Mens Rea Essential For Establishing Offence Of Filing Delayed ITR: Rajasthan High Court

Mens Rea Essential For Establishing Offence Of Filing Delayed ITR: Rajasthan High Court

The Rajasthan High Court has ruled that mens rea is a necessary element for finding an assessee guilty of the offense of filing delayed income tax returns.

Justice Anoop Kumar Dhand noted that without "mens rea," an accused cannot be deemed guilty, and thus, their conviction under Section 276 CC of the Income Tax Act cannot be upheld.

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

Initiating proceedings under Section 271(1) of the Income Tax Act of 1961, a notice dated December 31, 1981, was issued to the respondent. Despite this, the respondent failed to provide any explanation. Subsequently, a reminder was sent, but no response was received. Consequently, the Income Tax Officer levied a penalty of Rs. 2200 on the respondent under Section 271(1).

Charges were leveled against the respondent under Section 276 CC. The accused refuted the charges and opted for a trial. Despite denying the allegations, the assessee did not present any defense evidence. Eventually, the assessee was acquitted.

The department argued that the accusation against the assessee was related to the submission of a delayed income tax return for the assessment year 1978–79, which was filed after a delay of over 28 months. This fact was substantiated by evidence provided by the Income Tax Department. According to them, the trial court had no justification or basis 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 intentional nor driven by any willful misconduct, thus failing to meet the criteria of 'mens rea'. After carefully examining the evidence presented, 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 of 1986 introduced Section 278E to the Income Tax Act, effective 10th September, 1986. This section stipulates that in any prosecution involving an offense under this Act that necessitates a culpable mental state, the court shall presume the existence of such a mental state. The burden of proof is then shifted to the accused to demonstrate that they did not possess such a mental state. According to the explanation provided, the culpable mental state encompasses intention, motive, and knowledge. Furthermore, the absence of this culpable mental state must be proven by the accused as part of their defense, beyond a reasonable doubt.

The court observed that to establish the guilt of the accused for the offense under Section 276C, the complainant must prove the mens rea of the accused regarding non-payment of tax or attempts to evade tax. However, in this instance, the accused respondent has provided a detailed explanation for the delay in filing the income tax returns and subsequently depositing the entire tax amount, along with penalties.

The Court determined that the complainant or appellant did not succeed in proving that the respondent had mens rea to evade tax payment. The Income Tax Department failed to establish the guilt of the accused respondent beyond a reasonable doubt.