TaxTMI 
TaxTMI 
2025 (6) TMI 1225
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.... Dubai, New York, US through State Trading Corporation, which he carried on for a period of three years from 01.04.1993 to 31.03.1996. He exhausted his pending Export Orders and no further orders were received nor did he continue his business. 3. During the period between 1993 to 1995 he advanced a sum of Rs. 4,53,50,000/- by Account Payee Cheques in the name of Sh. Subhash Chand Kathuria (hereinafter referred to as "SCK"), his elder brother-in-law and in the name of his business Units namely: (i) M/s Anita International (named after the SCK's wife) (ii) M/s Yasha Overseas (named after SCK's daughter) (iii) Sh. Subhash Chander Kathuria (SCK) individual) 4. Form this amount, SCK paid Rs. 2,90,48,005/- to various parties on behalf the Petitioner and net advance remaining with SCK and his businesses was Rs. 4,24,45,195/-. 5. The Petitioner submitted that he was unable to pay his tax liability in year 1994-95. The Assessing Officer (AO) Circle 17 (I) recovered the demand of Rs. 5,33,738/- for the Assessment Year 1994-95 from the bank account of SCK and his businesses, which in fact belonged to the Petitioner but were lying in the accounts of SCK. ....
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....ax Act was served upon him on 29.03.1999 in response whereof, he filed the Return for the year 1995-96 on 20.02.2001, wherein Rs. 27,21,590/- was shown as net income. 12. A Notice under Section 143 (2) / 142 (1) Income Tax Act was issued to him. He appeared in person along with his Advocate and filed a written explanation. The Assessee was asked to furnish the details of purchases, sales, inventory, opening and closing of stock and justification for DP Rate and proof of export realisation in support of his claimed deductions under Section 80HHC of the Income Tax Act. 13. A Survey under Section 133A of the Income Tax Act was carried out on 30.10.1995. Finally on 07.03.2001, the concerned Income Tax Officer passed the Assessment Order for the year 1995-96. The Assessee did not file any Income Tax Returns after the Assessment Year 1996-97. He also failed to deposit any tax penalty or interest wilfully, which is an offence under Section 276C (2) read with Section 278 (E) of the Income Tax Act. 14. Hence, the Commissioner, Income tax accorded sanction under Section 279 of the Income Tax Act on 15.03.2004, followed by filing of a Criminal Complaint by the Income Tax Officer. ....
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....es of the case. It was not been considered that out of the total tax liability of Rs. 38,13,620/- for the relevant period, the actual tax component amounted to only Rs. 10,75,636/-, while the remaining amount comprised of the interest accrued over the years. During this time, the Petitioner had been pursuing recovery of the entire liability from SCK under Section 226 (3) of the Income Tax Act, as was done in the previous Assessment year 1994-95. 24. It has not been appreciated that large amounts had been advanced to SCK and to his different business Companies which is reflected in the Balance Sheets of the Petitioner for the relevant period. The entire Audit Report has not been examined for it would have reflected that SCK himself in his personal capacity owed the Petitioner more than the sum payable by the Petitioner to the Income Tax Department. 25. The advances given by the Petitioner were returnable by the persons through whom the amount was given in case the purpose for which the advances are given, had not been fulfilled. In the Balance Sheet for 1995-96, the Petitioner had expected that the amounts advanced would be utilized for the purpose for which they had been adva....
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....called for the records but erroneously placed the onus of adducing this evidence on the Petitioner. 31. It is further asserted that the learned ASJ has wrongly relied upon the Balance Sheet dated 31.03.1995 to observe that the Petitioner was holding a cash reserve of Rs. 67,92,65,408/- and was in a position to pay the tax. The matter pertains to the Assessment year 1995-96 and as on 31.03.1996, the Balance Sheet of the Petitioner had a figure of Rs.12,58,151.99. 32. Furthermore, in the following Assessment Year of 1996-97, the Petitioner had a loss of over Rs. 7,00,000/- and had to close his operations. 33. In the end, it is contended that the Petitioner had filed a Criminal Complaint against SCK before the learned MM for registration of FIR against him, but the learned MM rejected his Complaint by observing that the dispute was purely Civil in nature. The matter was carried by him in Appeal, but he did not succeed. Therefore, the presumption of the Court that no steps were taken by the Petitioner to recover his amount due from SCK, is wrong and erroneous. 34. It is, therefore, submitted that the Order of Conviction and Sentence of the learned ACMM, as upheld by the lea....
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....ring the year 1995-96 in the Export business against the Sales shown by him, of Rs. 3,44,92,085/-. Also, he had shown profits from licencing and income from FDRs, but had not filed any Report of the Chartered Accountant in Form 10CCA under Rule 18BBA (3) to claim exemption under Section 80HHC. Despite the demand being raised for the tax for the year 1995-96 on 20.02.2001, the Petitioner has failed to make payment of the income tax. 41. Reliance has been placed on N.K. Jain vs. Union of India, 2002 (254) ITR 388 wherein it has been observed that it is for the accused to prove his defence which he can do either by cross-examining the prosecution witnesses or by leading defence evidence. Similarly, in the case of V.P. Punj vs. Asst. Commissioner of Income Tax, 2002 (253) ITR 369 the Co-ordinate Bench of this Court held that Income Tax Act does not differentiate between a natural or juristic person. From the Assessee's Reply to Show Cause Notice, it cannot be inferred that he has succeeded in proving his defence beyond reasonable doubt. 42. In the end, it is submitted that the failure of the Petitioner to pay income tax for the Assessment Year 1995-96 was indeed 'wilful' and he h....
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.... this Act or the payment thereof shall include a case where any person- (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof. 50. The gravamen of this Section is that there should be "Wilful attempt of an Assessee to evade the payment of Tax, penalty or interest to make the offence punishable." 51. In the present case, it is not in dispute that the Petitioner herein did not submit his Income-Tax Assessment for the Financial Year 1995-1996, though he filed his Auditors' Report on 25.10.1996, which contained the names of the Debtors as on 31.03.1996. On account of default ....
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....y observed by the learned ASJ in the impugned Order that the Petitioner himself was not sure of the nature of the financial transaction between him and SCK, his co-brother. At times, he stated that his co-brother was holding his money as if he has given him a loan, but at many of places, he has asserted that he has been cheated by SCK. As per the communications sent by the Petitioner to the Income-Tax Authority, he had shown that his co-brother was supposed to supply him the goods qua the crores of Rupees given by him, but no such supply was made. 56. Learned ASJ in his impugned Order, therefore, concluded that there are contradictory claims being made by the Petitioner, which do not explain the exact nature of transactions and therefore, it was a case of disputed business transactions, which needed evidence to be established and proved. Such like transactions cannot be covered under the words "any person who holds the money as referred to under Section 226 of the Income Tax Act." 57. This is further corroborated by the fact that there is no finite finding of any amount being due from SCK. Evidently, there were business transactions between the Petitioner and SCK under which ....