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Rajasthan HC Rules: Mens Rea Essential for Guilt in Delayed Income Tax Returns Filing

Rajasthan HC Rules: Mens Rea Essential for Guilt in Delayed Income Tax Returns Filing

The Rajasthan High Court has ruled that proving "mens rea" is essential when determining an assessee's culpability for filing delayed income tax returns.

The single headed bench of Justice Anoop Kumar Dhand noted that without establishing mens rea, an accused cannot be deemed guilty, and consequently, their conviction under Section 276 CC of the Income Tax Act cannot stand.

The Income Tax Officer, with sanction from the Commissioner of Income Tax, filed a criminal complaint against the respondent-assessee under Section 276 CC of the Income Tax Act. The complaint stated that the assessee failed to submit their income tax returns by the deadline of July 31, 1978, as required under Section 139(1), and instead filed them on December 31, 1980.

Proceedings under Section 271(1) of the Income Tax Act of 1961 were initiated with a notice dated December 31, 1981. Despite receiving the notice, the respondent failed to provide any explanation. Subsequently, a reminder was issued, yet no response was received. Consequently, the Income Tax Officer imposed a penalty of Rs. 2200 on the respondent under Section 271(1).

The respondent was charged under Section 276 CC, to which they pleaded not guilty and opted for a trial. Despite denying the allegations, the assessee did not present any defense evidence. Eventually, the assessee was acquitted of the charges.

The department argued that the allegation against the assessee was the submission of a delayed income tax return for the assessment year 1978–79, which occurred more than 28 months after the due date. Evidence provided by the Income Tax Department supported this claim. The department asserted that there was no justification or basis for the trial court to acquit the respondent of the charges.

The assessee argued that while there was indeed a delay in filing the income tax return, it was not deliberate or intentional, thus not meeting the requirement of 'mens rea'. Upon thorough examination of the available evidence, the court delivered a well-reasoned judgment in favor of the respondent, granting them the benefit of the doubt.

The Tax Law Amendment and Miscellaneous Provisions Act, 1986, introduced Section 278E to the Act effective from September 10, 1986. This section stipulates that in any prosecution for an offense under this Act that necessitates a "culpable mental state" on the part of the accused, the Court shall presume the presence of such a mental state.

Under the explanation provided, the culpable mental state encompasses "intention," "motive," and "knowledge." Consequently, the burden shifts to the accused to demonstrate that they did not possess such a mental state. The absence of this culpable mental state must be proven by the accused in their defense, and this burden requires proof beyond a reasonable doubt.

The court observed that to establish the guilt of the accused under Section 276C, the complainant must prove the mens rea of the accused regarding non-payment of tax or attempted tax evasion. However, in this case, the respondent provided a detailed explanation for the delay in filing the income tax returns and subsequently deposited the entire tax amount along with a penalty.

The Court concluded that the complainant or appellant failed to demonstrate that the respondent had the mens rea to evade tax payment. The Income Tax Department was unable to establish the guilt of the accused respondent beyond a reasonable doubt.

Counsel For Appellant: Siddharth Bapna

Counsel For Respondent: Shiv Pratap Singh Rathore

Case Title: The Income Tax Officer Versus Rajendra Prasad Vaish

Case No.: S.B. Criminal Appeal No. 543/1991

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