The Apex Court in one of its recent judgment held that non-filing of income tax return may lead to prosecution under the Income Tax Act. The Supreme Court In the case of Sasi Enterprises vs. The Assistant Commissioner of Income Tax, Criminal appeal no. 61 of 2011, has categorically stated that it is an obligation on the part of the assessees to file their returns and the action of non-filing can make them liable to prosecution under the statute.
Brief facts of the case:
In the present case a partnership firm failed to file the income tax return either voluntarily under section 149 of the Income Tax Act or upon receiving notices under sections 142 and 148 of the Act from the AO during separate assessment as well as re-assessment. Accordingly criminal proceedings under section 276CC of the Income Tax Act were initiated by the department against the partners of the said firm. The firm challenged the criminal prosecution of its partners in the criminal court.
The criminal court rejected the challenge of the firm against which the firm preferred an appeal before the High Court. The High Court rejected the appeal filed by the firm.
At last the firm moved before the Supreme Court to challenge the action of prosecution against its partners.
Arguments on behalf of the firm:
The firm in its appeal before the Apex Court contended that the action on the part of the income tax department was wrongful. It was argued that at the time of initiation of criminal proceedings the assessment was sub-judice for the pendency of the appeal against the same; as such no criminal prosecution could have been initiated. The action by the department was alleged to be prima facie illegal.
Judgment of the Apex Court:
The Apex Court rejected the contentions of the firm. It was held that the firm had ample opportunity to file a belated return but failed to do so. For the said reason the Apex Court rejected the appeal and gave directions to the trial court to dispose off the trial soon.
From the judgment of the Supreme Court it is crystal clear that the court holds the opinion that it is better to file income tax return to avoid criminal prosecution. It is a reminder to all the tax payers that they should file their returns diligently. The law relating to income tax does not encourage non-filers and does not also prefer to defend them. The government has taken a strict approach to check tax evasion. The laws are being updated regularly. Thus the tax payers should make their moves with great caution in order to avoid criminal prosecution in future.