I filed my returns late but only after a notice, and I paid the penalty for the delay. Does the proviso to s.276CC save me, and can I get the prosecution quashed by explaining the delay?
No on both counts. The proviso to s.276CC refers only to a return under s.139(1); s.142(1)(i) and s.148 are conspicuously absent from it, so the benefit is available only to voluntary filing and not to a return filed after the failure has been detected and a notice issued. Payment of penalty under Chapter XXI does not exonerate the assessee from prosecution under Chapter XXII, and because s.278E requires the court to presume the culpable mental state, the explanation for the delay must be led as evidence before the Magistrate and cannot be accepted at the quashing stage.
Decided by the High Court (S. Vishwajith Shetty J) on 2025-01-16, reported as NC: 2025:KHC-K:238; Criminal Petition Nos. 201213, 201214, 201215 and 201216 of 2023 (High Court of Karnataka, Kalaburagi Bench). It bears on section 276CC, section 278E, section 139(1), section 139(8A), section 142(1)(i), section 148, section 279(1) of the Income Tax Act 1961, in Prosecution and Evidence & Burden of Proof matters.
This is the answer to two of the most common defences to a s.276CC complaint, and it fixes where they have to be run. The proviso is the practitioner's best point on s.276CC, but it is narrower than it looks: it covers a return furnished before the expiry of the assessment year (or an updated return under s.139(8A) within time), or a case where the tax payable by a person other than a company on the total income determined on regular assessment, reduced by advance tax and self-assessment tax paid before the expiry of the assessment year and by tax deducted or collected at source, does not exceed ten thousand rupees. The statutory words are "on the total income determined on regular assessment", but the figure to work with is the one that finally stands: where the assessment is reduced on appeal or rectification, the threshold is computed on the reduced income, and the library's entries on R.P. Darrmalingam and Manav Menon are where that point lives. It does not extend to a return filed in response to s.142(1)(i) or s.148. The second half of the judgment is the practical trap: s.278E means the assessee's reasons — bereavement, illness, records with an auditor — are not a ground for quashing at all; they are a defence to be proved at trial, and s.278E(2) sets that standard beyond reasonable doubt.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The Income Tax Officer, Ward-1, Bidar filed four separate private complaints under s.200 CrPC against the petitioner, proprietor of a stone crusher, for offences punishable under s.276CC, after obtaining sanction from the competent authority, alleging that he had wilfully failed to submit his returns of income in time for AYs 2012-13 to 2015-16. The Magistrate took cognizance and issued summons in C.C. Nos. 2056/2019, 2332/2019, 2333/2019 and 2334/2019. The petitioner moved the High Court under s.482 CrPC. He contended that on receipt of notice under s.139 he had filed the returns, that penalty was levied for the delay and paid, that the delay was not wilful because his brothers had died during the relevant period, and that he had not been heard by the competent authority before the sanction order was issued, relying on a coordinate Bench decision in C.P. Yogeshwara v. Income Tax Department (Crl.P. No.1998/2016, disposed of 04.01.2017). The Department relied on the presumption under s.278E and on Sasi Enterprises v. ACIT (2014) 361 ITR 163 (SC) and V.P. Punj v. ACIT (2002) 253 ITR 369 (Delhi), and in its statement of objections said the PCIT had issued a show-cause notice before sanction and disposed of the objections by a speaking order.
All four petitions were dismissed, with liberty to the petitioner to raise all grounds before the Magistrate. The benefit of the proviso to s.276CC is available only to voluntary filing of the return required under s.139(1) and does not apply after detection of the failure and issue of a notice under s.142(1)(i) or s.148. Payment of penalty for the delay does not exonerate the assessee from prosecution under Chapter XXII. Because of the presumption under s.278E the court before which the s.276CC proceedings are initiated must presume the culpable mental state, and it is for the accused to rebut it by producing material before that court; the explanation offered at the quashing stage cannot be accepted.
The Court reasoned from the text of the section: s.276CC is attracted by a failure to comply with s.139(1) or to respond to a notice under s.142 or s.148 within the time specified, and the section itself takes in s.139(1), s.142(1)(i) and s.148, but the proviso takes in only s.139(1) and the provisions of s.142(1)(i) and s.148 are conspicuously absent from it; the proviso therefore envisages the filing of even a belated return before discovery of the failure and issuance of notice (para 7). On the penalty point it read Chapter XXI and Chapter XXII together and held that delay in filing not only results in payment of penalty but also results in prosecution, so payment of penalty does not exonerate (para 8). It then set out s.276CC and s.278E in full (para 9) and held that the presumption in s.278E requires the trial court to presume the mental state, leaving it to the accused to rebut it by producing material, failing which he is liable to be punished (para 10). It applied Sasi Enterprises, quoting the passage that the court in a prosecution such as s.276CC has to presume the existence of mens rea and it is for the accused to prove the contrary and that too beyond reasonable doubt, and that the appellants have to prove the circumstances which prevented them from filing the returns (para 12), and V.P. Punj to the same effect (para 13). The sanction challenge failed on the material in the statement of objections showing a show-cause notice and a speaking order (para 11). C.P. Yogeshwara was held to be of no assistance because in that case the Court had not taken notice of the presumption available under s.278E, and in any event Sasi Enterprises governed (para 14).
Consequently, the benefit of the proviso is available only to voluntary filing of the return as required under Section 139(1) of the Act.
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Handle my notice → Ask a CA on WhatsAppNo on both counts. The proviso to s.276CC refers only to a return under s.139(1); s.142(1)(i) and s.148 are conspicuously absent from it, so the benefit is available only to voluntary filing and not to a return filed after the failure has been detected and a notice issued. Payment of penalty under Chapter XXI does not exonerate the assessee from prosecution under Chapter XXII, and because s.278E requires the court to presume the culpable mental state, the explanation for the delay must be led as evidence before the Magistrate and cannot be accepted at the quashing stage. This was decided by the High Court (S. Vishwajith Shetty J) and bears on section 276CC, section 278E, section 139(1), section 139(8A), section 142(1)(i), section 148, section 279(1) of the Income Tax Act 1961. It is reported as NC: 2025:KHC-K:238; Criminal Petition Nos. 201213, 201214, 201215 and 201216 of 2023 (High Court of Karnataka, Kalaburagi Bench). This is the answer to two of the most common defences to a s.276CC complaint, and it fixes where they have to be run. The proviso is the practitioner's best point on s.276CC, but it is narrower than it looks: it covers a return furnished before the expiry of the assessment year (or an updated return under s.139(8A) within time), or a case where the tax payable by a person other than a company on the total income determined on regular assessment, reduced by advance tax and self-assessment tax paid before the expiry of the assessment year and by tax deducted or collected at source, does not exceed ten thousand rupees. The statutory words are "on the total income determined on regular assessment", but the figure to work with is the one that finally stands: where the assessment is reduced on appeal or rectification, the threshold is computed on the reduced income, and the library's entries on R.P. Darrmalingam and Manav Menon are where that point lives. It does not extend to a return filed in response to s.142(1)(i) or s.148. The second half of the judgment is the practical trap: s.278E means the assessee's reasons — bereavement, illness, records with an auditor — are not a ground for quashing at all; they are a defence to be proved at trial, and s.278E(2) sets that standard beyond reasonable doubt. If it applies to you, the first step is this: Establish first whether the return relied on was furnished under s.139(1) or in response to a notice under s.142(1)(i) or s.148; on this authority only the former can attract the proviso.
The Income Tax Officer, Ward-1, Bidar filed four separate private complaints under s.200 CrPC against the petitioner, proprietor of a stone crusher, for offences punishable under s.276CC, after obtaining sanction from the competent authority, alleging that he had wilfully failed to submit his returns of income in time for AYs 2012-13 to 2015-16. The Magistrate took cognizance and issued summons in C.C. Nos. 2056/2019, 2332/2019, 2333/2019 and 2334/2019. The petitioner moved the High Court under s.482 CrPC. He contended that on receipt of notice under s.139 he had filed the returns, that penalty was levied for the delay and paid, that the delay was not wilful because his brothers had died during the relevant period, and that he had not been heard by the competent authority before the sanction order was issued, relying on a coordinate Bench decision in C.P. Yogeshwara v. Income Tax Department (Crl.P. No.1998/2016, disposed of 04.01.2017). The Department relied on the presumption under s.278E and on Sasi Enterprises v. ACIT (2014) 361 ITR 163 (SC) and V.P. Punj v. ACIT (2002) 253 ITR 369 (Delhi), and in its statement of objections said the PCIT had issued a show-cause notice before sanction and disposed of the objections by a speaking order. The matter was decided on 2025-01-16 by the High Court (S. Vishwajith Shetty J). On those facts the High Court held as follows. All four petitions were dismissed, with liberty to the petitioner to raise all grounds before the Magistrate. The benefit of the proviso to s.276CC is available only to voluntary filing of the return required under s.139(1) and does not apply after detection of the failure and issue of a notice under s.142(1)(i) or s.148. Payment of penalty for the delay does not exonerate the assessee from prosecution under Chapter XXII. Because of the presumption under s.278E the court before which the s.276CC proceedings are initiated must presume the culpable mental state, and it is for the accused to rebut it by producing material before that court; the explanation offered at the quashing stage cannot be accepted.
The Court reasoned from the text of the section: s.276CC is attracted by a failure to comply with s.139(1) or to respond to a notice under s.142 or s.148 within the time specified, and the section itself takes in s.139(1), s.142(1)(i) and s.148, but the proviso takes in only s.139(1) and the provisions of s.142(1)(i) and s.148 are conspicuously absent from it; the proviso therefore envisages the filing of even a belated return before discovery of the failure and issuance of notice (para 7). On the penalty point it read Chapter XXI and Chapter XXII together and held that delay in filing not only results in payment of penalty but also results in prosecution, so payment of penalty does not exonerate (para 8). It then set out s.276CC and s.278E in full (para 9) and held that the presumption in s.278E requires the trial court to presume the mental state, leaving it to the accused to rebut it by producing material, failing which he is liable to be punished (para 10). It applied Sasi Enterprises, quoting the passage that the court in a prosecution such as s.276CC has to presume the existence of mens rea and it is for the accused to prove the contrary and that too beyond reasonable doubt, and that the appellants have to prove the circumstances which prevented them from filing the returns (para 12), and V.P. Punj to the same effect (para 13). The sanction challenge failed on the material in the statement of objections showing a show-cause notice and a speaking order (para 11). C.P. Yogeshwara was held to be of no assistance because in that case the Court had not taken notice of the presumption available under s.278E, and in any event Sasi Enterprises governed (para 14). In the words reproduced by the source cited on this page: "Consequently, the benefit of the proviso is available only to voluntary filing of the return as required under Section 139(1) of the Act." The decision followed or applied Sasi Enterprises v. Assistant Commissioner of Income Tax (2014) 361 ITR 163 (SC) — followed; V.P. Punj v. Assistant Commissioner of Income Tax (2002) 253 ITR 369 (Delhi) — followed; C.P. Yogeshwara v. Income Tax Department, Crl.P. No.1998/2016 (Karnataka), disposed of 04.01.2017 — held to be of no assistance because s.278E was not noticed.
It was decided by the High Court on 2025-01-16 and is reported as NC: 2025:KHC-K:238; Criminal Petition Nos. 201213, 201214, 201215 and 201216 of 2023 (High Court of Karnataka, Kalaburagi Bench). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 276CC, section 278E, section 139(1), section 139(8A), section 142(1)(i), section 148, section 279(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. All four petitions were dismissed, with liberty to the petitioner to raise all grounds before the Magistrate. The benefit of the proviso to s.276CC is available only to voluntary filing of the return required under s.139(1) and does not apply after detection of the failure and issue of a notice under s.142(1)(i) or s.148. Payment of penalty for the delay does not exonerate the assessee from prosecution under Chapter XXII. Because of the presumption under s.278E the court before which the s.276CC proceedings are initiated must presume the culpable mental state, and it is for the accused to rebut it by producing material before that court; the explanation offered at the quashing stage cannot be accepted. It arises in Prosecution and Evidence & Burden of Proof matters, on section 276CC, section 278E, section 139(1), section 139(8A), section 142(1)(i), section 148, section 279(1) of the Income Tax Act 1961, and was decided by S. Vishwajith Shetty J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the return was voluntary, work the two limbs of the proviso separately — whether it was furnished before the expiry of the assessment year (or as an updated return under s.139(8A) within the time provided), and the arithmetic of the tax payable after credit for advance tax, self-assessment tax paid before the end of the assessment year, and TDS and TCS. Do not stop at the assessed figure: if the quantum appeal has reduced the total income, or prepaid taxes have been given credit since, recompute the proviso arithmetic on the figure as it finally stands before conceding that the threshold is exceeded. Do not treat payment of the s.271F or s.271(1)(a) penalty as closing the matter; Chapters XXI and XXII operate independently. Take the sanction point only if the record shows no show-cause notice or no speaking order — the sanction survived here because the PCIT had issued a show-cause notice and disposed of the objections by a speaking order. Plan the defence for the trial court: identify the witnesses and documents that will prove the absence of a culpable mental state, and be ready to meet the standard in s.278E(2).
Validity check could not be completed. Validity check could not be completed. No search for an appeal or later treatment was carried out on this pass. The judgment declines to follow an earlier coordinate Bench decision of the same High Court (C.P. Yogeshwara) on the ground that s.278E was not noticed there, so the position within that High Court should be checked before this is relied on as settled. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Para 9 sets out s.276CC in full, including the proviso with the figure 'ten thousand rupees' in limb (ii)(b) and the punishment threshold 'twenty-five hundred thousand rupees' in clause (i), and s.278E in full. The judgment does not identify the amending Act or the date from which the ten thousand rupee figure applies, and no attempt is made here to state one; a Rajasthan High Court judgment of April 2024 read on the same pass reproduces s.276CC with the older clause (i) figure of 'one hundred thousand rupees' while its text of the proviso also reads 'ten thousand rupees', so reproductions of this section in judgments are not uniform and should be checked against a current source. Para 9 also prints 'clause (1) of sub-section (1) of section 142' where the section reads 'clause (i)'. The extract of Sasi Enterprises in para 12 is described as para 30 of that judgment; that attribution was not independently verified. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
All four petitions were dismissed, with liberty to the petitioner to raise all grounds before the Magistrate. The benefit of the proviso to s.276CC is available only to voluntary filing of the return required under s.139(1) and does not apply after detection of the failure and issue of a notice under s.142(1)(i) or s.148. Payment of penalty for the delay does not exonerate the assessee from prosecution under Chapter XXII. Because of the presumption under s.278E the court before which the s.276CC proceedings are initiated must presume the culpable mental state, and it is for the accused to rebut it by producing material before that court; the explanation offered at the quashing stage cannot be accepted.
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My return was only processed under 143(1). Does that stop the department reopening it later?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
A reassessment was done in between. Does the two-year clock for s.263 restart from it?