Two rulings of the Bombay High Court in July 2026 set limits on income-tax prosecution. On 22 July 2026, Justice Madhav J. Jamdar quashed a complaint under Section 276CC for late filing of return in Rajesh Somandas Sachdev v. ITO. In a ruling reported on 30 July 2026, Justice Amit S. Jamsandekar at the Goa Bench quashed a complaint under Section 276C(2) in Dinar Tarcar Resources (India) Pvt. Ltd. v. Income Tax Department.
What was decided
In Sachdev, the return for Assessment Year 2014-15 was not filed in time and a complaint was filed in 2018 after a reassessment notice went unanswered. The return later filed showed TDS of about Rs 2.55 lakh and a refund of about Rs 1.64 lakh, which the Department accepted. Applying the Supreme Court’s decision in Guru Nanak Enterprises v. ITO, the Court held that prosecution served no purpose where the Revenue suffered no loss, and that continuing it would be an abuse of process.
In Dinar Tarcar, the allegation was a wilful attempt to evade payment of admitted tax for Assessment Year 2012-13. The company attributed the delay to financial strain after mining in Goa was suspended, had sought time, paid interest and cleared the dues. The Court held that “wilful” requires a deliberate intent to evade; mere delay or failure to pay, without mens rea, does not attract Section 276C(2). It also held that the complaint must specify the acts constituting the wilful attempt, and that process had been issued mechanically.
Why it matters
Prosecution complaints are often filed on the basis of delay alone. These rulings show that courts will examine whether there was an actual revenue loss and whether intent is specifically alleged, and will also scrutinise the Magistrate’s order issuing process.
The rulings arise under the Income-tax Act, 1961. Defaults for earlier years continue to be governed by that Act, while corresponding offences under the Income-tax Act, 2025 should be examined with these principles in mind.
Practical points
- If you receive a show cause notice for prosecution, respond with the full tax computation, including TDS and refunds due.
- Keep records of requests for time, payment of interest and reasons for delay, as these bear on intent.
- Check whether the sanction for prosecution considered all relevant material.
- Consider whether compounding or a challenge to the summoning order is the more suitable route on the facts.
Sources: LiveLaw Biz, 28 Jul 2026; LiveLaw Biz, 30 Jul 2026.
For a confidential discussion on income-tax prosecution and compounding, see Income-tax Search & Seizure Lawyer.
General legal information only; not legal advice or solicitation.
