Delhi High Court

V.P. Punj vs Asstt. Cit on 3 August, 2001

Equivalent citations: 2001 119 TAXMAN 543 Delhi

JUDGMENT

This petition under section 482 of the Code of Criminal Procedure, 1973 is directed against the order dated 26-7-1998 passed by the court of Sh. Ravi Kumar, Additional Sessions Judge, Delhi, dismissing revision against the order framing charge under section 276CC of the Income Tax Act, 1961 (hereinafter referred to as the Act) in the complaint titled 'Prabodha Seth v. Cornelia Investment (P) Ltd.

2. Facts in brief are : that the petitioner No. 3 is a company registered under the Companies Act, 1956, the petitioner Nos. 1 and 2 were its directors during the relevant period. The income-tax return of the company for the assessment year (1990-91) was not filed within the prescribed period, i.e., 31-12-1990. The return could be filed up to 31-3-1991, under clause (a) of proviso to section 276CC, to avoid prosecution. It was actually filed on 17-6-1991, the tax and interest thereon were also deposited. On 20-2-1992 the notice was issued to the petitioners, by the respondent No. 1, to show cause as to why prosecution under section 276CC, should not be initiated against them. The petitioners in their reply dated 27-2-1992, informed the department that there was no 'deliberate' or 'willful' default. The wife of the petitioner No. 1 was suffering from cancer and gravely sick, therefore, the return could not be filed in time. Not satisfied with the reply, on 15-10-1992, the criminal complaint under section 276CC was filed against the petitioners alleging :

"5. That a show-cause notice why the prosecution under section 276CC should not be launched was served upon the accused, in reply whereof, the accused submitted that there is no willful default as the wife of the one of the Director's V.P. Punj dies in November, 1990. The assessing officer found the explanation given by the accused an afterthought and not tenable in law as such this complaint is being filed under section 276CC."

3. Petitioners were summoned; prosecution led pre-charge evidence and vide orders dated 9-12-1997 the court of M.K. Gupta, ACMM framed charge under section 276CC. Petitioners' revision against the order framing charge was dismissed, on 26-7-1998. Now, they have assailed the legality and validity of the order framing charge as well as the order dated 26-7-1998 dismissing their revision.

4. The learned counsel for the petitioners argued that the income-tax return was filed voluntarily on 17-6-1991 before the issuance of show-cause notice dated 20-2-1992 and that the petitioners not only filed the income-tax return, but had also paid Rs. 61,617, towards income-tax, interest and penalty, out of total taxable income of Rs. 67,370 which by itself substantiates their bona fide. It is, thus, argued that there was no 'deliberate' or 'willful default' which is an essential ingredient of the offence. It was further argued that the allegations contained in the complaint are vague, from the mere failure to file income-tax return in time, no presumption that the same 'willfully' filed late can be raised. In support of its submission, reliance was placed on a decision of the Calcutta High Court in Gopalji Shaw v. ITO (1988) 173 ITR 554 (Cal) wherein it was observed 'in a criminal case, it is not for the accused to establish his innocence. The onus is on the prosecution to bring home the guilt of the accused. Mens read is an essential ingredient of the criminal offence. The fact of extension of time to file the return excludes the element of mens read inasmuch as it must be presumed that the Income Tax Officer, being satisfied that there was ground for delay in filing the return, had extended the time'. The learned counsel for the respondents argued to the contrary.

5. In order to appreciate the arguments, reference to some of the sections of the Act is necessary. Section 139(1) of the Act mandates that the income-tax return must be filed before due date. Section 139(8) provides that where the return is furnished after the specified date, the assessed shall be liable to pay the interest. Section 276C provides punishment for willful attempt to evade tax. Section 276CC provides punishment for willful failure to furnish the returns of income in due time. However, sub-clause (a) of clause (ii) of the proviso to section 276CC provides that such a person is not liable to be prosecuted under this section for his failure to furnish the return by due date (a) if the return is furnished before the expiry of the assessment year or (b) if the tax payable after deduction of the advance tax, etc., does not exceed Rs. 3,000. Thus, if section 276CC is read in isolation, the mens read is an essential requirement of law and that it would be for the prosecution to lead evidence to prove that the return was willfully filed late. However, it is not so.

6. The legislature in its wisdom by the Tax Law Amendment and Miscellaneous Provisions Act, 1986 added section 278E to the Act with effect from 10-9-1986. It provides that in any prosecution for the offence under this Act which requires 'culpable mental state' on the part of the accused, the court shall presume the existence of such mental state. The burden is shifted to the accused to prove that he had no such mental state. As per the Explanation, the culpable state would include 'intention', 'motive' and 'knowledge'. It further provides that the absence of such culpable mental state shall have to be proved by the accused in defense beyond reasonable doubt. Section 278E reads :

"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 defense 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 established by a preponderance of probability."

7. By this section the rules of evidence stand altered. In any prosecution for any offence under this Act, the court has to presume the existence of mens rea. It is for the accused to prove to the contrary and that too beyond reasonable doubt. Further, the Act also does not differentiate in any way between natural or juristic person. Applying these principles to the facts of this case, admittedly the petitioner could file the return on or before 31-3-1991 to avoid prosecution. The return was filed on 17-6-1991. In reply to the show-cause notice prior to the launching of the prosecution, petitioner No. 1 stated that his wife was suffering from cancer who died in November, 1990 and for that the entire family was upset, thus, the delay in filing the income-tax return was not deliberate. From the reply, it cannot be inferred that the petitioners have succeeded in proving their defense beyond reasonable doubt. This is a question of fact, regarding which no finding can be recorded at the stage of framing the charge. As per the settled law, charge can be framed even on the basis of a strong suspicion. The Supreme Court in the recent decision in Smt. Om Wati v. State through Delhi Administration 2001 Crl. L.J. 1723 made the following observations :

"We would again remind the High Courts of their statutory obligation to not to interfere at the initial stage of framing the charges merely on hypothesis, imagination and far-fetched reasons which in law amount to interdicting the trial against the accused persons. Unscrupulous litigants should be discouraged from protracting the trial and preventing culmination of the criminal cases by having resort to uncalled for and unjustified litigation under the cloak of technicalities of law."

8. For the foregoing reasons, there is no merit in the petition and the same is dismissed.