Section 276CC — Failure to furnish returns of income
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live and heavily litigated. Prosecution for wilful non-filing of returns.
Finance Act, 2026: WHOLLY SUBSTITUTED w.e.f. 1 March 2026 — graded-threshold structure; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes a wilful failure to furnish in due time the return of income (s.139(1)/142(1)(i)/148/153A) or return of fringe benefits (s.115WD). 'In due time' means the s.139(1) due date.
Litigation profile: Very high — landmark Supreme Court line on 'in due time', the irrelevance of a belated return, the s.278E presumption, and 'first offence' compounding.
A. COMMENTARY
The offence — wilful non-filing by the due date
Section 276CC criminalises a wilful failure to furnish, in due time, the return of income required under section 139(1) or by notice under sections 142(1)(i), 148 or 153A (and, historically, the return of fringe benefits under section 115WD). The offence is complete the day after the due date passes without a return; it is an offence of omission. The proviso carves out small cases — no prosecution where the return is filed before the end of the assessment year (or a section 139(8A) updated return is filed in time), or where the tax payable (for a non-company), after advance tax/TDS/TCS, does not exceed Rs. 10,000.
The Supreme Court has authoritatively held that 'in due time' in section 276CC refers to the time allowed under section 139(1) (or a notice), not the extended time for a belated return under section 139(4). Filing a belated return under section 139(4) does not undo an offence that was already complete on the expiry of the section 139(1) time (Prakash Nath Khanna; reaffirmed in Vinubhai Mohanlal Dobaria, 2025). The proviso, too, covers only the section 139(1) return — it does not rescue a return filed only after a section 142(1)(i)/148 notice. Each assessment year's default is a separate offence.
Mens rea, the section 278E presumption, and pendency
The failure must be 'wilful', but section 278E requires the court to presume culpable mental state; the burden of rebuttal is on the assessee, and that exercise belongs to the trial, not ordinarily to the quashing/discharge stage (Sasi Enterprises; Rajkumar Agarwal; Confident Projects). Payment of a late-filing fee/penalty does not exonerate. Pendency of assessment or appeal is no bar to prosecution, since the offence is the non-filing itself (Sasi Enterprises). Even so, where on admitted facts no wilful attempt to evade is made out, the High Court may quash (Vyalikaval).
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 26 of the Finance Act, 2026, with effect from 1 March 2026, section 276CC is wholly substituted. The substantive trigger (wilful failure to furnish the return of fringe benefits/income by the due date) and the proviso are retained, but the punishment is recast into the graded structure: simple imprisonment up to two years, or fine, or both, where the tax that would have been evaded exceeds Rs. 50 lakh; simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and fine only in any other case. The rigorous imprisonment and the mandatory minimums are removed and the single Rs. 25 lakh threshold is replaced by the Rs. 50 lakh / Rs. 10 lakh bands. The verbatim text in Part B is the pre-substitution text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text. With effect from 1 March 2026 section 276CC is wholly substituted (graded thresholds; simple imprisonment) — see the amendment note above.
Failure to furnish returns of income.
276CC. If a person wilfully fails to furnish in due time the return of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or by notice given under sub-section (2) of the said section or section 115WH or the return of income which he is required to furnish under sub-section (1) of section 139 or by notice given under clause (i) of sub-section (1) of section 142 or section 148 or section 153A, he shall be punishable,—
(i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;
(ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to two years and with fine:
Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of fringe benefits under sub-section (1) of section 115WD or return of income under sub-section (1) of section 139—
(i) for any assessment year commencing prior to the 1st day of April, 1975; or
(ii) for any assessment year commencing on or after the 1st day of April, 1975, if—
(a) the return is furnished by him before the expiry of the assessment year or a return is furnished by him under sub-section (8A) of section 139 within the time provided in that sub-section; or
(b) the tax payable by such person, not being a company, on the total income determined on regular assessment, as reduced by the advance tax or self-assessment tax, if any, paid before the expiry of the assessment year, and any tax deducted or collected at source, does not exceed ten thousand rupees.
C. AUTHORITIES
The authorities are arranged by issue-cluster. The principles survive the 2026 substitution.
Cluster 1 — 'In due time' = section 139(1); a belated return does not cure
Facts Returns were not filed within the section 139(1) time and were filed only later; the assessee argued that a belated return under section 139(4) cured the default and that the proviso applied.
Held / ratio 'In due time' means the time under section 139(1), not the extended time under section 139(4); the offence is complete the day after the section 139(1) due date and a belated return does not erase it. The proviso to section 276CC covers only the section 139(1) return and does not rescue a return filed after a section 142(1)(i)/148 notice. Section 278E requires the court to presume culpable mental state, to be rebutted at trial.
Significance The anchor authority on 'in due time', the proviso, and the presumption.
Vinubhai Mohanlal Dobaria v. Chief CIT (2025 INSC 155) (SC)
Facts Successive years' returns filed late; the question included whether a default qualified as a 'first offence' for compounding under the CBDT Guidelines.
Held / ratio Reaffirms Prakash Nath Khanna: the offence is committed the day after the section 139(1) due date and each assessment year's default is a separate offence; a default committed before any show-cause notice can qualify as a 'first offence' for compounding.
Significance The most recent Supreme Court restatement, with a practical compounding dimension.
Cluster 2 — Section 278E presumption; late fee does not exonerate; quashing on facts
Sasi Enterprises v. ACIT (2014) 361 ITR 163 (SC)
Citation (2014) 361 ITR 163 / 5 SCC 139 (SC).
Facts Discharge petition (section 245 CrPC) in a section 276CC non-filing prosecution; the accused argued that appeals against best-judgment assessments were pending and accounts were not finalised. (The Jayalalithaa/Sasikala matter.)
Held / ratio Non-finalisation of accounts or pendency of appeals is no defence to section 276CC; the section 278E presumption of culpable mental state applies and the burden of proving reasonable cause lies on the accused, to be discharged at trial and not at the discharge stage.
Significance The leading authority on the 276CC/278E interface and on pendency being no bar.
Rajkumar Agarwal v. Income Tax Department (2025:KHC-K:238) (Kar)
Citation Karnataka High Court, 2025; neutral citation 2025:KHC-K:238.
Facts Quashing petition contending that payment of the late-filing penalty exonerated the assessee from section 276CC.
Held / ratio Mere payment of the late-filing penalty does not exonerate from section 276CC; the section 278E presumption stands and the burden to rebut it lies on the assessee before the trial court, not at the section 482 CrPC stage.
Significance Confirms that the late-fee point is no answer and that rebuttal is a trial exercise.
Confident Projects (India) (P) Ltd. v. ITO (Kar HC, 28 January 2021)
Citation Karnataka High Court, 28 January 2021.
Facts Quashing sought of a section 276CC prosecution; the assessee pointed to circumstances said to have prevented timely filing.
Held / ratio Under section 278E the court presumes culpable mental state; the accused must establish the circumstances that prevented timely filing — a matter for trial.
Significance A practical High Court application of the presumption.
Vyalikaval House Building Co-op. Society Ltd. v. ITO (2020) 428 ITR 89 (Kar)
Citation (2020) 428 ITR 89 (Karnataka).
Facts Delayed self-assessment tax; the prosecution alleged wilful attempt to evade by non-filing.
Held / ratio On the facts no inference of a wilful attempt to evade could be drawn; the section 278E presumption does not foreclose quashing where, on admitted facts, no wilfulness is made out. Prosecution quashed.
Significance Shows the outer limit — quashing remains available where wilfulness is plainly absent.
Cluster 3 — Tribunal (ITAT) / appellate-finding dimension and pendency
The Tribunal does not try the section 276CC offence. Its relevance is twofold: a conclusive finding that no tax was evaded (or that the assessment is unsustainable) bears on the 'amount of tax which would have been evaded'; but pendency of the appeal, by itself, neither bars the prosecution nor saves the accused.
Sasi Enterprises v. ACIT (2014) 361 ITR 163 (SC)
Citation (2014) 361 ITR 163 (SC).
Facts / holding Pendency of appeals against best-judgment assessments was held to be no defence; the section 276CC offence is the non-filing itself and is unrelated to the quantum ultimately assessed, so adjudication pendency does not freeze prosecution.
K.C. Builders v. ACIT (2004) 265 ITR 562 (SC)
Citation (2004) 265 ITR 562 (SC).
Facts / holding Applied by parity: where the Tribunal's conclusive findings negate any evaded tax, the foundation for the 'amount evaded' element of the graded offence is undermined; the penalty-prosecution linkage operates in the assessee's favour.
P. Jayappan v. S.K. Perumal (1984) 149 ITR 696 (SC)
Citation (1984) 149 ITR 696 (SC).
Facts / holding General principle, applied to non-filing prosecutions: the criminal court proceeds independently of pending assessment/appellate proceedings, subject to the Uttam Chand escape route if a conclusive favourable finding is later recorded.
CHAPTER XXII — OFFENCES AND PROSECUTIONS
Section 276CC — Failure to furnish returns of income
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live and heavily litigated. Prosecution for wilful non-filing of returns.
Finance Act, 2026: WHOLLY SUBSTITUTED w.e.f. 1 March 2026 — graded-threshold structure; rigorous imprisonment and mandatory minimum removed (see amendment note).
Mechanism: Punishes a wilful failure to furnish in due time the return of income (s.139(1)/142(1)(i)/148/153A) or return of fringe benefits (s.115WD). 'In due time' means the s.139(1) due date.
Litigation profile: Very high — landmark Supreme Court line on 'in due time', the irrelevance of a belated return, the s.278E presumption, and 'first offence' compounding.
A. COMMENTARY
The offence — wilful non-filing by the due date
Section 276CC criminalises a wilful failure to furnish, in due time, the return of income required under section 139(1) or by notice under sections 142(1)(i), 148 or 153A (and, historically, the return of fringe benefits under section 115WD). The offence is complete the day after the due date passes without a return; it is an offence of omission. The proviso carves out small cases — no prosecution where the return is filed before the end of the assessment year (or a section 139(8A) updated return is filed in time), or where the tax payable (for a non-company), after advance tax/TDS/TCS, does not exceed Rs. 10,000.
'In due time' means the section 139(1) date
The Supreme Court has authoritatively held that 'in due time' in section 276CC refers to the time allowed under section 139(1) (or a notice), not the extended time for a belated return under section 139(4). Filing a belated return under section 139(4) does not undo an offence that was already complete on the expiry of the section 139(1) time (Prakash Nath Khanna; reaffirmed in Vinubhai Mohanlal Dobaria, 2025). The proviso, too, covers only the section 139(1) return — it does not rescue a return filed only after a section 142(1)(i)/148 notice. Each assessment year's default is a separate offence.
Mens rea, the section 278E presumption, and pendency
The failure must be 'wilful', but section 278E requires the court to presume culpable mental state; the burden of rebuttal is on the assessee, and that exercise belongs to the trial, not ordinarily to the quashing/discharge stage (Sasi Enterprises; Rajkumar Agarwal; Confident Projects). Payment of a late-filing fee/penalty does not exonerate. Pendency of assessment or appeal is no bar to prosecution, since the offence is the non-filing itself (Sasi Enterprises). Even so, where on admitted facts no wilful attempt to evade is made out, the High Court may quash (Vyalikaval).
FA 2026 Amendment (w.e.f. 1 March 2026)
By section 26 of the Finance Act, 2026, with effect from 1 March 2026, section 276CC is wholly substituted. The substantive trigger (wilful failure to furnish the return of fringe benefits/income by the due date) and the proviso are retained, but the punishment is recast into the graded structure: simple imprisonment up to two years, or fine, or both, where the tax that would have been evaded exceeds Rs. 50 lakh; simple imprisonment up to six months, or fine, or both, where it exceeds Rs. 10 lakh but not Rs. 50 lakh; and fine only in any other case. The rigorous imprisonment and the mandatory minimums are removed and the single Rs. 25 lakh threshold is replaced by the Rs. 50 lakh / Rs. 10 lakh bands. The verbatim text in Part B is the pre-substitution text.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
The text reproduced is the pre-Finance Act, 2026 text. With effect from 1 March 2026 section 276CC is wholly substituted (graded thresholds; simple imprisonment) — see the amendment note above.
Failure to furnish returns of income.
276CC. If a person wilfully fails to furnish in due time the return of fringe benefits which he is required to furnish under sub-section (1) of section 115WD or by notice given under sub-section (2) of the said section or section 115WH or the return of income which he is required to furnish under sub-section (1) of section 139 or by notice given under clause (i) of sub-section (1) of section 142 or section 148 or section 153A, he shall be punishable,—
(i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine;
(ii) in any other case, with imprisonment for a term which shall not be less than three months but which may extend to two years and with fine:
Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of fringe benefits under sub-section (1) of section 115WD or return of income under sub-section (1) of section 139—
(i) for any assessment year commencing prior to the 1st day of April, 1975; or
(ii) for any assessment year commencing on or after the 1st day of April, 1975, if—
(a) the return is furnished by him before the expiry of the assessment year or a return is furnished by him under sub-section (8A) of section 139 within the time provided in that sub-section; or
(b) the tax payable by such person, not being a company, on the total income determined on regular assessment, as reduced by the advance tax or self-assessment tax, if any, paid before the expiry of the assessment year, and any tax deducted or collected at source, does not exceed ten thousand rupees.
C. AUTHORITIES
The authorities are arranged by issue-cluster. The principles survive the 2026 substitution.
Cluster 1 — 'In due time' = section 139(1); a belated return does not cure
Prakash Nath Khanna v. CIT (2004) 266 ITR 1 (SC)
Citation (2004) 266 ITR 1 / (2004) 9 SCC 686 (SC).
Facts Returns were not filed within the section 139(1) time and were filed only later; the assessee argued that a belated return under section 139(4) cured the default and that the proviso applied.
Held / ratio 'In due time' means the time under section 139(1), not the extended time under section 139(4); the offence is complete the day after the section 139(1) due date and a belated return does not erase it. The proviso to section 276CC covers only the section 139(1) return and does not rescue a return filed after a section 142(1)(i)/148 notice. Section 278E requires the court to presume culpable mental state, to be rebutted at trial.
Significance The anchor authority on 'in due time', the proviso, and the presumption.
Vinubhai Mohanlal Dobaria v. Chief CIT (2025 INSC 155) (SC)
Citation 2025 INSC 155 / (2025) 473 ITR 394 (SC), decided 7 February 2025.
Facts Successive years' returns filed late; the question included whether a default qualified as a 'first offence' for compounding under the CBDT Guidelines.
Held / ratio Reaffirms Prakash Nath Khanna: the offence is committed the day after the section 139(1) due date and each assessment year's default is a separate offence; a default committed before any show-cause notice can qualify as a 'first offence' for compounding.
Significance The most recent Supreme Court restatement, with a practical compounding dimension.
Cluster 2 — Section 278E presumption; late fee does not exonerate; quashing on facts
Sasi Enterprises v. ACIT (2014) 361 ITR 163 (SC)
Citation (2014) 361 ITR 163 / 5 SCC 139 (SC).
Facts Discharge petition (section 245 CrPC) in a section 276CC non-filing prosecution; the accused argued that appeals against best-judgment assessments were pending and accounts were not finalised. (The Jayalalithaa/Sasikala matter.)
Held / ratio Non-finalisation of accounts or pendency of appeals is no defence to section 276CC; the section 278E presumption of culpable mental state applies and the burden of proving reasonable cause lies on the accused, to be discharged at trial and not at the discharge stage.
Significance The leading authority on the 276CC/278E interface and on pendency being no bar.
Rajkumar Agarwal v. Income Tax Department (2025:KHC-K:238) (Kar)
Citation Karnataka High Court, 2025; neutral citation 2025:KHC-K:238.
Facts Quashing petition contending that payment of the late-filing penalty exonerated the assessee from section 276CC.
Held / ratio Mere payment of the late-filing penalty does not exonerate from section 276CC; the section 278E presumption stands and the burden to rebut it lies on the assessee before the trial court, not at the section 482 CrPC stage.
Significance Confirms that the late-fee point is no answer and that rebuttal is a trial exercise.
Confident Projects (India) (P) Ltd. v. ITO (Kar HC, 28 January 2021)
Citation Karnataka High Court, 28 January 2021.
Facts Quashing sought of a section 276CC prosecution; the assessee pointed to circumstances said to have prevented timely filing.
Held / ratio Under section 278E the court presumes culpable mental state; the accused must establish the circumstances that prevented timely filing — a matter for trial.
Significance A practical High Court application of the presumption.
Vyalikaval House Building Co-op. Society Ltd. v. ITO (2020) 428 ITR 89 (Kar)
Citation (2020) 428 ITR 89 (Karnataka).
Facts Delayed self-assessment tax; the prosecution alleged wilful attempt to evade by non-filing.
Held / ratio On the facts no inference of a wilful attempt to evade could be drawn; the section 278E presumption does not foreclose quashing where, on admitted facts, no wilfulness is made out. Prosecution quashed.
Significance Shows the outer limit — quashing remains available where wilfulness is plainly absent.
Cluster 3 — Tribunal (ITAT) / appellate-finding dimension and pendency
The Tribunal does not try the section 276CC offence. Its relevance is twofold: a conclusive finding that no tax was evaded (or that the assessment is unsustainable) bears on the 'amount of tax which would have been evaded'; but pendency of the appeal, by itself, neither bars the prosecution nor saves the accused.
Sasi Enterprises v. ACIT (2014) 361 ITR 163 (SC)
Citation (2014) 361 ITR 163 (SC).
Facts / holding Pendency of appeals against best-judgment assessments was held to be no defence; the section 276CC offence is the non-filing itself and is unrelated to the quantum ultimately assessed, so adjudication pendency does not freeze prosecution.
K.C. Builders v. ACIT (2004) 265 ITR 562 (SC)
Citation (2004) 265 ITR 562 (SC).
Facts / holding Applied by parity: where the Tribunal's conclusive findings negate any evaded tax, the foundation for the 'amount evaded' element of the graded offence is undermined; the penalty-prosecution linkage operates in the assessee's favour.
P. Jayappan v. S.K. Perumal (1984) 149 ITR 696 (SC)
Citation (1984) 149 ITR 696 (SC).
Facts / holding General principle, applied to non-filing prosecutions: the criminal court proceeds independently of pending assessment/appellate proceedings, subject to the Uttam Chand escape route if a conclusive favourable finding is later recorded.