2024 (4) TMI 749 - HC - Income Tax

Prosecution fails to prove intent in tax evasion case under Section 276CC, acquittal upheld

The Income Tax Officer, Ward-2, Ajmer (Raj.) Versus Rajendra Prasad Vaish.

Rajasthan HC dismissed the appeal against acquittal under Section 276CC of the Income Tax Act. The accused filed returns 28 months late but explained ... Acquittal of charge u/s 276CC - respondent has failed to comply with the provisions contained u/s 139(1) and he has submitted the income tax returns after a delay of 28 months - “intention”, “motive” and “knowledge” - “culpable mental state” on the part of the accused - HELD THAT:- Apex Court in the case of Prem Das [1999 (2) TMI 6 - SUPREME COURT] held that for holding an accused guilty u/s 276CC ‘mens rea’ is a necessary ingredient. Hence, in absence of proof of ‘mens rea’ and on the basis of mere presumption u/s 132(4-A), the conviction cannot be sustained. In the above case, the Hon’ble Apex Court has clearly held that the complainant in order to bring home the guilt of the accused for the offence punishable u/s 276C has to prove the mens rea of the accused for non-payment of tax or attempt to evade the tax. But in the present case, the accused respondent has explained the reasons, in detail, about the delay in filing the income tax returns and depositing the entire tax amount with penalty subsequently. Therefore, the complainant/ appellant has failed to prove that the respondent had mens rea to evade the payment of tax. Accordingly, the Income Tax Department has failed to prove the guilt of the accused respondent beyond all the reasonable doubts. The trial Judge came to the conclusion that even no notice was given to the respondent prior to filing of the complaint against him. Hence, it was found that the offence u/s 276CC was not found to be proved against the respondent. It is the settled principle of law that while appreciating the evidence, in an appeal against acquittal, if the appellate Court finds that two views are plausible, then the view favouring the innocence of an accused must be taken into consideration. This Court does not find any perversity in the findings arrived at by the trial Court in acquitting the accused under the aforesaid offences. Accordingly, the instant Criminal Appeal is dismissed. The judgment of acquittal of the accused respondent, passed by the Court below, is upheld. Issues Involved:The judgment involves the acquittal of the accused-respondent under Section 276 CC of the Income Tax Act, 1961 by the Special Magistrate (Economic Offences), Rajasthan, Jaipur based on the delay in filing income tax returns and the lack of mens rea.Details of the Judgment:Issue 1: Allegation of Delayed Income Tax ReturnThe Income Tax Officer filed a criminal complaint against the respondent for not submitting Income Tax Returns within the stipulated time. The respondent filed returns after a delay, leading to penalty imposition under Section 271(1) of the Act of 1961. The appellant argued that the delay warranted prosecution, while the respondent claimed no willful delay or intention to evade tax.Issue 2: Provisions of Section 276CC and Defence of AccusedThe prosecution alleged the respondent's failure to comply with Section 139(1) of the Act of 1961, constituting an offence under Section 276CC. The respondent's defence highlighted the proviso to Section 276CC, protecting genuine assessees who file returns belatedly or pay substantial tax amounts. The respondent asserted no mens rea in the delayed filings.Issue 3: Burden of Proof and Presumption of Culpable Mental StateThe legislature added Section 278E, shifting the burden to the accused to prove the absence of a culpable mental state. The High Court emphasized the need for a positive act with intent to evade tax for conviction under Section 276CC. Previous judicial decisions emphasized the requirement of mens rea for such offences.Conclusion:The trial court acquitted the respondent, considering the lack of notice prior to the complaint and the failure to prove mens rea for tax evasion. The appellate court upheld the acquittal, citing the principle of taking the view favoring the innocence of the accused when multiple interpretations are plausible. The judgment dismissed the appeal and affirmed the acquittal of the accused respondent.