BASAGOUDA RAMAGOUDA NARASANNAVAR V. INCOME TAX DEPARTMENT

CRL.P/100392/2020

AI Insights

The case involves a criminal petition filed under Section 482 of the Criminal Procedure Code (Cr.P.C.) by Basagouda Ramagouda Narasannavar and Suresh G. Sholapurmath, seeking to quash the proceedings against them for alleged offenses under Sections 276C(2) and 277 of the Income Tax Act, 1961. The allegations stemmed from a private complaint by the Income Tax Department, which accused the petitioners of colluding to show a higher tax payment than actually made, thereby evading tax. The court's decision hinged on the interpretation of a government circular that exempts certain low-value tax evasion cases from prosecution.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 754543 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-04-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Criminal Procedure Code
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: Y V RAVIRAJ
• Assessee Lawyers: SHRIHARSH NEELOPANT
• Keywords: Material alteration; Private complaint; Prosecution Immunity; Quash Proceedings; Self-assessment tax
• Section: 276C(2); 482; 277; 140-A

Judgement Text

"IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 22ND DAY OF APRIL 2021 BEFORE THE HON’BLE MR. JUSTICE MOHAMMAD NAWAZ CRL.P. NO.100392/2020 BETWEEN: 1. BASAGOUDA RAMAGOUDA NARASANNAVAR AGE. 66 YEARS, OCC. RETIRED SERVICE. R/O R.S.NO.201, PLOT NO.12, BASAVA KRUPA, BEHIND COURT, GOKAK, DIST. BELAGAVI-591307 2. SURESH G. SHOLAPURMATH AGE. 67 YEARS, OCC. CHARTERED ACCOUNTANT, COURT ROAD, GOKAK, DIST. BELAGAVI-591307. ...PETITIONERS (BY SRI. SHRIHARSH A NEELOPANT, ADV.) AND INCOME TAX DEPARTMENT REP. BY ITS INCOME TAX OFFICER, SHRI.ANGAD KUMAR, AGE. 41 YEARS, INCOME TAX OFFICER, WARD-I, GOKAK-591307. …RESPONDENT (BY SRI.Y.V. RAVIRAJ, ADV.) THIS CRIMINAL PETITION IS FILED U/SEC.482 OF CR.P.C.,PRAYING TO QUASH THE PRIVATE COMPLAINT IN CC NO.705/2015 AS PER ANNEXURE-A PENDING BEFORE THE PRINCIPAL CJ AND JUDICIAL MAGISTRATE FIRST CLASS, GOKAK FOR THE OFFENCES PUNISHABLE UNDER SECTION 276C AND 277 OF INCOME TAX ACT, 1961, IN SO FAR AS PETITIONERS CONCERNED. 2 THIS PETITION COMING ON FOR ADMISSION, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioners have preferred this petition under Section 482 of Cr.P.C. seeking to quash the proceedings initiated against them in C.C. No.705/2015, on the file of Court of Principal Civil Judge and JMFC, Gokak, for offences punishable under Sections 276C(2) and 277 of Income Tax Act, 1961. 2. Heard the learned counsel for the petitioners and learned Standing counsel appearing for respondent/complainant. 3. On the basis of a private complaint filed by the respondent, the aforesaid proceedings were initiated against the petitioners. The sum and substance of the complaint averments are that accused No.1 is an assessee under the Income Tax Act. Accused No.2 is the Chartered Accountant providing Professional services in the name and 3 style as ‘M/s. S.G. Sholapurmath and Company’ at Gokak. Accused No.1 filed returns of income for the assessment year 2009-10, prepared and filed by accused No.2, wherein the tax liability payable under Section 140(A) i.e., self assessment tax has been worked out and the tax due was claimed to have been paid on the date specified in each case. Further, counter file of the income tax challan duly stamped by the SBI, Gokak was filed with returns in support of payment of the tax. While processing the returns of the income on AST, it was found that the self assessment tax has been paid at a lesser amount than actually shown in the counter file of the income tax challan enclosed along with returns and extra digit was prefixed to the amount actually paid. Thus, showing the higher figure. It is alleged that the challan was materially altered after payment to show excess payment/credit/claim of Rs.2,000/- by accused No.1 in the returns filed by him. 4 4. It is alleged by the complainant that accused Nos.1 and 2 have colluded with each other in the fraudulent claim by paying less tax but claiming as if they have made higher payment of tax thereby evaded the payment of tax and therefore, liable for prosecution under Section 276C(2) of I.T. Act, 1961. 5. The learned counsel for the petitioners would contend that as per circular F.No.285/160/90/IT(INV)/190 dated 07.02.1991 issued by Government of India Ministry of Finance, the income escaping assessment upto a sum of Rs.25,000/- is immune from prosecution. In the present case, the tax amount involved is less than Rs.25,000/- and therefore, he submits that proceedings are liable to be quashed. 6. The learned counsel for the respondent would submit that as per the above circular, if the amount is less than Rs.10,000/-, the prosecution 5 need not be initiated for an offence under Section 276C(2) of the Act. 7. In the instant case, according to the complainant, the self assessment tax was paid at lesser amount than shown in the counterfoil of the income tax challan filed along with the return and the challan was materially altered after payment to show excess payment of Rs.2,000/- by accused No.1 in the return filed by him. 8. According to the circular in F.No.285/160/90/IT(INV)/190 dated 07.02.1991, wherein para 5 (iv) Clause 4 of the said circular, reads as under:- “(iv) Section 276C(2) willful attempt to evade payment of taxes etc. Prosecution need not be initiated for an offence under this section if the aggregate amount of tax interest and penalty involved is less than Rs.10,000/-. This limit would be 6 Rs.1,000/- for the corresponding provision under the Wealth –Tax Act, 1957.” Since it is not in dispute that the aggregate amount of tax interest and penalty involved in the present case is less than Rs.10,000/- as per the above circular and the relevant para as noted above, the initiation of prosecution against the petitioners is liable to be quashed. Hence, the following: ORDER i) Petition is allowed. ii) The entire proceedings pending on the file of the Principal Civil Judge & JMFC, Gokak, in CC No.705/2015 is hereby quashed. In view of the above order, IA 1/2021 does not survive for consideration and it is dismissed. Sd/- JUDGE MNS/Para Nos.1 to 6 VMB/Para No.7 to end "