Company & Directors Guilty of Tax Return Failure: Penalties Imposed

The court found the accused, a Pvt. Ltd. Company and its directors, guilty of willful failure to furnish returns of income for the assessment year 2014-2015 under sections 276-CC and 278-E of The Income Tax Act. Despite citing financial difficulties, the accused did not file the return, leading to the imposition of penalties. The company was fined Rs. 5,000, while the directors were sentenced to six months of rigorous imprisonment, fined Rs. 5,000 each, and required to pay the company's fine. Bail bonds were surrendered, and the accused received a copy of the judgment.

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Issues Involved:
1. Whether the accused willfully failed to furnish returns of income for the assessment year 2014-2015.
2. What order should be passed regarding the findings.

Summary:

Issue 1: Willful Failure to Furnish Returns
The complainant, Sudhansu Mohapatra, DCIT 4(3)(2), filed a complaint against the accused, a Pvt. Ltd. Company and its directors, for an offence under section 276-CC read with section 278-E of The Income Tax Act, 1961. The accused did not file the return of income for A.Y. 2014-2015 despite having taxable income. The directors, being responsible for tax payment, failed to file the return citing financial difficulties. The court examined evidence from both sides, including audit reports, notices, and sanction orders. The complainant proved that the accused had taxable income but did not file the return. The defense argued that the failure was not willful but due to financial difficulties and procedural lapses in notice issuance. However, the court found that the accused did not provide sufficient evidence to prove that the default was not willful. The court concluded that the accused failed to discharge the burden of proving the absence of willful default, thus affirming the complainant's case.

Issue 2: Order
The court, after hearing both parties, determined that the accused were guilty of the offence under section 276-CC read with section 278-E of The Income Tax Act. Considering the nature of the offence and the circumstances, the court decided to impose the minimum prescribed punishment. The order was as follows:
i) The company (Accused No. 1) was fined Rs. 5,000.
ii) The directors (Accused Nos. 2 and 3) were sentenced to six months of rigorous imprisonment each and fined Rs. 5,000 each, with a default clause of 30 days of simple imprisonment.
iii) The directors were also ordered to pay the fine imposed on the company.
iv) The bail bonds of the accused were surrendered.
v) A copy of the judgment was provided to the accused free of cost.

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