Madras HC Quashes Section 276CC Prosecution Where Tax Payable Was Nil

Rajkumar Thiyagarajan Vs Income Tax Department (Madras High Court)

The petition was filed to quash the proceedings in C.C. No.13 of 2016 pending before the learned Additional Chief Judicial Magistrate, Madurai.

The petitioner submitted that the respondent had filed a complaint alleging offences punishable under Sections 276C(1) and 276CC of the Income Tax Act, 1961, on the ground that the petitioner failed to file the return of income for the Assessment Year 2013-14 within the prescribed time. According to the petitioner, the income tax return was subsequently filed on 29.03.2016. After receiving a show cause notice dated 29.04.2016, the petitioner, through a reply dated 24.05.2016, explained that the return had already been filed and that the cash deposits exceeding ₹10,00,000 could be properly explained from the books of account and the TDS referred to in the respondent’s communication. The petitioner also submitted that the computation of income accompanying the return showed entitlement to a refund of ₹1,070, after adjustment of the tax liability of ₹7,19,409 against advance tax and tax deducted at source. The petitioner further contended that the sanction dated 29.07.2016 had been accorded only for prosecution under Section 276CC, whereas the complaint had been filed for offences under Sections 276C(1) and 276CC, rendering the complaint vitiated. It was also contended that the case fell within proviso (ii)(b) to Section 276CC, making the prosecution unsustainable.