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SC blow to Jaya on tax returns

New Delhi, Jan. 30: The Supreme Court today cleared the way for Jayalalithaa’s prosecution in a nearly two-decade-old case of not filing tax returns in a potential blow to the Tamil Nadu chief minister’s purported national ambitions.

A bench of Justices K.S. Radhakrishnan and A.K. Sikri, which asked a metropolitan court to complete the trial within four months, threw out Jayalalithaa’s contention that not filing tax returns was not an offence as there had been no tax evasion.

If convicted, the AIADMK boss could be jailed for up to three years, automatically disqualifying her as a legislator and from contesting elections for six years.

The go-ahead for the trial came a little over a month after the AIADMK had projected her as a possible prime ministerial candidate, presumably of a non-Congress, non-BJP front.

The court’s ruling is also bound to be fodder for her rival DMK, now in the throes of a sibling rivalry.

Jayalalithaa, accused of not filing income-tax returns for the financial year 1993-94, had been charged under Section 276CC of the Income Tax Act, along with her confidante Sasikala and Sasi Enterprises, in which both were partners.

Sasikala and the firm are accused of not filing returns for the years 1991-92 and 1992-93.

The tax department had launched criminal proceedings against Jayalalithaa and the others for not filing returns despite having a taxable income.

The chief minister and Sasikala had first appealed in a trial court and then Madras High Court.

After both dismissed the appeals, they moved the top court, where their counsel argued that the prosecution was malicious and the obligation to file returns would arise only if there was taxable income.

One of the arguments put forward was that the firm’s accounts had not been finalised.

The top court rejected the argument, saying an assessee is bound to file returns under Section 139(1) of the Income Tax Act.

It said the contention of the appellants that the failure to file returns “was not wilful”, as no returns were filed because the firm’s accounts had not been finalised, “cannot be accepted”.

“Court, in a prosecution of offence, like Section 276CC, has to presume the existence of mens rea (guilty intention) and it is for the accused to prove the contrary and that too beyond reasonable doubt.

“Resultantly, the appellants have to prove the circumstances which prevented them from filing the returns as per Section 139(1) or in response to notices under Sections 142 and 148 of the Act.

“We, therefore, find no reason to interfere with the order passed by the high court. The appeals, therefore, lack merits,” Justice Radhakrishnan, writing the judgment, said.

The court directed the additional chief metropolitan court, economic offences-1, Egmore, Chennai, to complete the trial within four months.

Since Jayalalithaa and Sasikala are only accused of not filing returns, they can be jailed for a minimum of three months and a maximum of three years, if convicted.

Had they been accused of tax evasion, the maximum term in case of a conviction would have been seven years.