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?
No. The Supreme Court held that the s.276CC offence is complete on the failure to furnish the return in due time and is unrelated to the pendency of the assessment. The proviso does not help unless the return was furnished before the end of the assessment year or the tax payable on the total income determined on regular assessment, less advance tax and TDS, is within the statutory figure — and by s.278E the court presumes the culpable mental state, leaving it to the accused to displace it beyond reasonable doubt.
Decided by the Supreme Court (Supreme Court of India (K.S. Radhakrishnan and A.K. Sikri, JJ.)) on 2014-01-30, reported as [2014] 41 taxmann.com 500 (SC)/[2014] 222 Taxman 78 (SC)/[2014] 361 ITR 163 (SC)/[2014] 265 CTR 225 (SC); Criminal Appeal Nos. 61 to 64 of 2007. It bears on section 276CC, section 278E, section 139(1), section 139(4), section 142(1)(i), section 148, section 144, section 279(1) of the Income Tax Act 1961, in Prosecution matters.
This is the decision the department cites when you ask for discharge under s.245 Cr.P.C. It closes three arguments at once: that no offence can be made out while the quantum is under appeal, that a partner's statement in his own return explaining why the firm's accounts were unfinalised excuses the firm, and that the burden of proving wilfulness sits on the prosecution at the threshold stage. What it leaves open is the proviso itself, which is a computation, not a plea — and the computation is made on the total income determined on regular assessment.
Binding on every court and authority in India.
Read aloud by your device. Press again to stop.
Sasi Enterprises was a registered partnership firm, reconstituted from 4 May 1990 with J. Jayalalitha and N. Sasikala as partners, trading through two units. It filed no returns for assessment years 1991-92 and 1992-93, which were due by 31 August 1991 and 31 August 1992. A survey under s.133A was conducted on 25 August 1992 and a s.148 notice was served on the firm on 16 February 1994; no return followed. Best judgment assessments under s.144 were made on 8 and 9 February 1996, on total incomes of Rs 5,84,860 and Rs 14,87,930. The two partners separately failed to file their own returns for assessment year 1993-94 despite notices under s.142(1)(i) and reminders, and best judgment assessments were made on them in February 1996 on total incomes of Rs 1,04,49,153 and Rs 70,28,110. After sanction under s.279(1), complaints were filed on 21 August 1997 before the Additional Chief Metropolitan Magistrate, Egmore, Chennai, against the firm for the two firm years and against each partner individually for 1993-94. Discharge petitions under s.245(2) CrPC were dismissed by the Chief Metropolitan Magistrate on 14 June 2006 and the Madras High Court dismissed the revisions by a common order of 2 December 2006. Final tax liabilities after appellate effect were Rs 32,63,482 and Rs 52,47,594 for the firm and Rs 12,54,395 and Rs 9,81,870 for the two partners.
The appeals were dismissed and the refusal of discharge upheld; the Criminal Court was directed to complete the trial within four months of receiving the judgment. Four propositions carry it. First, s.276CC reaches a failure to furnish a return under s.139(1) or in response to a notice under s.142(1)(i) or s.148 within the time specified. Second - and this is the proposition the headline usually omits - the proviso to s.276CC picks up only s.139(1) and conspicuously omits s.142(1)(i) and s.148, so its benefit is available only to voluntary filing: it does not apply once the failure has been detected and a notice under s.142(1)(i) or s.148 has issued. Third, the pendency of appellate proceedings on the assessment is no bar, because the offence is committed on the non-filing and is unrelated to the pendency of assessment proceedings except for the second part of the offence, which fixes the sentence. Fourth, under s.278E the court must presume the culpable mental state in a s.276CC prosecution, and it is for the accused to prove the contrary beyond reasonable doubt. A statement in a partner's individual return that the firm's accounts were not finalised does not absolve the firm, which is independently required to file, and a best judgment assessment under s.144 does not nullify that liability.
The Court traced the effect of the Direct Tax Laws (Amendment) Act 1987: the officer lost the power to extend time under s.139(1), belated returns under s.139(4) were confined to one year from the end of the assessment year, s.139(2) was absorbed into s.142(1)(i), penalty under s.271(1)(a) was abolished and mandatory interest under s.234A introduced - but the prosecution provision in s.276CC was never relaxed (paras 16-17). Wilful default it took, from Wellington v. Reynold, as a deliberate or intentional failure to do what the taxpayer ought to have done knowing that the omission was wrong (para 22). It read the proviso as relief for genuine assessees in two situations only: a return furnished before the expiry of the assessment year, giving a further seven months, and a case where tax on the total income determined on regular assessment, less advance tax and tax deducted at source, does not exceed Rs 3,000 (para 23). Because the proviso mentions only s.139(1) and not s.142(1)(i) or s.148, its benefit is confined to voluntary filing before detection (para 24). The 'whichever is earlier' in s.139(4) points the same way (para 25). The proviso does not say the offence has not been committed - an assessee within clause (ii)(b) has committed the offence but is exempt from prosecution - so the proviso cannot control the main section (para 26). That reasoning, the Court said, has the support of Prakash Nath Khanna (para 27). On pendency, it applied the plain-language rule from B. Premanand v. Mohan Koikal: had the legislature intended prosecution to await the assessment it would have said so in s.276CC (para 28). On mens rea, s.278E requires the court to presume the culpable mental state, and the appellants must prove the circumstances that prevented them from filing (para 30).
Section 276CC contemplates that an offence is committed on the non-filing of the return and it is totally unrelated to the pendency of assessment proceedings except for second part of the offence for determination of the sentence of the offence, the department may resort to best judgment assessment or otherwise to past years to determine the extent of the breach.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo. The Supreme Court held that the s.276CC offence is complete on the failure to furnish the return in due time and is unrelated to the pendency of the assessment. The proviso does not help unless the return was furnished before the end of the assessment year or the tax payable on the total income determined on regular assessment, less advance tax and TDS, is within the statutory figure — and by s.278E the court presumes the culpable mental state, leaving it to the accused to displace it beyond reasonable doubt. This was decided by the Supreme Court (Supreme Court of India (K.S. Radhakrishnan and A.K. Sikri, JJ.)) and bears on section 276CC, section 278E, section 139(1), section 139(4), section 142(1)(i), section 148, section 144, section 279(1) of the Income Tax Act 1961. It is reported as [2014] 41 taxmann.com 500 (SC)/[2014] 222 Taxman 78 (SC)/[2014] 361 ITR 163 (SC)/[2014] 265 CTR 225 (SC); Criminal Appeal Nos. 61 to 64 of 2007. This is the decision the department cites when you ask for discharge under s.245 Cr.P.C. It closes three arguments at once: that no offence can be made out while the quantum is under appeal, that a partner's statement in his own return explaining why the firm's accounts were unfinalised excuses the firm, and that the burden of proving wilfulness sits on the prosecution at the threshold stage. What it leaves open is the proviso itself, which is a computation, not a plea — and the computation is made on the total income determined on regular assessment. If it applies to you, the first step is this: Compute the proviso figure for each year before you argue anything else: tax on the total income determined on regular assessment, reduced by advance tax paid and tax deducted at source.
Sasi Enterprises was a registered partnership firm, reconstituted from 4 May 1990 with J. Jayalalitha and N. Sasikala as partners, trading through two units. It filed no returns for assessment years 1991-92 and 1992-93, which were due by 31 August 1991 and 31 August 1992. A survey under s.133A was conducted on 25 August 1992 and a s.148 notice was served on the firm on 16 February 1994; no return followed. Best judgment assessments under s.144 were made on 8 and 9 February 1996, on total incomes of Rs 5,84,860 and Rs 14,87,930. The two partners separately failed to file their own returns for assessment year 1993-94 despite notices under s.142(1)(i) and reminders, and best judgment assessments were made on them in February 1996 on total incomes of Rs 1,04,49,153 and Rs 70,28,110. After sanction under s.279(1), complaints were filed on 21 August 1997 before the Additional Chief Metropolitan Magistrate, Egmore, Chennai, against the firm for the two firm years and against each partner individually for 1993-94. Discharge petitions under s.245(2) CrPC were dismissed by the Chief Metropolitan Magistrate on 14 June 2006 and the Madras High Court dismissed the revisions by a common order of 2 December 2006. Final tax liabilities after appellate effect were Rs 32,63,482 and Rs 52,47,594 for the firm and Rs 12,54,395 and Rs 9,81,870 for the two partners. The matter was decided on 2014-01-30 by the Supreme Court (Supreme Court of India (K.S. Radhakrishnan and A.K. Sikri, JJ.)). On those facts the Supreme Court held as follows. The appeals were dismissed and the refusal of discharge upheld; the Criminal Court was directed to complete the trial within four months of receiving the judgment. Four propositions carry it. First, s.276CC reaches a failure to furnish a return under s.139(1) or in response to a notice under s.142(1)(i) or s.148 within the time specified. Second - and this is the proposition the headline usually omits - the proviso to s.276CC picks up only s.139(1) and conspicuously omits s.142(1)(i) and s.148, so its benefit is available only to voluntary filing: it does not apply once the failure has been detected and a notice under s.142(1)(i) or s.148 has issued. Third, the pendency of appellate proceedings on the assessment is no bar, because the offence is committed on the non-filing and is unrelated to the pendency of assessment proceedings except for the second part of the offence, which fixes the sentence. Fourth, under s.278E the court must presume the culpable mental state in a s.276CC prosecution, and it is for the accused to prove the contrary beyond reasonable doubt. A statement in a partner's individual return that the firm's accounts were not finalised does not absolve the firm, which is independently required to file, and a best judgment assessment under s.144 does not nullify that liability.
The Court traced the effect of the Direct Tax Laws (Amendment) Act 1987: the officer lost the power to extend time under s.139(1), belated returns under s.139(4) were confined to one year from the end of the assessment year, s.139(2) was absorbed into s.142(1)(i), penalty under s.271(1)(a) was abolished and mandatory interest under s.234A introduced - but the prosecution provision in s.276CC was never relaxed (paras 16-17). Wilful default it took, from Wellington v. Reynold, as a deliberate or intentional failure to do what the taxpayer ought to have done knowing that the omission was wrong (para 22). It read the proviso as relief for genuine assessees in two situations only: a return furnished before the expiry of the assessment year, giving a further seven months, and a case where tax on the total income determined on regular assessment, less advance tax and tax deducted at source, does not exceed Rs 3,000 (para 23). Because the proviso mentions only s.139(1) and not s.142(1)(i) or s.148, its benefit is confined to voluntary filing before detection (para 24). The 'whichever is earlier' in s.139(4) points the same way (para 25). The proviso does not say the offence has not been committed - an assessee within clause (ii)(b) has committed the offence but is exempt from prosecution - so the proviso cannot control the main section (para 26). That reasoning, the Court said, has the support of Prakash Nath Khanna (para 27). On pendency, it applied the plain-language rule from B. Premanand v. Mohan Koikal: had the legislature intended prosecution to await the assessment it would have said so in s.276CC (para 28). On mens rea, s.278E requires the court to presume the culpable mental state, and the appellants must prove the circumstances that prevented them from filing (para 30). In the words reproduced by the source cited on this page: "Section 276CC contemplates that an offence is committed on the non-filing of the return and it is totally unrelated to the pendency of assessment proceedings except for second part of the offence for determination of the sentence of the offence, the department may resort to best judgment assessment or otherwise to past years to determine the extent of the breach." The decision followed or applied Prakash Nath Khanna v. CIT [2004] 266 ITR 1/135 Taxman 327 (SC) - the Court records at para 27 that its reasoning has the support of this decision; B. Premanand v. Mohan Koikal [2011] 4 SCC 266 - the language of a statute is the determinative factor of legislative intent; Sonarome Chemicals (P.) Ltd. v. Union of India [2000] 242 ITR 39 (Kar.) - constitutional validity of s.276CC upheld.
It was decided by the Supreme Court on 2014-01-30 and is reported as [2014] 41 taxmann.com 500 (SC)/[2014] 222 Taxman 78 (SC)/[2014] 361 ITR 163 (SC)/[2014] 265 CTR 225 (SC); Criminal Appeal Nos. 61 to 64 of 2007. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 276CC, section 278E, section 139(1), section 139(4), section 142(1)(i), section 148, section 144, 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. The appeals were dismissed and the refusal of discharge upheld; the Criminal Court was directed to complete the trial within four months of receiving the judgment. Four propositions carry it. First, s.276CC reaches a failure to furnish a return under s.139(1) or in response to a notice under s.142(1)(i) or s.148 within the time specified. Second - and this is the proposition the headline usually omits - the proviso to s.276CC picks up only s.139(1) and conspicuously omits s.142(1)(i) and s.148, so its benefit is available only to voluntary filing: it does not apply once the failure has been detected and a notice under s.142(1)(i) or s.148 has issued. Third, the pendency of appellate proceedings on the assessment is no bar, because the offence is committed on the non-filing and is unrelated to the pendency of assessment proceedings except for the second part of the offence, which fixes the sentence. Fourth, under s.278E the court must presume the culpable mental state in a s.276CC prosecution, and it is for the accused to prove the contrary beyond reasonable doubt. A statement in a partner's individual return that the firm's accounts were not finalised does not absolve the firm, which is independently required to file, and a best judgment assessment under s.144 does not nullify that liability. It arises in Prosecution matters, on section 276CC, section 278E, section 139(1), section 139(4), section 142(1)(i), section 148, section 144, section 279(1) of the Income Tax Act 1961, and was decided by Supreme Court of India (K.S. Radhakrishnan and A.K. Sikri, JJ.). 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 whether the return, though late, went in before the end of the assessment year — that is the other limb of the proviso and it is absolute. Do not build the defence on the pendency of the assessment or on a partner's explanation in a separate return; both were rejected here. Plan the rebuttal of the s.278E presumption as evidence to be led at trial, not as a submission at the discharge stage.
Still good law. Followed by name and citation in Principal CIT v. Prabodh Kumar Tiwari [2025] 176 taxmann.com 831/[2026] 485 ITR 196 (Delhi), 9 July 2025, whose case review records this decision as followed at para 20. Nothing found suggests it has been doubted. Two caveats travel with it. The punishment slabs in s.276CC have since been rewritten - the Finance Act 2026 replaced rigorous with simple imprisonment throughout Chapter XXII, removed the minimum sentences and graded the maximum on the tax that would have been evaded, with effect from 1 March 2026 in the 1961 Act and 1 April 2026 in s.479 of the Income-tax Act 2025 - and the compounding guidelines the Court referred to in the surrounding law have been replaced. And the corpus entry vinubhai-mohanlal-dobaria-v-ccit-276cc carries the later Supreme Court treatment of when the offence is committed. 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.
This decides a discharge application, not guilt. The Court dismissed the appeals, upheld the refusal of discharge, and directed the Criminal Court to complete the trial within four months of receiving the judgment (para 31); it did not convict anyone, and the defences remained open at trial. The proposition most often taken from it - that the offence is committed on non-filing and is unrelated to the pendency of assessment proceedings - is at para 28, but the sentence continues: the department may resort to the best judgment assessment or to past years to determine the extent of the breach for the purpose of sentence. The other holding worth stating plainly is at para 24: the proviso to s.276CC mentions only s.139(1) and omits s.142(1)(i) and s.148, so its protection is available only to a return filed voluntarily before the failure is detected and a notice issued. The Court also held that the proviso does not mean no offence was committed - an assessee within clause (ii)(b) has committed the offence but is exempt from prosecution (para 26). Counsel for the appellants asked the Court to reconsider Prakash Nath Khanna; it declined, and said its own reasoning had that decision's support (para 27). The decision construes the pre-2016 text; the figure in the second limb of the proviso stood at Rs 3,000, the punishment slabs in s.276CC have since been rewritten, and the compounding guidelines have been replaced. The corpus entry vinubhai-mohanlal-dobaria-v-ccit-276cc carries the later Supreme Court treatment of when the offence is committed. The second limb of the proviso never came into play on these facts: the final liabilities determined after appellate effect were Rs 32,63,482 and Rs 52,47,594 for the firm and Rs 12,54,395 and Rs 9,81,870 for the partners, all far above the Rs 3,000 threshold. The judgment does not say what evidence would displace the s.278E presumption, because the question before it was discharge - that has since been answered elsewhere, the Delhi High Court holding the presumption rebutted on documentary and contemporaneous material in Principal CIT v. Prabodh Kumar Tiwari [2025] 176 taxmann.com 831/[2026] 485 ITR 196 (Delhi) at paras 23 to 25. Note one slip in the report: para 1 records that Criminal Appeals Nos. 61 and 63 of 2007 relate to the firm while para 3 records that Nos. 62 and 63 relate to the two partners, so appeal 63 is described twice and the allocation of the four appeal numbers between the firm and the partners cannot be read off the judgment with confidence. 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 appeals were dismissed and the refusal of discharge upheld; the Criminal Court was directed to complete the trial within four months of receiving the judgment. Four propositions carry it. First, s.276CC reaches a failure to furnish a return under s.139(1) or in response to a notice under s.142(1)(i) or s.148 within the time specified. Second - and this is the proposition the headline usually omits - the proviso to s.276CC picks up only s.139(1) and conspicuously omits s.142(1)(i) and s.148, so its benefit is available only to voluntary filing: it does not apply once the failure has been detected and a notice under s.142(1)(i) or s.148 has issued. Third, the pendency of appellate proceedings on the assessment is no bar, because the offence is committed on the non-filing and is unrelated to the pendency of assessment proceedings except for the second part of the offence, which fixes the sentence. Fourth, under s.278E the court must presume the culpable mental state in a s.276CC prosecution, and it is for the accused to prove the contrary beyond reasonable doubt. A statement in a partner's individual return that the firm's accounts were not finalised does not absolve the firm, which is independently required to file, and a best judgment assessment under s.144 does not nullify that liability.
TaxSphere, “Sasi Enterprises v ACIT”, https://taxnotice.vittsphere.com/caselaw/case/sasi-enterprises-v-acit-276cc-proviso-278e/ (validity last checked 2026-08-20)
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.
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?
I never filed my return for the year and the department has launched a prosecution, but my TDS and advance tax more than covered the tax and I am actually due a refund. Can the criminal case go on?
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?
I missed the due date but I did file the return under s.139(4) before the assessment. Doesn't that mean I filed 'in due time' and cannot be prosecuted under s.276CC?
