Proviso to Section 276CC barred prosecution and an early complaint failed before regular assessment was completed
The proviso to Section 276CC of the Income-tax Act barred prosecution for failure to file the return where the default related to assessment year 2013-14 and the tax ultimately determined was below the statutory threshold; the complaint was therefore not maintainable. The criminal complaint was also premature because no regular assessment under Section 143(3) had been completed when it was filed, and the later issue of notice under Section 148, payment of tax, and subsequent assessment did not cure that defect. On both grounds, the impugned prosecution was quashed in entirety.
Issues: (i) whether the proviso to Section 276CC of the Income-tax Act, 1961 barred prosecution for failure to furnish the return of income in the facts of the case; (ii) whether the criminal complaint was premature in the absence of regular assessment at the time of its filing.
Issue (i): whether the proviso to Section 276CC of the Income-tax Act, 1961 barred prosecution for failure to furnish the return of income in the facts of the case.
Analysis: The default related to assessment year 2013-2014, and the accused had not filed the return within the time prescribed under Section 139(1) of the Income-tax Act, 1961. The Court noted that the tax payable on the income ultimately determined was only Rs. 1,750, and the statutory bar in the proviso to Section 276CC was pressed into service. The Court further held that the contention that the proviso was inapplicable merely because the accused was a company could not be accepted on the facts, since the default concerned failure to file the return and the tax due remained below the statutory threshold.
Conclusion: The proviso to Section 276CC applied, and prosecution was not maintainable.
Issue (ii): whether the criminal complaint was premature in the absence of regular assessment at the time of its filing.
Analysis: The Court noted that no regular assessment order under Section 143(3) of the Income-tax Act, 1961 had been passed when the complaint was instituted. It also noted that notice under Section 148 was issued later, the tax was paid thereafter, and the regular assessment was completed only subsequently. In these circumstances, the prosecution was treated as having been launched before the assessment machinery had culminated in the relevant determination.
Conclusion: The complaint was premature and could not be sustained.
Final Conclusion: The impugned prosecution was quashed in its entirety, bringing the criminal proceedings to an end.
Ratio Decidendi: Where the statutory bar under the proviso to Section 276CC is attracted and the prosecution is instituted before regular assessment is completed, the complaint for failure to furnish return of income cannot be sustained.
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