A notice under Section 139(2) of the Income-tax Act, 1961 must be issued and served before the end of the relevant assessment year for prosecution under Section 276CC of the Act.

N.K.Sinha, J.

1. The application is for quashing the entire criminal prosecution initiated against the petitioner in Complaint Case No. 68 of 1986 under Sec. 276CC of the Income-tax Act, 1961, presently pending before the Special Court (Economic Offences), Muzaffarpur.

2. Only such of the facts as are necessary for disposal of the application need be stated. The Income-tax Officer, O.P. No. 2, filed a complaint alleging that on September 20, 1980, the residential and business premises of the petitioner were searched under Sec. 132(1) of the Income-tax Act, 1961 (hereinafter "the Act"). In the course of search a large number of incriminating books of account including duplicate sets of books were seized by the officers of the Department. On a scrutiny of the books of account seized, it was detected that the accused had income from other sources and he had not disclosed his true income to the Department and had been evading payment of taxes. As there was concealment of substantial income for the assessment year 1983-84 a notice under Sec. 139(2) of the Act was issued against the accused. The due date for filing the return of income was June 30, 1983. The accused filed the return of income on December 17, 1985, i.e., long after the expiry of the due date for filing the return for the assessment year 1983-84. The complainant thereafter charged the accused for having miserably failed to furnish the return by the due date for his income which he was required to file under Sub-sec. (2) of Sec. 139 and Section 148 of the Act, which was an offence punishable under Sec. 276CC of the Act. The complaint was filed after obtaining the sanction order of the Commissioner of Income-tax as required under Sec. 279(1) of the Act.

3. Sri K. M. Jain, learned counsel for the petitioner, referred to a number of grounds taken in the application for quashing the order dated March 29, 1986, passed by the Special Court taking cognizance on the basis of the complaint as also, the entire criminal prosecution based thereon. A supplementary affidavit has also been filed enclosing a copy of a circular of the Department of Revenue, Central Board of Direct Taxes, Government of India, dated February 7, 1991, on the subject of guidelines for prosecution under the direct tax laws. As per the guidelines there could be no prosecution under Sec. 276CC of the Act for failure to furnish the return of income, in case the net tax involved is less than Rs. 5,000 (five thousand) and the taxpayers were not habitual defaulters. Since the total tax chargeable was only Rs. 2,577 as per the assessment order, copy of which is annexure "3", it was argued that in terms of the guidelines of the Department referred to above the criminal prosecution of the petitioner ought not to be allowed to continue even if he had committed the alleged offence.

4. Mr. Jain, however, confined his argument mainly to the ground that as per the provision of Sub-sec. (2) of Sec. 139 of the Act, as it stood before its amendment with effect from April 1, 1989, the Assessing Officer was required to issue a notice to the petitioner and serve the same upon him before the end of the relevant assessment year. He pointed out that the petitioner-assessee was required to file his return of income by June 30, 1983, and the Assessing Officer within the meaning of Sec. 139(2) of the Act could have issued the notice to him and served the same on him under the law by the end of the relevant assessment year which happened to be March 31, 1984. The relevant portion of Sub-sec. (2) of Sec. 139 of the Act provides that in the case of every person who, in the Assessing Officers opinion is assessable under this Act, whether on his own total income or on the total income of any other person during the previous year, the Assessing Officer may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the n