Kamlesh Sharma, J.
1. These criminal writ petitions (Nos. 15 of 1992, 20 of 1994 and 34 of 1995) are being disposed of by a common judgment as these involve similar facts and common questions of law.
2. Against each petitioner in these writ petitions, the Assistant Commissioner of Income-tax, Circle I, Shimla, respondent No. 2, has filed a complaint under Section 276CC of the Income-tax Act, 1961 (hereinafter called 'the Act'), in the court of the Chief Judicial Magistrate, Shimla, who has issued process after taking cognizance of the offence. In these criminal writ petitions, each petitioner has challenged the criminal complaint and the proceeding pending against him/her in the court of the Chief Judicial Magistrate, Shimla.
The facts in brief :
3. All the three petitioners, namely, Shri Prakash Nath, Sandeep Khanna and Smt. Govindi, were partners of the firm carrying on business in the name and style of Kailash Nath and Associates during the year relevant to the assessment year 1988-89, Besides them, Shri Kailash Nath and Ravi Khanna were also partners out of whom Sh. Kailash Nath was the managing partner as per the terms of the partnership deed dated April 1, 1983 (annexure 'P-1' in each writ petition). All the partners were entitled to share in profits of the firm by 20 per cent. each of the total profits and liable to suffer losses in the same proportion. Though they had deposited advance tax between April 1, 1987, and March 31, 1988, they failed to submit their respective returns on or before July 31, 1988, as per the provisions of Section 139(1) of the Act. Each petitioner filed his/her return on March 20, 1991, and the final assessment order under Section 143(3) of the Act was made by separate orders dated August 26, 1991.
4. For late submission of the return, penalty proceedings were initiated against each petitioner and by separate orders dated March 16, 1992 (annexure 'P-2' in each petition), penalty of the amount stated therein was imposed under Section 271(1)(a) of the Act. Separate appeal filed by each petitioner against the order imposing penalty has also been dismissed by the Commissioner of Income-tax (Appeals), Shimla, as stated by the respondents in their reply-affidavit(s). Separate notices to show cause dated November 12, 1991, under Section 276CC of the Act (annexure 'P-3' in each petition) were issued to each petitioner calling upon him/her to show cause as to why proceedings under Section 276CC should not be initiated against him/her for the alleged wilful failure on his/her part to furnish the return of income within the stipulated time as allowed under Section 139(1) of the Act. Each petitioner has filed a reply to the notice to show cause (annexure P-4 in each petition) wherein he/she, inter alia, stated that the delay in filing the return for the assessment year 1988-89 was caused because, the firm, Kailash Nath and Associates, in which he/she has 20 per cent. share in the profits for the relevant year, had not intimated his/her share in the said firm till the date he/she filed his/her return of income. The firm filed its return of income on September 17, 1991. It was also submitted by each petitioner in his/her reply that the share of income from the firm is the main source of income which also provides the necessary funds in his/her hands to deposit taxes also.
5. According to each petitioner, there was no deliberate/wilful attempt on his/her part to withhold the return of income as the circumstances relating to any delay in the filing of the return were beyond his/her control and that he/she was deriving no advantage by withholding the submission of the return. Being not satisfied with the reply, the Commissioner of Income-tax, Patiala, issued authorisation dated May 51, 1992, to launch prosecution against each petitioner as a result of which a complaint was filed against each petitioner in the court of the Chief Judicial Magistrate, Shimla, who has issued process against each petitioner after taking cognizance of the offence alleged against him/her.
6. Relevant provisions of the Act.
'Section 139(1) : Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed.
(a) in the case of every person whose total income, or the total income of any other person in respect of which he is assessable under this Act, includes any income from business or profession, before the expiry of four months from the end of the previous year, or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is later ;
(b) In the case of every other person, before the 30th day of June of the assessment year :
Provided that, on an application made in the prescribed manner, the Assessing Officer may, in his discretion, extend the date for furnishing the return, and, notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of Sub-section (8). Section 139(2) :
In the case of any person who, in the Assessing Officer's opinion, is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Assessing Officer may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed from and verified in the prescribed manner and setting forth such other particulars as may be prescribed :
Provided that, on an application made in the prescribed manner, the Assessing Officer may, in his discretion, extend the date for furnishing the return, and, notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of Sub-section (8).
Section 139(4) :
(4) (a) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in Clause (b), and the provisions of Sub-section (8) shall apply in every such case ; (b) the period referred to in Clause (a) shall be-
(i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year ;
(ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of the assessment year ;
(iii) Where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year.
Section 139(5) :
If any person having furnished a return under Sub-section (1) of Sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made. Section 139(8)(a) :
Where the return under Sub-section (1) or Sub-section (2) or subsection (4) for an assessment year is furnished after the specified date, or is not furnished, then (whether or not the Assessing Officer has extended the date for furnishing the return under Sub-section (1) or Sub-section (2), the assessee shall be liable to pay simple interest at fifteen per cent. per annum, reckoned from the day immediately following the specified date to the date of the furnishing of the return, or, where no return has been furnished, the date of completion of the assessment under Section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source :
Provided that the Assessing Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any assessee under this Sub-section .
Explanation 1-- For the purposes of this Sub-section , 'specified date', in relation to a return for an assessment year, means,--
(a) in the case of every assessee whose total income, or the total income of any person in respect of which he is assessable under this Act, includes any income from business or profession, the date of the expiry of four months from the end of the previous year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or the 30th day of June of the assessment year, whichever is later ;
(b) in the case of every other assessee, the 30th day of June of the assessment year.
Emanation 2.--Where, in relation to an assessment year, an assessment is made for the first time under Section 147, the assessment so made shall be regarded as a regular assessment for the purposes of this Sub-section .
(b) Where as a result of an order under Section 147 or Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 or an order of the Settlement Commission under Sub-section (4) of Section 245D, the amount of tax on which interest was payable under this Sub-section has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and-
(i) in a case where the interest is increased, the Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be a notice under Section 156 and the provisions of this Act shall apply accordingly ;
(ii) in a case where the interest is reduced, the excess interest paid, if any, shall be refunded.'
7. A perusal of these provisions shows that every person whose total income attracts imposition of income-tax is obliged to furnish a return of his income before the prescribed date which in the case of each petitioner was July 31, 1988. Further, if a person has not furnished a return within the time prescribed/allowed under Section 139(1) of the Act or within the time allowed under a notice issued under Section 139(2) of the Act, he may furnish a return for any previous year at any time before the expiry of the period as prescribed under Clause (b) of Section 139(4) of the Act. The present case falls under Clause (b)(iii), therefore, each petitioner could furnish his/her return before July 31, 1990. But each petitioner filed his/her return on March 28, 1991, and the assessment thereof was made on August 26, 1991. Admittedly, no notice under Section 139(2) of the Act was issued to any of the petitioners. Section 139(8) of the Act further provides that if the return is submitted, although voluntarily, but beyond the specified time prescribed by Section 139(1), the assessee becomes liable to pay simple interest at the rate of fifteen per cent. per annum reckoned from the date immediately following the specified day to the day of furnishing return, or where no return has been furnished from the said day to the date of completion of assessment under Section 144 on the amount of tax, remaining payable.
8. As to who is authorized to sign and verify the return to be filed under Section 139, is provided under Section 140 of the Act. Further, if a person does not furnish a return either under Section 139(2) or send a return under Section 139(4) or revised return under Section 139(5) or fails to comply with notice/direction under Sections 142(1) and 142(2A) or Section 143(2), he is liable to be assessed ex parte under Section 144 of the Act after taking into account all relevant material which the Assessing Officer has gathered.
9. Section 276CC of the Act, which makes failure to furnish a return, in due time, an offence, is as under :
'Section 276CC :
'If a person wilfully fails to furnish in due time the return of income which he is required to furnish under Sub-section (1) of Section 139 or by notice given under Sub-section (2) of Section 139 or Section 148, he shall be punishable,--
(i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine ;
(ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to three years and with fine :
Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of income under Sub-section (1) of Section 139 -
(i) for any assessment year commencing prior to the 1st day of April, 1975 ; or
(ii) for any assessment year commencing on or after the 1st day of April, 1975, if-
(a) the return is furnished by him before the expiry of the assessment year ; or
(b) the tax payable by him on the total income determined on regular assessment, as reduced by the advance tax, if any, paid, and any tax deducted at source, does not exceed three thousand rupees. '
A perusal of this section makes it clear that the necessary ingredients of the offence are : wilful failure to furnish a return of income in due time as provided under Section 139(1) or under Section 139(2) of the Act. The punishment provided is not less than six months which may extend to seven years rigorous imprisonment where the amount of tax evaded exceeds rupees one lakh, if the failure to furnish a return had not been discovered, and not less than three months, which may extend to three years, where the tax evaded is less than rupees one lakh.'
10. Section 278E of the Act is as under :
'(1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
Explanation.--In this Sub-section , 'culpable mental state' includes intention, motive or knowledge of a fact, or belief in, or reason to believe, a fact.
(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is established by a preponderance of probability.'
11. Under this Sub-section , the court shall presume a culpable mental state on the part of the accused for committing an offence of the nature described in Section 276 of the Act but the accused can rebut such presumption by proving that he did not have such a mental state to withhold the submission of return within the time prescribed for such submission under the Act.
Submissions made by learned counsel for the parties.
12. The first point raised by learned counsel for the petitioner is that on correct interpretation of the words 'before the assessment is made' used in Section 139(4) of the Act, the return filed by each petitioner before the assessment of his/her return on August 26, 1991, was within due time as the time prescribed under Section 139(1) or Section 139(2) stood extended up to the date of assessment of his/her return. For making his submissions, learned counsel has relied upon the judgment of the Supreme Court in CIT v. Kulu Valley Transport Co. P. Ltd. : [1970]77ITR518(SC) . In the said judgment, the learned judges of the Supreme Court were dealing with the return filed under Sub-section (3) of Section 22 of the Indian Income-tax Act, 1922 (hereinafter, for short, 'the 1922 Act'), which provided that if any person has not furnished a return within the time allowed by Subsection (1) or Sub-section (2) of Section 22, or having furnished a return under either of those Sub-section s, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time, before the assessment is made.
13. Interpreting Sub-section s (1), (2) and (3) of Section 22 of the 1922 Act, the learned judges of the Supreme Court in CIT v. Ranchhoddas Karsondas : [1959]36ITR569(SC) , have observed that there is a time limit provided under Sub-section s (1) and (2) and the failure or omission occurs when that period passes, but Sub-section (3) allows a locus poenitentiae before the assessment is actually made. But in the judgment in the case of CIT v. Kulu Valley Transport Co. P. Ltd. : [1970]77ITR518(SC) , these sections were being examined in the context of Sub-section (2A) of Section 22 which was added by Section 14 of Act No. 25 of 1953 with effect from 1st April, 1952, and the majority view was that Sub-section (3) could not be read as implying that notwithstanding the restriction placed by Sub-section (2A), a return disclosing loss of income will not only be entertained but also carried forward at any time in pursuance of notice under Sub-section (1) or Sub-section (2A) of Section 22 of the 1922 Act. This view is against the interpretation being put by learned counsel for the petitioners and no assistance can be drawn as it was taken in the context of the provisions of Section 22 of the Act. The contrary minority view, that Sub-section s (1), (2) and (2A) of Section 22 of the 1922 Act must be read with Section 22(3) for the purpose of determining the time within which the return has to be submitted, can also not be of any guidance in the present case, for the same reason that it was taken in the context of the provisions of Section 22 of the 1922 Act.
14. It is correct that as per Section 159(4)(a), the time for furnishing return is extended as provided under Clause (b), if the return is not furnished within the time allowed under Sub-section (1) or Sub-section (2) of Section 139 of the Act and a rider is put by the words 'before the assessment is made' but by no stretch of imagination can these words be interpreted as suggested by learned counsel for the petitioners that time for filing the return under Sub-section (1) or (2) of Section 139 of the Act is extended till the assessment order is passed, which may be at any point of time, as in the present case it was on August 26, 1991, much after the expiry of the due time on July 31, 1988, as provided under Section 139(1) of the Act and extended period of two years as provided under Section 139(4)(b)(iii). This rider seems to have been provided for the best judgment assessment which might be made if any person fails to make a return required by any notice given under Sub-section (2) of Section 139 of the Act. Therefore, these words are to be read in the context these are used. Moreover, Sub-section (4) of Section 139 does not control Sub-section (1) of Section 139 which provides statutory period for furnishing the return, which is 'due time' as mentioned in Section 276CC. Therefore, the first submission of learned counsel for the petitioners is rejected.
15. Another submission made by learned counsel for the petitioners is that the expression 'if the failure had not been discovered' governs both Clauses (i) and (ii) of Section 276CC and in a case where there is no such discovery and the return is filed voluntarily, as in the present case, there will be no measure of punishment, in the absence of which there is no justification to hold a trial against the petitioners. According to learned counsel, 'discovery' tantamounts to some action taken by the respondents either by issuing a notice under Section 139(2) or Section 142(1) or Section 148 of the Act calling upon the petitioner to file his return of income or when the respondents would have completed the best judgment assessment under Section 144 of the Act, in the absence of the return of income. Since no such action has been taken in the present case against the petitioners, there is no question of any discovery.
16. We do not find any substance in this submission as we are unable to accept the interpretation proposed by learned counsel for the petitioners. The first part of Section 276CC contains the ingredients of the offence and Clauses (i) and (ii) thereof provide for the punishment. A plain reading of these clauses makes it clear that the expression 'if the failure had not been discovered' does not govern Clause (ii), therefore, even if discovery would mean, as suggested by learned counsel for the petitioners, which has not admittedly been done in the case of the petitioners, their case falls under the category of 'any other case' and the measure of punishment will be imprisonment for a term which shall not be less than three months but which may extend to three years and fine as provided under Clause (ii) of Section 276CC.
17. So far as payment of interest by the petitioners under Sub-section (8) of Section 139 and penalty under Section 271 of the Act is concerned, it is payable for the reasons given in these Sections which are independent of Section 276CC.
18. The third submission made by learned counsel for the petitioners is that respondent No. 1 while passing the order dated March 31, 1992, authorising prosecution of each petitioner, did not consider his/her reply to the show-cause notice that he/she could not furnish the return in due time as the managing partner of the firm did not supply to each petitioner the information with regard to his/her share in the income or loss of the firm for the assessment year 1988-89, till January 17, 1991. Had respondent No. 1 applied his mind to the explanation given by each petitioner, he would have come to the conclusion that the delay in filing the return was not wilful and does not constitute an offence under Section 276CC. In support of his submission, learned counsel has referred to para. 12 of the partnership deed (annexure 'P-1') which provides for powers and duties of the managing partner but in reply learned counsel appearing for the respondents has pointed out that in para. 7 thereof, the partners have full and free access at all times to the books of account of the firm and they are permitted to have any extracts therefrom. Further, in para. 8 of the deed, the accounts of the firm should be closed on March 31, every year when final accounts in the profit and loss account and the balance-sheet should be prepared and audited by a firm of chartered accountants. In view of this, it cannot be said that the explanation of each petitioner in reply to the show cause notice was such that respondent No. 1 should not have proceeded further with the matter. Moreover, it is a question of fact that each petitioner had reasonable cause or explanation not to file his/her return within the 'due time' which he/she has to prove during the course of the trial pending against him/her.
19. Lastly, it is submitted by learned counsel for the petitioners that the ingredients of the offence under Section 276CC are not made out from the complaint, as such, it deserves to be quashed and the petitioners should not be put to trial. On a perusal of the complaint, we do not find any substance in this submission. After giving the facts in paras. 1 to 6, it is stated in para. 7 that '. . . from the above circumstances, it is clear that the accused wilfully failed to furnish in due time the return of income which he/she was required to furnish under law.' Thereafter, the amount of tax evaded by each petitioner is given. Therefore, the averments made in the complaint do, prima facie, constitute an offence under Section 276CC. By now, it is well settled that proceedings against an accused in the initial stage can be quashed only if, on the face of the complaint or the papers accompanying the same, no offence is constituted. The test is that taking the allegations and the complaint on their face value, without adding or subtracting anything, if no offence is made out, the High Court will be justified in quashing the proceedings in exercise of its inherent powers under Section 482 of the Code of Criminal Procedure. (Please see : Raj Kapoor v. State : 1980CriLJ202 ; Municipal Corporation of Delhi v. Ram Kishan Rohtagi : 1983CriLJ159 and Madhavrao Jiwaji Rao Scindia v. Sambhajirao Chandrojirao Angre : 1988CriLJ853 ).
20. Though the present proceedings are not under Section 482 of the Criminal Procedure Code, yet the same principles would apply if the criminal proceedings are sought to be quashed in exercise of extraordinary powers under articles 226 and 227 of the Constitution of India.
21. Now, dealing with the case law cited by learned counsel for the petitioners, we may point out that in Gopalji Shaw v. ITO [1988] 175 ITR 554, the complaint under Section 276CC of the Act was quashed for the reasons that on a perusal of the complaint, the learned judge found that it did not disclose any offence at all and also that penalty proceedings under Section 271(1)(a) of the Act were initiated but no order was passed from which it was inferred that if there were no reason to penalise the petitioner for the delay in filing the return, there could not be wilful default to prosecute him under Section 276CC.
22. In another judgment, CIT v. Maheshprasad Gupta : [1989]178ITR468(MP) , the learned judges answering a reference 'whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the penalty ?' observed that in view of the facts that the partners of the assessee-firm were not properly literate arid were entirely dependent upon the munims for finalisation of the accounts and had taken necessary steps by changing them to get the accounts finalised and, above all, it was their first year of account, the Tribunal was satisfied that the assessee had shown reasonable cause for the delay in filing the return and deleted the penalty.
23. In ITO v. Autofil : [1990]184ITR47(AP) , the learned judge was deciding the appeals against the order of acquittal under Section 276CC of the Act and, after examining the meaning of the term 'wilful failure' in the context of the facts proved on record, held that the delay in filing the return was caused due to illness of the clerk of the assessee, who could not finalise the accounts, it was held that there was no presence of mens rea, a bad motive and a guilty mind, on the part of the assessee, as such, they could not be held guilty of the offence under Section 276CC of the Act.
24. In Narayan v. Union of India : [1994]208ITR82(MP) , the learned judge was dealing with the criminal revision directed against the conviction under Section 276CC of the Act. In view of the proved facts on record that the assessee had failed to furnish the return in due time on account of his illness in respect of which he had produced a medical certificate from a doctor, the credibility of which was not enquired into by the department, it was held that the ingredients of offence under Section 276CC, that the delay was wilful, were not proved beyond reasonable doubt and the revision petition was accepted and conviction set aside.
25. All these judgments are on the facts of each case and are of no help in the cases before us in which the trial is at the initial stage and the prosecution is to be afforded an opportunity to prove its case, which, prima facie, is made out from the averments made in the complaint.
26. The result of the above discussion is that we do not find any merit in these writ petitions and these are dismissed.
27. Before parting, it is made clear that the observations made during the course of this judgment shall have no effect whatsoever on the merits of the case.