77-year-old NRI's criminal prosecution under Section 276C(1) quashed after penalty deletion by appellate authority

The Madras HC quashed criminal prosecution under Section 276C(1) against a 77-year-old Non-Resident Indian petitioner. The case involved unusual large RTGS credits and stock market investments in the petitioner's bank account. The CIT(A) had deleted the penalty, finding no intention to conceal income as the petitioner held bonafide belief regarding no tax liability due to his NRI status and TDS deductions. The HC ruled that once the penalty was deleted by the appellate authority, the prosecution could not be sustained, despite having previously dismissed a similar petition in 2020.

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Issues involved:
The petition to quash proceedings in EOCC.No.401 of 2018 under Section 276C(1) of Income Tax Act, 1961.

Summary:

Issue 1: Alleged Tax Evasion
The respondent alleged that the petitioner failed to disclose capital gains from share transactions, resulting in short term capital gain of Rs. 52.13 crores, evading tax under Section 276C(1) of the Income Tax Act, 1961. The petitioner argued that as a Non Resident Indian, the bank had the responsibility to deduct tax at source correctly, and discrepancies were due to the bank deducting a lower amount. The Commissioner of Income Tax concluded that there was no evidence of wilful tax evasion, leading to the petitioner's appeal for quashment of proceedings.

Issue 2: Abuse of Process of Court
The respondent contended that the present quash petition was an abuse of the court process, citing a Supreme Court ruling that successive petitions under Section 482 Cr.P.C. should not be allowed to stall proceedings. Despite a previous dismissal of a quash petition, the petitioner filed the current petition based on subsequent developments, including the Commissioner of Income Tax's order favoring the petitioner.

Conclusion:
The Court acknowledged the previous dismissal of a quash petition but considered the subsequent developments, including the petitioner's age, Non Resident Indian status, and the Commissioner of Income Tax's findings. Given the circumstances and to ensure justice, the Court quashed the proceedings in EOCC.No.401 of 2018, allowing the criminal original petition.

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