged the respondent
by holding that wilful default on the part of the respondent was not


Crl. M.C. No.2110/2010                                      Page 5 of 9
established. That conclusion was also erroneous and unsustainable
as the learned trial Court conveniently ignored existence of Section
278-E in the Income Tax Act which permits raising of a
presumption in favour of the Department regarding the existence of
culpable mental state(mens rea) on the part of the assessee and non-
consideration of that provision of law led to the passing of a wrong
order of discharge of the accused-assessee, respondent herein.
Section 278-E was considered by the Supreme Court in the case of
Prakash Nath (supra), which was cited by Mr. Tiger Singh, and the
Supreme Court had observed as under:

              "22. Whether there was wilful failure to furnish the
              return is a matter which is to be adjudicated factually
              by the Court which deals with the prosecution case.
              Section 278-E is relevant for this purpose and the same
              reads as follows:
                         "278-E: 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





Crl. M.C. No.2110/2010                                                  Page 6 of 9
                         established by   a   preponderance   of
                         probability:.
              23. There is a statutory presumption prescribed in
              Section 278-E. 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 in
              respect to the act charged as an offence in the
              prosecution. Therefore, the factual aspects highlighted
              by the appellants were rightly not dealt with by the
              High Court. This is a matter for trial. It is certainly
              open to the appellants to plead absence of culpable
              mental state when the matter is taken up for trial."


9.     This decision of the Apex Court squarely applies to the facts
of the case in hand. It would be for the respondent to establish
during the trial that her failure to file her return was not wilful. The
Courts below went wrong in going into the question as to whether
the explanation offered by the respondent in response to the show
cause notice given to her before the filing of the complaint in Court
was rightly rejected or not. Once the complaint stood filed the trial
Court was only required to examine whether cognizance should be
taken or not and once it was decided to take cognizance and to
summon the respondent the trial Court thereafter was required to
examine whether in the pre-charge evidence the complainant had
been able to show that the respondent had not filed her return for the
assessment year in question within the prescribed period, which fact
in the present case was not even disputed by the respondent. So,
after raising the presumption under Section 278-E the trial Court
should have framed the charge against the respondent leaving it to



Crl. M.C. No.2110/2010                                             Page 7 of 9
him show during the trial thereafter that there was no wilful default
on her part.

10. Section 278-E came to be considered by this Court also in
V.P.Punj's case(supra), which was also relied upon by the learned
counsel for the petitioner and the Single Judge bench had held that
the sufficiency of the explanation of the defaulter assessee is a
question of fact regarding which no finding can be given at the stage
of charge but the presumption of mens rea against the accused
under Section 278-E has to be pressed into service by the Court at
the charge stage.

11.    Just because the respondent had applied for the compounding
of the offence before the filing of the complaint against her in Court,
as is was being claimed by her, and the same according to her had
not been decided before the filing of the complaint it could not be
said that the complaint was not maintainable, as was also the
submission of the learned counsel for the respondent not was the
trial Court required to examine at the stage of charge as to why the
department was not compounding the offence in the case of the
respondent herein. If she was aggrieved by any action or inaction on
the part of the authority competent to take the decision on her
request for compounding she should have had recourse to legal
remedies instead of waiting for the prosecution to be launched by
the department.




Crl. M.C. No.2110/2010                                     Page 8 of 9
11.    The revisional Court also did not go into the aforesaid aspects
and simply affixed its seal of approval to the order of the trial Court
and, therefore, its order also cannot be sustained.

12.     This petition and, is accordingly allowed.     The impugned
orders of the trial Court and the revisional Court are set aside and
the matter is now remanded back to the Court of the Additional
Chief Metropolitan Magistrate with the direction for framing charge
under Section 276-CC of the Income Tax Act against the respondent
and to try her in accordance with law. It is however, clarified that
nothing observed by this Court in this order shall be considered by
the trial Court to be any final expression of opinion on the merits of
the complainant's case or the respondent's explanation which she
had tendered in response to show cause notice given to her before
the filing of the complaint in Court by the Income Tax Department.

       The case shall now be taken up by the trial Court on 29th
April,2013 at 2 p.m.




                                                      P.K.BHASIN,J

MARCH 13, 2013




Crl. M.C. No.2110/2010                                     Page 9 of 9
 
 
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