My belated return showed a refund due, so no tax was payable on regular assessment and the proviso to s.276CC protects me. Can I be discharged on that ground before trial?
Not on this authority. The Telangana High Court held that whether the accused was entitled to a refund, whether there was wilful failure to furnish the return in due time, and whether the notice was validly served are all matters to be decided only after a full trial, and refused to interfere with the dismissal of the discharge application. It also applied the settled position that the benefit of the proviso is available only to a voluntary return under s.139(1) filed before the failure is detected, and not once a notice under s.142(1)(i) or s.148 has been issued.
Decided by the High Court (Dr. G. Radha Rani J) on 2022-10-31, reported as Criminal Revision Case No. 2922 of 2017 (Telangana High Court). It bears on section 276CC, section 278E, section 139(1), section 139(4), section 279(1), section 282 of the Income Tax Act 1961, in Prosecution matters.
The proviso to s.276CC is the best defence a s.276CC accused has, and this decision marks its practical limits. First, the second limb — tax payable on the total income determined on regular assessment, as reduced by advance tax and tax deducted at source, not exceeding the statutory figure — presupposes a regular assessment. Where none has been made, the accused cannot establish the limb on the papers, and the court will not assume it in his favour at the discharge stage. Second, and this is the point on s.148 that the notice-holder needs: s.276CC itself catches a failure to furnish a return under s.139(1), under a notice under s.142(1)(i), and under s.148, but the proviso is expressed only in terms of a return under s.139(1), and s.142(1)(i) and s.148 are conspicuously absent from it. So the proviso cannot be invoked at all in respect of a s.148 return, and even for a s.139(1) return it envisages a belated filing before the detection or discovery of the failure. Third, the accused's argument that no prosecution can lie until the tax evaded has been quantified by assessment was rejected: the offence under s.276CC is complete on the non-filing and is unrelated to the pendency of assessment proceedings. Note the counter-authority: the Madras High Court in Manav Menon v. DCIT (2023), already in the library, gave effect to the prepaid-taxes limb of the proviso, and the Madhya Pradesh decision in Rameshwar Prasad Sunderlal relied on here by the accused had held that the prosecution must lead evidence to show the case does not fall within the proviso. Which way a court goes may turn on whether an assessment has actually been completed.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The accused derived rental income from properties let out to various tenants. For assessment year 2013-14 his return was due on or before 31 July 2013 under s.139(1) and could have been filed under s.139(4) up to 31 March 2015; it was filed only on 20 June 2016. The Department's case was that during the relevant period he had cash deposits of Rs 20,00,000 in a savings bank account, a turnover of Rs 1,22,27,376 reported in service tax returns, interest of Rs 2,88,864 as per TDS return and rent of Rs 58,24,294 as per TDS return, and that the maximum amount not chargeable to tax for that year was Rs 2,00,000. A show cause notice dated 2 June 2016 was served on 8 June 2016 on the accused's wife; he neither appeared nor replied. A private complaint was filed under s.276CC read with s.278E and the matter became C.C. No. 210 of 2016 before the Special Judge for Economic Offences cum VIII Additional Metropolitan Sessions Judge, Hyderabad. The accused applied for discharge under s.245(1) CrPC, contending that the return he filed on 20 June 2016 claimed a refund of Rs 6,370 so that proviso (ii)(b) to s.276CC applied squarely, that the complaint and sanction order showed no computation of income assessed, tax and interest, that the punishment being linked to tax evaded no prosecution could lie without determination of the tax, that the sanction under s.279(1) was vitiated for lack of application of mind, and that service of notice did not comply with s.282. The complainant's own witness accepted in cross-examination that the sanction order had been issued without taking the belated return into account. The trial court dismissed the discharge application by order dated 26 October 2017, relying on Prakash Nath Khanna, and the accused filed this criminal revision.
The criminal revision was dismissed and the trial court's refusal of discharge confirmed. Whether the accused was entitled to a refund of tax, whether there was wilful failure to furnish the return in due time, and whether service of the notice on the accused's wife was valid are all questions to be decided only after a full-fledged trial, and the trial court's order disclosed no illegality or impropriety.
The Court set out s.139 and s.276CC and held that s.139 places a statutory mandate on every person to file the return before the due date, which for this assessee was 31 July 2013. It found as a fact that he had filed neither by that date nor within the extended period under s.139(4) ending 31 March 2015, but only on 20 June 2016, after the show cause notice. It then applied Sasi Enterprises v. ACIT, quoting the passages holding that s.276CC applies where an assessee has failed to file a return as required by s.139 or in response to notices under s.142 or s.148; that the proviso gives relief to genuine assessees, either by allowing a belated s.139(1) return before the end of the assessment year or by exempting those whose tax payable on regular assessment, after advance tax and tax deducted at source, does not exceed the statutory figure; and that the benefit of the proviso is available only to voluntary filing under s.139(1), so that it does not apply after detection of the failure and after a notice under s.142(1)(i) or s.148 calling for a return. It further quoted Sasi Enterprises to the effect that the proviso does not say the offence has not been committed by those within it, only that such a person shall not be proceeded against; that the proviso cannot control the main section; and that the offence under s.276CC is committed on the non-filing of the return and is totally unrelated to the pendency of assessment proceedings. Against the accused's reliance on Rameshwar Prasad Sunderlal, which had held that the prosecution laid no evidence to show the case did not fall within proviso (ii)(b), the Court preferred that later Supreme Court statement. It also noted the trial court's reasoning that the Department had not held the accused entitled to a refund and that the question could not be decided at that stage, and that the validity of service was a mixed question of law and fact.
Thus, the contentions of the learned counsel for the petitioner, whether the accused was entitled for refund of tax and whether there was willful failure to furnish the return in due time and whether the service of notice on the wife of the accused is valid or not has to be decided only after full-fledged trial.
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Handle my notice → Ask a CA on WhatsAppNot on this authority. The Telangana High Court held that whether the accused was entitled to a refund, whether there was wilful failure to furnish the return in due time, and whether the notice was validly served are all matters to be decided only after a full trial, and refused to interfere with the dismissal of the discharge application. It also applied the settled position that the benefit of the proviso is available only to a voluntary return under s.139(1) filed before the failure is detected, and not once a notice under s.142(1)(i) or s.148 has been issued. This was decided by the High Court (Dr. G. Radha Rani J) and bears on section 276CC, section 278E, section 139(1), section 139(4), section 279(1), section 282 of the Income Tax Act 1961. It is reported as Criminal Revision Case No. 2922 of 2017 (Telangana High Court). The proviso to s.276CC is the best defence a s.276CC accused has, and this decision marks its practical limits. First, the second limb — tax payable on the total income determined on regular assessment, as reduced by advance tax and tax deducted at source, not exceeding the statutory figure — presupposes a regular assessment. Where none has been made, the accused cannot establish the limb on the papers, and the court will not assume it in his favour at the discharge stage. Second, and this is the point on s.148 that the notice-holder needs: s.276CC itself catches a failure to furnish a return under s.139(1), under a notice under s.142(1)(i), and under s.148, but the proviso is expressed only in terms of a return under s.139(1), and s.142(1)(i) and s.148 are conspicuously absent from it. So the proviso cannot be invoked at all in respect of a s.148 return, and even for a s.139(1) return it envisages a belated filing before the detection or discovery of the failure. Third, the accused's argument that no prosecution can lie until the tax evaded has been quantified by assessment was rejected: the offence under s.276CC is complete on the non-filing and is unrelated to the pendency of assessment proceedings. Note the counter-authority: the Madras High Court in Manav Menon v. DCIT (2023), already in the library, gave effect to the prepaid-taxes limb of the proviso, and the Madhya Pradesh decision in Rameshwar Prasad Sunderlal relied on here by the accused had held that the prosecution must lead evidence to show the case does not fall within the proviso. Which way a court goes may turn on whether an assessment has actually been completed. If it applies to you, the first step is this: Establish first whether a regular assessment has been made for the year; without one you cannot work the second limb of the proviso, and the court will send the question to trial.
The accused derived rental income from properties let out to various tenants. For assessment year 2013-14 his return was due on or before 31 July 2013 under s.139(1) and could have been filed under s.139(4) up to 31 March 2015; it was filed only on 20 June 2016. The Department's case was that during the relevant period he had cash deposits of Rs 20,00,000 in a savings bank account, a turnover of Rs 1,22,27,376 reported in service tax returns, interest of Rs 2,88,864 as per TDS return and rent of Rs 58,24,294 as per TDS return, and that the maximum amount not chargeable to tax for that year was Rs 2,00,000. A show cause notice dated 2 June 2016 was served on 8 June 2016 on the accused's wife; he neither appeared nor replied. A private complaint was filed under s.276CC read with s.278E and the matter became C.C. No. 210 of 2016 before the Special Judge for Economic Offences cum VIII Additional Metropolitan Sessions Judge, Hyderabad. The accused applied for discharge under s.245(1) CrPC, contending that the return he filed on 20 June 2016 claimed a refund of Rs 6,370 so that proviso (ii)(b) to s.276CC applied squarely, that the complaint and sanction order showed no computation of income assessed, tax and interest, that the punishment being linked to tax evaded no prosecution could lie without determination of the tax, that the sanction under s.279(1) was vitiated for lack of application of mind, and that service of notice did not comply with s.282. The complainant's own witness accepted in cross-examination that the sanction order had been issued without taking the belated return into account. The trial court dismissed the discharge application by order dated 26 October 2017, relying on Prakash Nath Khanna, and the accused filed this criminal revision. The matter was decided on 2022-10-31 by the High Court (Dr. G. Radha Rani J). On those facts the High Court held as follows. The criminal revision was dismissed and the trial court's refusal of discharge confirmed. Whether the accused was entitled to a refund of tax, whether there was wilful failure to furnish the return in due time, and whether service of the notice on the accused's wife was valid are all questions to be decided only after a full-fledged trial, and the trial court's order disclosed no illegality or impropriety.
The Court set out s.139 and s.276CC and held that s.139 places a statutory mandate on every person to file the return before the due date, which for this assessee was 31 July 2013. It found as a fact that he had filed neither by that date nor within the extended period under s.139(4) ending 31 March 2015, but only on 20 June 2016, after the show cause notice. It then applied Sasi Enterprises v. ACIT, quoting the passages holding that s.276CC applies where an assessee has failed to file a return as required by s.139 or in response to notices under s.142 or s.148; that the proviso gives relief to genuine assessees, either by allowing a belated s.139(1) return before the end of the assessment year or by exempting those whose tax payable on regular assessment, after advance tax and tax deducted at source, does not exceed the statutory figure; and that the benefit of the proviso is available only to voluntary filing under s.139(1), so that it does not apply after detection of the failure and after a notice under s.142(1)(i) or s.148 calling for a return. It further quoted Sasi Enterprises to the effect that the proviso does not say the offence has not been committed by those within it, only that such a person shall not be proceeded against; that the proviso cannot control the main section; and that the offence under s.276CC is committed on the non-filing of the return and is totally unrelated to the pendency of assessment proceedings. Against the accused's reliance on Rameshwar Prasad Sunderlal, which had held that the prosecution laid no evidence to show the case did not fall within proviso (ii)(b), the Court preferred that later Supreme Court statement. It also noted the trial court's reasoning that the Department had not held the accused entitled to a refund and that the question could not be decided at that stage, and that the validity of service was a mixed question of law and fact. In the words reproduced by the source cited on this page: "Thus, the contentions of the learned counsel for the petitioner, whether the accused was entitled for refund of tax and whether there was willful failure to furnish the return in due time and whether the service of notice on the wife of the accused is valid or not has to be decided only after full-fledged trial." The decision followed or applied Sasi Enterprises v. Assistant Commissioner of Income Tax (2014) 361 ITR 163 (SC) — followed and quoted at length; Prakash Nath Khanna and Another v. Commissioner of Income Tax and Another — applied, as it had been by the trial court; Rameshwar Prasad Sunderlal and Others v. Union of India (Madhya Pradesh, Indore Bench) — relied on by the accused and not followed.
It was decided by the High Court on 2022-10-31 and is reported as Criminal Revision Case No. 2922 of 2017 (Telangana High Court). 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(4), section 279(1), section 282, 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. The criminal revision was dismissed and the trial court's refusal of discharge confirmed. Whether the accused was entitled to a refund of tax, whether there was wilful failure to furnish the return in due time, and whether service of the notice on the accused's wife was valid are all questions to be decided only after a full-fledged trial, and the trial court's order disclosed no illegality or impropriety. It arises in Prosecution matters, on section 276CC, section 278E, section 139(1), section 139(4), section 279(1), section 282 of the Income Tax Act 1961, and was decided by Dr. G. Radha Rani 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. Check which provision the return was called for under. If the charge rests on a failure to comply with a s.148 or s.142(1)(i) notice, the proviso gives you nothing and you must defend on wilfulness instead. For a s.139(1) default, check the first limb before anything else — a return furnished before the expiry of the assessment year bars proceedings outright. Apply the monetary limit in force for the year concerned: Rs 3,000 before 1 April 2016, Rs 10,000 from that date under the Finance Act 2016. Do not expect a refund claim in a belated return to end the prosecution by itself; here the department disputed that the return was even valid, and the court held the question could not be decided at the discharge stage. If you say the sanction under s.279(1) was mechanical or that service under s.282 was bad, expect those to be treated as mixed questions of law and fact for trial rather than grounds for discharge. Preserve the proviso point for trial in writing, and lead evidence on the assessed figures there; it was not rejected on merits, only held premature.
Searched for later treatment; none was found. That is not the same as a source affirming it. Two probes, both empty. The citedby search returns no results and a phrase search pairing the case name with section 276CC returned only the judgment itself, a Telangana High Court decision of 31 October 2022. So the holding - that the second proviso to section 276CC, which bars prosecution where the return is furnished before the end of the assessment year or the tax payable on the assessed income does not exceed the threshold, can be looked at when the accused seeks discharge, and that the presumption in section 278E does not relieve the prosecution of pleading the basic ingredients - has not been applied, doubted or overruled by any later decision on record. It runs with the Kerala line in Forzza Projects, which has been applied by the Madras High Court, so the reasoning is not isolated even though this judgment itself carries no citator support. 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.
The judgment reproduces s.276CC in a mixed form: clause (i) carries the post-2012 threshold of twenty-five hundred thousand rupees while the proviso carries the pre-2016 figure of three thousand rupees. For assessment year 2013-14, the year in issue, the Rs 3,000 figure was the one in force, the Finance Act 2016 having raised it to Rs 10,000 only from 1 April 2016; but the extract should not be used as a statement of the present text. The extract of s.139(1) at paragraph 10 is a paraphrase rather than the statutory words, and the extract of s.139(4) there gives the pre-2016 time limit of one year from the end of the relevant assessment year. The judgment quotes Sasi Enterprises as saying 'the due date would be 31st August of the assessment year as per Section 139(1)'; that is the Supreme Court's own expression as reproduced and does not match Explanation 2 to s.139(1). Paragraph 5 records the sanction order as dated 24 October 2016 while paragraph 2.2 and paragraph 15 refer to a show cause notice dated 2 June 2016 served on 8 June 2016; both dates are reproduced as printed. Rameshwar Prasad Sunderlal v. Union of India (Madhya Pradesh, Indore Bench) and K.T.M.S. Mohd. v. Union of India were relied on by counsel and are quoted in the report, but neither has been read here. 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.
The criminal revision was dismissed and the trial court's refusal of discharge confirmed. Whether the accused was entitled to a refund of tax, whether there was wilful failure to furnish the return in due time, and whether service of the notice on the accused's wife was valid are all questions to be decided only after a full-fledged trial, and the trial court's order disclosed no illegality or impropriety.
TaxSphere, “Sada Kesava Reddy v Dy CIT”, https://taxnotice.vittsphere.com/caselaw/case/sada-kesava-reddy-v-dcit-276cc-proviso-at-discharge-stage/ (validity last checked 2026-09-07)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
The s.148 notice was digitally signed on 31 March but the e-mail only went on 6 April. Was it issued in time?
The reopening notice was posted to the address in my PAN and came back undelivered. The department says it did all it had to. Was the notice served?
The department only uploaded the show cause notice on the e-filing portal and never emailed it to me, then passed an order when I did not reply. Is that valid service?
The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
