TaxTMI 
TaxTMI 
2026 (8) TMI 57
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.... and Ms. Susan Linhares, the learned Senior Standing Counsel for the Respondent. 3. Rule. Rule made returnable forthwith by consent of the parties and heard finally. The service is waived on behalf of the Respondent by Ms. Linhares. 4. The impugned Order is challenged, inter alia, on the grounds that: i. The impugned Order issuing process is passed mechanically and is contrary to the records, more particularly in view of the NIL DUES Certificate, which proves that the 1st Petitioner had paid the entire amount along with penalty and accrued interest and therefore there was no wilful attempt to evade the tax liability on part of the 1st Petitioner. ii. There was no wilful attempt to evade payment of tax on part of the 1st Petitioner, which is evident from the fact that the 1st Petitioner has declared the correct income and correct tax liability in its Income Tax Returns and the same came to be accepted at the time of assessment by the Department and the Assessment Order passed under Section 154 of the I.T. Act clearly confirms this position. The 1st Petitioner's action in paying the tax due, along with penalty and interest, even before the issuance of proc....
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....tition by submitting that the Petition is devoid of merit and is an attempt to prematurely stifle legitimate prosecution. It is further submitted by her that the contention of the Petitioners that they could not pay the tax on time due to the mining ban in the State of Goa is irrelevant as the payment of tax was for the period when the 1st Petitioner was conducting regular business and earned income during the period of 1st April 2011 to 31st March 2012. She submitted that the ban on mining operations in the State of Goa came into force only in October 2012. She submitted that the 1st Petitioner made a wilful attempt to evade payment of tax, penalty, and interest for A.Y. 2012-13, and that its acts were not merely a delay in payment. She further submitted that the subsequent payment of tax and interest or issuance of "Nil Dues Certificate" does not obliterate the offence already committed, as wilful attempts had already occurred. In view of the same, it is submitted that the impugned Order is a reasoned order passed in accordance with law and the sanction for prosecution was given after complete analysis of the records. It is Ms. Linhares's submission that the said Complaint under ....
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....o the proposed prosecution under Section 276-C(2) of the I.T. Act. The 1st Petitioner filed its objections to the said proposal on 9th January 2017, setting out in detail the genuine difficulty in delay in payment of the tax. In the interregnum, the 1st Petitioner continued to make payments towards the outstanding tax liability, along with penalty and interest. The details of such payments made by the 1st Petitioner are set out in a table on page 17 of the petition and are not denied by the Respondent. 12. The Principal Commissioner of Income Tax (Central), Bengaluru, vide Order dated 30th January 2017, granted permission to initiate prosecution under Section 279(1) of the I.T. Act. The Petitioners have not challenged this permission. 13. In the meanwhile, the Petitioners, after paying the part outstanding, replied to the demand notices dated 25th and 30th August 2016 on 1st September 2016 in which it is categorically stated by the Petitioners that the 1st Petitioner does not wish to default on tax payment and also informed that due to the ban on mining in the State of Goa, which resulted in stoppage of business and zero earning of revenue, the 1st Petitioner was unable to pa....
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....st March 2019, the said Order dated 29th January 2018 of the JMFC was quashed and set aside. The matter was remanded back to the JMFC. 19. After the remand on 1st March 2019, and almost 6 years later, the CJM passed the impugned Order, followed by the issuance of summons to the Petitioners dated 12th November 2025. 20. In this factual background, I have considered the provisions of Section 276-C (2) of the I.T. Act. The Section reads as follows:- 276C - (1) ............................................. (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 purpose 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 - (....
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....ment of 'wilfulness', the provisions of the Section cannot be made applicable and cannot be invoked to prosecute a person. Therefore, there has to be an intention to evade the liability of tax, penalty or interest. 24. The Section uses the words 'wilful attempt' and not 'wilful default'. In S. Sundaram Pillai and others v. V.R. Pattabiraman, (supra), the Hon'ble Supreme Court, while dealing with the Rent Control Acts of different States, has defined the word 'wilful' as well as the term 'wilful default'. The paragraphs read thus: "21. Before, however, going into this question further, let us find out the real meaning and content of the word 'wilful' or the words 'wilful default'. In the book A Dictionary of Law by L.B. Curzon, at page 361 the words 'wilful' and 'wilful default' have been defined thus: 'Wilful' - deliberate conduct of a person who is a free agent, knows what he is doing and intends to do what he is doing. 'Wilful default' - Either a consciousness of negligence or breach of duty, or a recklessness in the performance of a duty. 22. In other words, 'wilful default' would mean a deliberate and intentional default knowing full well ....
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....asis supplied) 25. Thus, the word 'wilful' denotes an act consciously and deliberately done and signifies a course of conduct marked by the exercise of volition rather than one that is accidental, negligent or involuntary. The word 'wilful' has a peculiar characteristic indicating the guilty mental state of the party. 26. Considering the definitions of 'wilful' provided in various dictionaries and in the interpretation of the words 'wilful default' provided by the Hon'ble Supreme Court in the above judgement, a similar meaning ought to be adopted to interpret the term 'wilful attempt' used in the Section. The word 'wilful' introduces a mental element and requires looking into the mind of a person by gauging the person's actions indicative of one's state of mind. Thus, in order to prosecute a person under Section 276-C(2), the conduct of a person acquires importance. A person, in such a case, ought to have deliberately, intentionally and consciously made attempts to evade payment of tax, penalty or interest under the I.T. Act. It does not include an unintentional act, an accidental act or a casual act or genuine inability. The word 'wilful' used in the Section imports the c....