1996 (2) TMI 115 - HC - Income Tax

Court upholds maintainability of petition under Criminal Procedure Code, clarifies no mens rea needed for Income-tax Act offense.

The court found the petition maintainable under section 482 of the Criminal Procedure Code, rejecting the preliminary objection raised by the respondents. ... Criminal Proceedings, High Court, Mens Rea, Offences And Prosecution, Tax At Source Issues Involved:1. Maintainability of the petition under section 482 of the Criminal Procedure Code.2. Requirement of proving mens rea for the offense under section 276B of the Income-tax Act.3. The correctness of the lower courts' reliance on section 278E and other case laws.Issue-wise Detailed Analysis:1. Maintainability of the petition under section 482 of the Criminal Procedure Code:The respondents raised a preliminary objection that the petitioner has filed a second revision under the guise of quashment proceedings under section 482 of the Code. They cited various judgments, including *Dharampal v. Smt. Ramshri* and *Ganesh Narayan Hegde v. Bangarappa*, which held that a second revision before the High Court in exercise of its inherent powers is barred under section 397(3) of the Criminal Procedure Code. However, the petitioner contended that this was not a second revision but a petition under section 482 for quashing the impugned orders, arguing that the orders amounted to an abuse of the process of the court. The court referred to *Raj Kapoor v. State (Delhi Administration)*, which held that the inherent power of the High Court under section 482 is not repelled by the revisional power under section 397. The court concluded that the petition was maintainable and repelled the preliminary objection.2. Requirement of proving mens rea for the offense under section 276B of the Income-tax Act:The petitioner argued that the revisional court wrongly referred to section 278E, which presumes the existence of a culpable mental state but allows the accused to prove otherwise. However, this section was inserted in the Act on September 10, 1986, and the offense occurred in 1983. The petitioner contended that mens rea is not an ingredient for the offense under section 276B, which deals with the failure to deposit tax deducted at source. The court cited *Rishikesh Balkishandas v. I. D. Manchanda, ITO* and *Jagmohan Singh v. ITO*, which held that the offense under section 276B is complete when tax deducted at source is not deposited in time, and late deposit does not absolve the accused. The court concluded that mens rea is not a requisite ingredient for the offense under sections 194A/200/276B of the Act.3. The correctness of the lower courts' reliance on section 278E and other case laws:The petitioner's counsel argued that the revisional court wrongly relied on section 278E and drew incorrect inferences. The court noted that the revisional court and the Chief Judicial Magistrate had dismissed the complaint on the grounds that the complainant had not proved any mens rea and that a bona fide mistake on the part of the accused firm was abundantly proved. However, the court found that both lower courts erred in their judgment. The court emphasized that in *Jagmohan Singh's case* and *Anil Kumar's case*, it was held that the offense under section 276B is complete when the tax deducted at source is not deposited in time, and the firm is liable to be prosecuted for such failure. The court also distinguished the facts of *P. V. Devassy v. CIT* and *Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO*, which were relied upon by the lower courts, stating that those cases involved different circumstances.The court concluded that the accused-respondents failed to deduct and deposit tax at the rate of 21 percent on the interest credited to J. R. Bansal and Company Private Limited without any reasonable cause or excuse. The court quashed the impugned orders and directed the Chief Judicial Magistrate, Ludhiana, to frame charges against the accused-respondents, allowing the petitions under consideration.