TaxTMI 
TaxTMI 
2025 (10) TMI 873
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....ly under Section 139(4) of the IT Act on 31.12.2023, declaring a total income of Rs. 27,31,95,740/-. As per the return of income filed by A1 Company, the total tax liability was Rs. 9,16,30,141/-. Out of the same, the Company had TDS Credit of Rs. 43,48,624/- and the self-assessment tax to be paid at the time of filing of returns was to the tune of Rs. 8,72,81,520/-. The Company filed the return of income on 31.12.2023 without paying the admitted tax liability of Rs. 8,72,81,520/- as mandated under Section 140-A of the IT Act. Therefore, a demand was quantified at Rs. 8,72,81,520/- vide order dated 31.12.2023 requiring the assessee to pay the demand within 30 days from the date of service and an e-mail was also sent on 31.12.2023. However, the Company has not paid the tax dues. It is the case of the complainant that the A1 Company, inspite of having sufficient resources and capability, has exhibited wilful intention to evade payment of tax. Therefore, notices were issued to the accused Company by the Assessing Officer on 08.10.2024 and 08.11.2024 requiring the accused Company to make payment of the outstanding tax liability. Despite the same, the accused Company and its directors c....
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....ding for AY 2023-24 and having earned a net profit of Rs. 26,23,99,201/-, has wilfully chosen not to pay the admitted tax liability of Rs. 8,72,81,520/- at the time of filing the return on 31.12.2023, thereby, clearly attracting the provisions of Section 276C(2) of the IT Act. It is his contention that the payment of tax made eventually after issuance of notice cannot absolve the prior non-compliance, and the proof of payment of entire tax ought to have been furnished at the time of filing of the return as per Section 140-A of the IT Act. It is her further contention that the non-initiation of penalty proceedings does not lead to a presumption that the wilful default in payment can be condoned. It is her further contention that it is for the petitioners to establish that they did not have the mens rea in causing wilful default in payment of tax. Hence, she opposed the petition. 5.I have perused the entire materials available on record. 6.It is not in dispute that the A1 Company has filed its returns of income for the AY 2023-24 belatedly on 31.12.2023. The allegations in the complaint are to the effect that the assessee, while filing its returns of income for the AY 2023-24 o....
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....aded 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 court, also be liable to fine. Explanation.-For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under 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 statemen....
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...., 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-section (3) of section 140A makes it very clear that in the event of failure to pay tax the assessee shall be deemed to be in default in respect of tax. The word "wilful attempt to evade the tax" is absent in section 140A(3). If, mere default in payment of tax in time is to be construed as a wilful attempt to evade the payment of tax the Legislature would have included the word "wilful attempt to evade the tax" in sub-section (3) of section 140A which is in fact absent. Therefore, in the event of mere default of payment of tax in time, the wilful attempt to evade the tax cannot be imported to prosecute. To prosecute the person for penal action, the penal provision has to be strictly construed. Only if the circumstances and the conduct of the accused show the wilful attempt in any manner whatsoever to evade the tax or to evade the payment of any tax, penalty or interest, the prosecution can be launched. 11.The apex court in Ta....
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....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) v. Jiwal Lal Chironji Lal 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 when the assessee satisfactorily demonstrate that he was having no intention of concealment of income, either deliberately or indeliberately, the conviction could not be sustained. In the circumstances of the present case also, it is apparent from the perusal of the record that there was no wilful attempt to evade tax or concealment of income on the part of the assessee-firm or false....
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....under section 276CC of the Act when there is wilful failure to furnish return. The expression 'failure' used in section 276CC 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 276C 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 Somani v. State of Gujarat [2021] 437 ITR 323 (Guj) the High Court of Gujarat at Ahmedabad held as follows (page 336 of 437 ITR) : "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 assessee must be aware that the tax was leviable and such assessee deliberately avoids paying it. The word 'evade' in the context means defeating the provisions of law of paying tax." 18.Considering the above judgments and the mere f....
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....R 199 (SC) ; (2007) 11 SCC 297 cited to the effect that for non-payment of tax within the stipulated period, prosecution is maintainable. The above case is factually distinguished where the assessee-company having deducted the tax at source had failed to pay the tax deducted at source amount in time. In such circumstances the apex court took a view that they are not company or director not immune from prosecution. 21.In Prakash Nath Khanna v. CIT [2004] 266 ITR 1 (SC) ; (2004) 9 SCC 686 the prosecution launched for the offence under section 276CC was sought to be quashed. The plea before the apex court in the above case is that as the assessee has already submitted the levy of interest and also penally he could not be prosecuted under section 276CC for the same default. The same was negatived by the apex court. Whereas in this case the prosecution is initiated only under section 276C(2) of the Act. Therefore, the above judgment is not applicable to the facts of this case. 22.In the judgment relied upon by the Department in Arun Arya v. ITO CRMC No. 205/2015, IA No. 01/2015 dated September 28, 2018 the High Court of Jammu and Kashmir at Jammu on the basis of the su....
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....39;ble Supreme Court and has ultimately held that, to prosecute a person, there must be a willful attempt on the part of the assessee to evade payment of any tax, penalty or interest. The said judgment has also attained finality. The explanation to Section 276C(2) of the IT Act makes it very clear that the evasion by way of any false entry or statement in the books of account or other document or omission to make any entry in the books of account or other documents or any other circumstances which will have the effect of enabling the assessee to evade tax or penalty or interest chargeable or imposable under the Act or the payment thereof, alone can be prosecuted. Though the explanation is an inclusive one, it is not the case of the Department in the present case that the assessee has suppressed the real income or has not disclosed any other source of income or has fabricated documents or has made any false entry in the statements or documents or omitted to make any such entry in the statements or documents or omitted to make any such entry in the books of account or other document or acted in any other manner to avoid payment of tax. The only allegation is that there is a delay in ....