TaxTMI 
TaxTMI 
2022 (2) TMI 50
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....ssment tax. The assessment under Section 143(3) of the IT Act, 1961 for the Assessment year 2013-14 was completed by accepting the income returned by the assessee vide order dated 31.03.2016. Since the assessee has paid only Rs. 10,000,000/- towards undisputed tax and still remaining amount has not been paid, the prosecution has been launched. Show cause Notice also issued before the initiation of the prosecution on 16.09.2016. Reply given by the accused on 24.09.2016 is general in nature. Hence prosecution has been launched. Challenging the prosecution the present petition has been filed. 3.a. Learned Counsel appearing for the Petitioner mainly contended that it is not the case of the department that the petitioner/accused has suppressed the real income or undisclosed income was unearthed either under inspection or search. The return submitted by the accused was accepted and the assessment order of the year 2013-14 was also confirmed. He has paid part of the tax amount which was accepted by the department. The Assessment Order dated 31.03.2016 also confirmed the income. Thereafter an immovable property of the petitioner was attached on 13.05.2016. It is his further contention t....
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....d the tax fully. At the relevant point of time he has paid only Rs. 10,000,000/-. Assessment Order was also passed on 31.03.2016. Even thereafter the amount has not been paid. Hence, it is his contention that when the tax has not been paid the prosecution certainly maintainable. It is his contention that as per Section 140A of the where any tax is payable on the basis of any return required to be furnished, assessee shall be liable to pay said tax without together with interest and failure to pay whole or any part of tax, assessee shall be deemed to be a defaulter in respect of the tax. Therefore, when the law mandates payment of tax within a period the person failed to pay such a tax, there is no bar for initiation of prosecution. Hence opposed the petitioner. He has also placed reliance on the following judgments: 1. Madhumilan Syntex Ltd. vs. Union of India and another [(2007)11 SCC 297] 2. Prakash Nath Khanna and Another vs. Commissioner of Income Tax and Another [(2004) 9 SCC 686] 3. Arun Arya Vs.Income Tax Officer [CRMC No. 205/2015, IA No. 01/2015 dated 28.09.2018 High Court of Jammu & Kashmir at Jammu] 4. Sujatha Venkateshwaran vs. the As....
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...., penalty or interest. Section 276(C) of the Income Tax is as follows: " 276C. Wilful attempt to evade tax, etc. (1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable,- (i) in a case where the amount sought to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the c....
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....t is also to be noted Section 140A of the Income Tax Act makes it very clear that any tax is based on any Return filed by the Assessee, the Assessee shall be liable to pay such tax. Similarly, sub-clause 3 of the Section 140A reads as follows: "140A(3) If any assessee fails to pay the whole or any part of such tax or interest or both in accordance with the provisions of sub- section (1), he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax or interest or both remaining unpaid, and all the provisions of this Act shall apply accordingly." 10. The above sub-clause 3 of Section 140A makes it very clear that in the event of failure to pay tax the assessee shall be deemed to be a default in respect of tax. The word "wilfully attempt to evade the tax" is absent in Section 140A(3). If, mere default in payment of tax in time to be construed as a wilful attempt to evade the payment of tax the legislatures would have included the word "wilful attempt to evade the tax" in Sub-clause 3 of Section 140A which is in fact absent. Therefore, mere default on payment of tax in time the wilful attempt to evade....
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..../1993] the Gujarat High Court has considered various judgments and held that mere failure pay the advance tax the offence is not attracted. The relevant portion of the judgment is as follows: 11. ... ... ... ... ... ... ... Sub-section (2) of section 276C could be attracted only when a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act and not otherwise. The complaint is for offences punishable under section 276C(2) of the Act. In view of what is discussed above, it is very clear that there is not even a whisper that there is wilful attempt in any manner whatsoever to evade the payment of tax and hence the process issued is required to be quashed and is hereby quashed." 14. In Union of India (UOI) vs. Jiwal Lal Chironji Lal and Ors. [MANU/ MP/ 0143/2010] The High Court of Madhya Pradesh (Gwalior Bench) has held as follows: "22.From the minute analysis of the aforesaid Judgments of the Supreme Court, it clearly emerges that the conduct of the Assessee acquires importance, in relation to the proceedings of imposition of penalty or prosecution or conviction of the Assessee and whne the Assessee sat....
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....ith interest. The penalty imposed is now pending consideration before the appellate authority. So it would not fall under the mischief of Section 276 C of the Income Tax Act. 10. What is dealt with in Prakash Nath Khanna's case is the criminal liability that can be fastened under Section 276CC of the Act when there is wilful failure to furnish return. The expression "failure" used in Section 276 CC of the Act is with respect to submission of assessment and return and the same cannot be equated with any failure to pay the tax in time and the liability under Section 276 C of the Act. A mere failure to pay the amount due (tax, interest or penalty) will not satisfy the requirement which would constitute the offence under Section 276C(2) of the Income Tax Act. Hence the crime registered and the further proceedings thereof will not serve any purpose, if it is proceeded further. The same is quashed." 17. In Ganga Devi vs. State of Gujarat [[2021] 437 ITR 323 (Guj)] the High Court of Gujarat at Ahmedabad held as follows: "22.1 What the law requires is the intention to evade payment of taxes then it is not mere failure to pay the tax but must be something more. The ....
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....ure to pay the tax will not constitute the offence under Section 276C(2). 20. In the judgment of the Apex Court relied by the Respondent in Madhumilan Syntex Ltd. vs. Union of India and another [(2007)11 SCC 297] cited to the effect that non-payment of tax within the stipulated period, prosecution is maintainable. The above case factually distinguished where the assessee company having deducted the tax at source and failed to pay the TDS amount in time. Such circumstances the Apex Court took a view that they are not company or director not immune from prosecution. 21. In Prakash Nath Khanna and Another vs. Commissioner of Income Tax and Another [(2004) 9 SCC 686] the prosecution launched for the offence under Section 276(CC) was sought to be quashed. The plea before the Apex Court in the abvoe case is that as the assessee has already submitted the levy of interest and also penalty he could not be prosecuted under Section 276(CC) for the same default. The same was negatived by the Apex Court. Whereas in this case the prosecution initiated only under Section 276(C)(2) of the Act. Therefore, the above judgment is not applicable to the fact of this case. 22. The judgment relie....