Rakshit Jain v. ACIT (2018) 171 DTR 401 / 305 CTR 577 / 103 CCH 64 (Delhi)(HC) Shrawan Gupta v. ACIT (2018) 171 DTR 401/ 305 CTR 577 / 103 CCH 64 (Delhi)(HC)/MGF Development Ltd v. ACIT (2018) 171 DTR 401/ 305 CTR 577 (Delhi)( HC) .

S. 276CC : Offences and prosecutions–Companies–Failure to furnish return would not come in way of criminal prosecution-Sanction–Commissioner empowered to sou moto initiate penalty even if assessing authority is Additional Commissioner-Return of income–Failure to furnish–Omission on part of the AO to impose penalty by itself does not mean default is not willful-Return of Income–Primary responsibility of furnishing return is of Managing Director–Directors also equally responsible for furnishing return. [S.139, 140, 271F, 278B, 279]

Assessee failed to file its return of income. AO filed a criminal complaint against the assessee, its directors and managing director alleging offence under section 276CC. Assessee filed a petition seeking quashing of the proceedings. The High Court held that there was no denial at this stage that there was a failure to furnish return. Whether or not there was justification for such default was a matter of defence which may be agitated during the trial. The assessment proceedings are independent of this matter and they would not come in the way of criminal prosecution. The High Court  further held that prosecution can be initiated by issuing notice under section 279 at the instance of the authorities superior to the AO including officer of the level of the Commissioner or even above in hierarchy. . Further the High Court held that penalty as envisaged in section 271F was to be determined by the AO. Omission on part of the AO to impose penalty by itself does not mean that the default was not willful. The High Court also held that the prime responsibility of furnishing return of the company is of the Managing Director. Incase of unavoidable difficulties of the Managing Director to abide by the requirements of the law, responsibility of the other directors cannot be ignored.  (AY. 2011-12)