Cheque Bounce case-Mere Non-Filing of IT Return doesn’t mean Complainant had No Source of Income

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March 25, 2019

The High Court of Madhya Pradesh in the case has categorically stated that non-filing of Income Tax Return by itself would not mean that the complainant had no source of income and thus, no adverse inference can be drawn in this regard only because of absence of Income Tax Return.

Case name: Shrimati Ragini Gupta vs. Piyush Dutt Sharma

The instant Criminal Revision has been lodged Lower Court’s order, whereby the revisionist has been convicted under Section 138 of Negotiable Instruments Act. In revision, the Revisionist has averred that the respondent has failed to prove his source of income.

The High Court of Madhya Pradesh in view of the facts and circumstances of the case affirmed the Lower Court’s order and made the following observations in the case:

  • Non-Filing of IT Return does not mean Complainant had no source of income- That the Revisionist’s contention that the respondent had not disclosed his source of income in the Income Tax Return cannot be a solitary basis for rejecting his evidence. That mere non-filing of Income Tax Return would not automatically dislodge the source of income of the complainant. Non-payment of Income Tax is a matter between the revenue and the assessee. If the assessee has not disclosed his income in the Income TaxReturn, then the Income Tax Department is well within its rights to reopen the assessment of income of the assessee and to take action as per the provisions of Income Tax Act.
  • That non-filing of Income Tax Return by itself would not mean that the complainant had no source of income and thus, no adverse inference can be drawn in this regard only because of absence of Income Tax Return. Whether there was any loan transaction between the parties or not and whether there was any legally recoverable debt or not, is the subject-matter which can be ascertained in the light of entire case led by the parties.
  • When can presumption u/Section 139 of NI Act can be drawn against the Accused- It was also noted by the Court that where issuance of cheque is proved beyond reasonable doubt and where the signature is not disputed by the revisionist at the very initial stage, then a presumption under Section 139 of the Negotiable Instruments Act can be drawn against the accused. In view of the facts of the case, the Court noted that the revisionist had failed to rebut the presumption under Section 139 of the NI Act.

The entire case can be accessed here.