In a major setback, the Supreme Court on Thursday ordered the prosecution of the Tamil Nadu Chief Minister Jayalalitha initiated by the Income Tax department before the Additional Chief Metropolitan Court, for not filing income tax returns during the years 1991-94.
A Bench of Justices K.S. Radhakrishnan and A.K. Sikri while rejecting her contention that non filing of income tax return was not an offence as there was no income and there was no tax evasion directed the trial court to complete the trial in four months. If convicted she will attract a minimum punishment of three months imprisonment and maximum of three years and fine.
The Bench dismissed a batch of appeals filed by Jayalalithaa, her close aide N. Sasikalaa and Sasi Enterprises (of which both were partners) against a Madras High Court judgment rejecting their plea for discharge from three cases.
The department launched criminal proceedings in 1996 and 1997 against Ms. Jayalalithaa for not filing income tax returns for the assessment year 1993-94, though she had taxable income. Cases were also filed against her associate Ms. Sasikalaa and Sasi Enterprises for 1991-92 and 1992-93.
The trial court dismissed the discharge applications filed by Jayalalitha and Sasikalaa and the Madras High Court dismissed their appeals against the trial court order. Subsequently, the court directed the two to appear in the court on January 29, stating that the trial would be conducted on a day-to-day basis. Special leave petitions were directed against the December 2, 2006 judgment of the High Court.
The Bench did not accept Jayalalitha’s argument that the appellate authority in appeal had assessed the tax liability of the firm at nil, rendering the entire prosecution malicious and the obligation to file returns would arise only if there was taxable income. When there was no income or there was no tax evasion, non-filing of returns would not be a criminal offence.
The Bench said the section itself provided for delayed filing of returns in genuine cases but the counter affidavit filed by the I-T department showed the dilatory tactics adopted by the appellants and non filing of I-T returns was not bona fide and this itself was an offence. There was no ground to interfere with the judgment of the High Court, the Bench held and dismissed the appeals.