Wilful tax default can sustain conviction where records and notice responses undermine claims of hardship or third-party custody of funds.

Wilful non-payment of assessed income tax can sustain conviction under Section 276C(2) where surrounding materials show deliberate default. The Delhi High Court examined the assessed liability, departmental notices, the assessee's audit and balance-sheet records, and the defence that funds were held by a co-brother and related concerns. It found no credible recoverable debt or supporting recovery steps, and held that replies to notices under Section 226(3) undermined the claim that the money was held for the assessee. Mere assertion of financial hardship, without evidence, was insufficient to displace the inference of deliberate non-payment. The conviction was therefore sustained.

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Issues: Whether the petitioner's failure to pay the assessed income tax for the relevant assessment year was wilful so as to sustain conviction under Section 276C(2) of the Income-tax Act, 1961.

Analysis: The Court examined the assessed liability, the notices issued by the income tax department, the petitioner's own audit and balance-sheet materials, and the defence that the money was with his co-brother and his concerns. It found that the petitioner's own documents did not show any recoverable debt from the co-brother or his firms, that the replies to notices under Section 226(3) of the Income-tax Act, 1961 negated the claim that money was held for the petitioner, and that no civil or other credible recovery steps were taken to establish the alleged dues. The Court also held that mere assertion of financial hardship, without supporting evidence, could not displace the conclusion that the non-payment was deliberate.

Conclusion: The conviction under Section 276C(2) of the Income-tax Act, 1961 was rightly sustained, and the revision petition failed.

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