The court ruled that an offence under Section 276CC is committed immediately after the due date for filing returns, and the actual filing date does not negate the classification as a 'first offence' under the compounding guidelines.

JUDGMENT :

J.B. PARDIWALA, J.

For the convenience of exposition, this judgment is divided into the following parts:

1. Leave granted.

2. This appeal arises from the judgment and order passed by the High Court of Gujarat dated 21.03.2017 in Special Civil Application No. 5386 of 2017 (hereinafter referred to as “the impugned order”) by which the High Court rejected the writ petition filed by the appellant herein and thereby upheld the order of the Chief Commissioner of Income Tax, Vadodara (“Respondent No. 1”) dated 14.02.2017 rejecting the application preferred by the appellant-assessee for compounding of the offence under Section 276CC of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

(A) FACTUAL MATRIX

3. The appellant is an individual earning income by way of salary and also by way of share of profit of partnership firm engaged in the business of chemicals. He filed his income tax returns for the AY 2011-12 and 2013-14 on 04.03.2013 and 29.11.2014 respectively declaring his income to be Rs. 49,79,700/- and Rs. 31,87,420/- respectively. The due dates for the filing of returns for AY 2011-12 and 2013-14 were 30.09.2011 and 31.10.2013 respectively and as such there was delay on the part of the appellant in filing the return of income for the said assessment years.

4. On 27.10.2014, a show cause notice was issued to the appellant by the Commissioner of Income Tax - III, Baroda alleging violation of Section 276CC of the Act for the AY 2011-12. The notice stated that although the due date for filing the income tax return for the AY 2011-12 was 01.08.2011 yet the appellant had filed the same with delay on 04.03.2013. The notice further stated that after allowing for the credit of prepaid taxes, the appellant was liable to pay self-assessment tax of Rs. 0/- which however remained unpaid by the due date prescribed for the filing of return of income. In the last, the appellant was called upon to show cause as to why proceedings under Section 276CC of the Act should not be initiated against him. The contents of the said notice are extracted herein-below:

“Office of the Commissioner of Income Tax-III

2nd floor, Aayakar Bhavan, Race Course Circle,

Baroda-390007

No. BRD/CIT-III/HQ/Pros/17/2014-15

Dated: 27.10.2014

To,

Shri Vinubhai Mohanbhai Dobaria

B-2/203, Subhlaxmi Coop. Housing Society

Ankleshwar

PAN ACIPD4420D

Sir/Sirs,

Sub: Launching of prosecution under section 276CC of the income Tax Act, 1961 Chapter XXII of the I.T. Act 1961 regd.

1. On examination of records, it is seen that you have furnished your return of income for the assessment year 2011-12 declaring total income of Rs. 49,79,700/- on 4.3.2013. Further, after allowing credit of prepaid taxes, you were liable to pay self assessment tax of Rs. 0/- by due date of filing of return. Later, your return of income was processed under section 143(1) of the Act 20.3.2013 determining demand of Rs. 0/- out of which Rs. 0/- is still pending.

2. In this context, take notice and show cause as to why proceedings under section 276CC of the Act should not be initiated against you for failure to furnish returns of income after the expiry of the assessment year. You may attend either personally or through representative duly authorized on 11.11.2014 at 12.30 p.m. If you fail to attend, it would be presumed you have nothing to say in the matter and this office shall proceed in the matter accordingly.

Yours faithfully

Sd/-

S.R. Malik

Commissioner of Income Tax-III, Baroda”

5. The appellant replied to the aforesaid show cause notice along with the application for compounding in accordance with the Guid