Paying income tax but not filing income tax return will cost you dearly as the Madras High Court has held that the burden lies on the assessee to show that he had no wilful intention not to file the return.

Accordingly, the Court has ruled continuation of prosecution in this matter. Experts advise that every tax payer must take full responsibility in filing returns.

A single judge bench of the Court, comprising Justice CV Karthikeyan highlighted ruling by the Supreme Court (Sasi Enterprises vs Assistant Commissioner of Income Tax), where it was clearly stated that filing the return within the stipulated and mandatory period is a duty cast on any person who has to declare the income.

The bench noted that the petitioner had laid the blame on his previous employer stating that there has been a mismatch in the income earned as given in form 16 and as uploaded in form 26AS. It had also been stated that this was not brought to the knowledge of the petitioner since he had left employment. It was also stated that even though the show cause notices were received, he was under the bona fide impression that since tax had been paid, no further action is required from his end.

The bench held that if the taxpayer is liable to file his return then he should file it within the stipulated timeline u/s 139(1). Further, he cannot lay the blame on his previous employer by stating that all taxes have been duly paid and assume that his erstwhile employer would have filed the return. Further, this cannot be treated as a bona fide mistake and it cannot be presumed that he has no intention of committing any offence.

“The burden lies on the assessee to show that he had no wilful intention not to file the return. Any explanation to discharge such burden can be tested only during the course of the trial,” the bench said. Further it mentioned that it cannot presume that the petitioner is innocent of any of the offences complained. “It is for the petitioner to establish such innocence,” the bench said while issuing a direction to the Additional Chief Metropolitan Magistrate for commencement of trial and complete by January 22 next year.

Compliance important

Om Rajpurohit, Director (Corporate & International Tax) with AMRG said this will have a broad influence on the society because many taxpayers are not serious about submitting returns and believe that if taxes are paid, they would be able to avoid prosecution. So, “even if taxes are paid, it is advisable to comply with tax provisions and file the return of income by the due date as prescribed by u/s 139(1) of the Income Tax Act in order to prevent prosecution,” he said.

Shailesh Kumar, Partner, Nangia & Co LLP said that courts are no more benevolent for ignorance of law. If required as per law, filing of return is mandatory and no taxpayer can argue that his responsibility to file the return of income was delegated and call it a bona fide mistake. “It is the duty of every person who has to declare the income and make sure his ITR is duly filed as per law. Also, the tax authorities have an authority to presume that Assessee has a culpable mental state and it is for the Assessee to prove his innocence,” he said.

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