2024 (1) TMI 1227 - HC - Income Tax

Delayed payment of self-assessment tax with interest not tax evasion under Section 276C(2)

The HC held that delayed payment of self-assessment tax does not constitute tax evasion under Section 276C(2). Petitioners filed their return for 2012-13 ... Prosecution u/s 276C (2) - petitioners had delayed to pay self-assessment tax - whether delayed payment alongwith the interest could be termed as evasion of tax? - HELD THAT:- The judgments in Confident Projects (India) (P.) Ltd [2021 (2) TMI 75 - KARNATAKA HIGH COURT], S.P. Velayutham [2022 (2) TMI 50 - MADRAS HIGH COURT] and M/s Health Bio Tech Ltd. & others (2023 (9) TMI 1229 - PUNJAB AND HARYANA HIGH COURT] have categorically held that delayed payment of income tax would not amount to evasion of tax. In the instant case Return for the total income for the year 2012-13 was filed on 29.09.2012 for amount of Rs. 8,20,53,544/-. The tax was self-assessed for an amount of Rs. 2,10,91,150/-. On account of the financial state of the company which remains debatable, the tax alongwith interest was paid on 10.07.2013. However, the show cause notice for delayed payment was sent only on 11.02.2014 and 24.02.2014 pursuant to which the complaint came to be instituted. Therefore, by no stretch of imagination can it be held that there was any evasion of tax on the part of the petitioners, though there was a delay in the payment of the tax for which interest stands levied and paid. Petition allowed. Issues Involved:1. Quashing of Complaint No. 1368 of 2014 under Sections 276C read with Section 278B of the Income Tax Act, 1961.2. Validity of the impugned order dated 20.08.2018.3. Validity of the order framing charges dated 06.09.2018.4. Subsequent proceedings arising from the aforementioned complaint and orders.Summary:Issue 1: Quashing of Complaint No. 1368 of 2014 under Sections 276C read with Section 278B of the Income Tax Act, 1961:The petitioners sought to quash Complaint No. 1368 of 2014 dated 01.04.2014 under Sections 276C read with Section 278B of the Income Tax Act, 1961. The petitioner No. 1, a Limited Company, filed its return for the Assessment Year 2012-13 on 29.09.2012, declaring a total income of Rs. 8,20,53,544/- with a pending self-assessment tax of Rs. 2,10,91,150/-. The tax was paid on 10.07.2013, but the respondent issued a show cause notice on 11.02.2014 for failure to pay self-assessment tax, leading to the prosecution under Section 276C(2). The petitioners argued that there was no evasion since the tax was acknowledged in the return and paid with interest before the show cause notice, making the complaint an abuse of the court process.Issue 2: Validity of the impugned order dated 20.08.2018:The court examined the impugned order dated 20.08.2018, which concluded that a prima facie case was made out against the petitioners. The petitioners contended that prosecution under Section 276C(2) could only be launched for willful evasion or attempt to evade tax, penalty, or interest, none of which existed in this case. The court referred to judgments from the Karnataka High Court, Madras High Court, and its own previous decisions, which held that delayed payment of income tax does not amount to tax evasion.Issue 3: Validity of the order framing charges dated 06.09.2018:The charges were framed against the petitioners on 06.09.2018. The court reiterated that delayed payment, acknowledged in the tax return and paid with interest, does not constitute evasion of tax. The judgments cited emphasized that criminal intent must be evident for prosecution, which was not the case here.Issue 4: Subsequent proceedings arising from the aforementioned complaint and orders:The court concluded that there was no basis for the complaint and subsequent proceedings since the tax was paid with interest, and there was no willful attempt to evade tax. Therefore, the complaint dated 01.04.2014, the impugned order dated 20.08.2018, the order framing charges dated 06.09.2018, and all subsequent proceedings were quashed.Conclusion:The petition was allowed, and all proceedings arising from Complaint No. 1368 of 2014 were quashed. The court held that delayed payment of income tax, acknowledged in the return and paid with interest, does not amount to evasion of tax, and there was no willful attempt to evade tax by the petitioners.