Wilful tax evasion requires conscious intent; delayed self-assessment tax payment alone did not justify criminal prosecution.

Criminal prosecution for alleged wilful attempt to evade self-assessment tax under Section 276C(2) was unsustainable where the accused were independent directors who had resigned before the complaint, a substantial part of the admitted liability had already been paid, and the balance was later discharged after GST refund adjustment. The Court distinguished wilful evasion from mere delay or default in payment, treated wilfulness and culpable mental state as essential ingredients, and found the material showed efforts to discharge the tax rather than a conscious attempt to evade it. Delayed payment could attract interest or penalty, but not criminal prosecution; the complaint and summons were quashed.

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Issues: Whether criminal prosecution for alleged wilful attempt to evade payment of self-assessment tax under Section 276C(2) of the Income-tax Act, 1961 deserved to be quashed in exercise of inherent jurisdiction.

Analysis: The petitioners were independent directors who had resigned before the complaint and the material showed that a substantial portion of the admitted tax liability had already been paid before initiation of prosecution, with the balance linked to GST refund adjustment and later payment. Section 276C(2) applies only where there is a wilful attempt to evade payment of tax, and the Court distinguished that offence from mere delay or default in payment. The Court treated wilfulness and culpable mental state as essential ingredients and held that the circumstances disclosed an effort to discharge the liability rather than a conscious attempt to evade it. On these facts, delayed payment could attract interest or penalty, but not criminal prosecution under Section 276C(2).

Conclusion: The prosecution was held to be unsustainable and the complaint and summons were quashed.

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