INCOME TAX OFFICER Vs. AUTOFIL

JUDGEMENT

(1.) THESE three appeals are directed against the order of acquittal of respondents Nos. 1 to 5. The income-tax Department prosecuted the respondents for an offence under section 139 (1) read with section 276CC of the Income-tax Act on the ground that there was wildful failure in the submission of return by the due date. Since the said default was alleged to be for three different years, there were three different cases filed against them. The delay was 27 months, 16 months and 5 months in these three cases.

(2.) THERE is no controversy on the point that there was delay in the submission of the returns of the first respondent-firm by its partners, R-2 to R-5. It is not simple failure in the submission of the returns by the due date that amounts to an offence under section 276CC but that the failure should be "willful" so as to call for a conviction.

(3.) IT is thus in rare and exceptional cases where penalty under section 271(1)(a) of the Income-tax Act is found to be not sufficiently deterrent and that mens rea was present that conviction under section 276CC is called for and not otherwise. In the instant case. The respondents filed an explanation stating that their clerk, one Hanumanth Rao, was not well and, therefore, the day-to-day accounts could not be finalised and the profit and loss account could not be drawn up so as to file the return in time. They have also stated that they were not conversant with the preparation of the profit and loss account and the balance-sheet and thus the delay was neither willful nor wanton. No doubt, this explanation was not accepted by the court below, but the question that still remains is, whether there is mens rea present to warrant a conviction for the offence for which the respondents were prosecuted. In the present case, there is no dispute that advance tax was paid and thus there was no evasion in payment of tax. Further, they have paid penalty for delayed filing of return apart from penal interest on the differential amount between the tax assessed and the tax paid. Conviction under section 276CC is an extreme and exceptional resort and gets warranted only when wilfulness in failure to submit the return in time is established beyond all reasonable doubt and there should be the presence of mens rea, a bad motive and a guilty mind. In the absence of this, no conviction shall follow the prosecution under section 276CC of the Income-tax Act, there is a clear explanation given by A-3 that he was not conversant with the preparation of the profit and loss account and the balance-sheet. Equally so is his colleague. Satyanarayana. Their clerk happened to fall ill. Even if, for any reason, the explanation does not receive acceptance, still the conduct of the respondents in paying the advance tax. The penal interest and penalty and want of mens rea absolve them from criminal liability. I, accordingly, find no merit in these appeals. The appeals are, therefore, dismissed.