M/ R.K. CITY DEVELOPERS PRIVATE LIMITED AND ORS vs. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE AND ORS

Facts

The petitioners, R.K. City Developers Private Limited and its Directors Rakesh Kumar and Satish Kumar, seek to quash a criminal complaint filed under Section 276CC of the Income Tax Act, 1961, for Assessment Year 2013-14, and the summoning order. A search under Section 132 was conducted on October 25, 2018. A notice under Section 153A was issued on May 24, 2019, requiring the filing of the income tax return within 30 days. The return was finally filed on December 19, 2020, resulting in a delay of 545 days. Show cause notices were issued, and replies were submitted, but the explanations for the delay were not accepted. An assessment order dated September 9, 2021, raised a demand of Rs. 2,93,12,370/-. Penalty proceedings under Section 271(1)(c) were also initiated. Sanction to prosecute was granted, leading to the filing of the criminal complaint and the subsequent summoning order.

Held

The High Court held that the delay in filing the income tax return was not justifiable and fell within the ambit of 'willful' failure under Section 276CC of the Income Tax Act, 1961. The court reasoned that the bereavement due to the demise of petitioner No. 2's father in 2017 could not explain the delay, especially since the notice under Section 153A was issued in 2019, approximately two years later. Furthermore, even considering the benefit of the COVID-19 period (March 15, 2020, to February 28, 2022), the delay from June 24, 2019 (expiry of the notice period) to March 20, 2020, remained unexplained. The court distinguished the cited case of *Narayan* by noting that the explanation of illness there was supported by an unchallenged medical certificate, unlike the present case where the petitioners failed to establish that the delay was not willful. Consequently, the summoning order was found to be not erroneous. The petition was dismissed.

Key Issues

1. Whether the delay in filing the income tax return for Assessment Year 2013-14, which was 545 days, can be considered 'willful' as contemplated under Section 276CC of the Income Tax Act, 1961, thereby justifying prosecution? (Question of law and fact, concerning Section 276CC). Assessee's Contention: The petitioners argued that the delay was not willful. They cited the demise of petitioner No. 2's father in 2017 and the onset of the COVID-19 pandemic as reasons for the delay. They relied on the judgment in *Narayan vs. Union of India* (Cri. Rev. No. 112 of 1992) and the Supreme Court's order in *Suo Motu Writ Petition (Civil) No.3 of 2020* concerning the extension of limitation due to COVID-19. Revenue's Contention: The judgment does not explicitly record the revenue's arguments, but it details the revenue's actions in initiating the prosecution and rejecting the assessee's explanations for the delay.