Income Tax Department by its Income Tax Officer (TDS), Ward-1(2) V. Elixir Enterprises and Hotels Pvt Ltd and Sri K.V. Kuparaju

CRL.A/1247/2023

AI Insights

The case involves the Income Tax Department appealing against the acquittal of M/S Elixir Enterprises and Hotels Pvt Ltd and its Managing Director, Sri K.V. Kuparaju, by the Special Court for Economic Offences, Bengaluru. The appeal was based on the alleged failure of the respondents to remit deducted TDS to the Central Government within the stipulated time for the financial year 2014-15. The trial court had acquitted the respondents, finding insufficient evidence to prove their guilt beyond a reasonable doubt. The High Court's decision to dismiss the appeal was influenced by the principles laid down by the Supreme Court regarding the scope of appellate review in cases of acquittal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 822427 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-12-2025
• Assessment Year: misc
• Other Referred Cases: CONSTABLE 907 SURENDRA SINGH AND ANOTHER v. STATE OF UTTARAKHAND, BABU SAHEBGOUDA RUDRAGOUDAR AND OTHERS v. STATE OF KARNATAKA, CHANDRAPPA v. STATE OF KARNATAKA, H.D. SUNDARA v. STATE OF KARNATAKA
• Laws Referred To: Income Tax Act, 1961, Code of Criminal Procedure
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ANNAMALAI S
• Assessee Lawyers: DILIP M
• Keywords: Economic offences; Income Tax Act; Judgment of acquittal; TDS non-remittance
• Section: 192; 194C; 194J; 194H; 194I; 200; 2.35; 278B; 276B

Judgement Text

" - 1 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE G BASAVARAJA CRIMINAL APPEAL NO. 1247 OF 2023 (A) BETWEEN: THE INCOME TAX DEPARTMENT BY ITS INCOME TAX OFFICER (TDS), WARD-1(2), NO.59, HMT BHAVAN, BELLARY ROAD, GANGANAGAR, BENGALURU-560 032. …APPELLANT (BY SRI. DILIP M.,ADVOCATE) AND: 1. M/S ELIXIR ENTERPRISES AND HOTELS PVT LTD., 135, RESIDENCY ROAD, BENGALURU-560 025 REPRESENTED BY ITS MANAGING DIRECTOR. 2. SRI.K.V. KUPPARAJU MANAGING DIRECTOR, M/S ELIXIR ENTERPRISES AND HOTELS PVT LTD., 135, RESIDENCY ROAD, BENGALURU-560 025. …RESPONDENTS (BY SRI. ANNAMALAI S.,ADVOCATE FOR R1 AND R2) THIS CRL.A IS FILED U/S 378(4) CR.PC PRAYING TO 1) SET ASIDE THE JUDGMENT OF ACQUITTAL OF RESPONDENTS VIDE ITS JUDGMENT IN C.C.NO.289/2019 BY THE SPECIAL COURT FOR ECONOMIC OFFENCES AT BANGALORE DATED 29.03.2023. 2) CONVICT THE RESPONDENTS FOR THE OFFENCES P/U/S 276B OF INCOME TAX ACT. Printed from counselvise.com Digitally signed by SUMA B N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 THIS APPEAL, COMING ON FOR ORDERS, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE G BASAVARAJA ORAL JUDGMENT The Income Tax Department has preferred this appeal against the judgment of acquittal passed by the Presiding Officer, Special Court for Economic Offences, Bengaluru in C.C.No.289/2019, dated 29.03.2023. 2. Brief facts leading to this appeal are that, the complainant filed the complaint against the accused Nos.1 and 2 for the offence under Section 276B read with Section 278B of Income Tax Act, 1961. It is alleged in the complaint that accused No.1 is the company registered under Companies Act, 2013. Accused No.2 is the Managing Director of accused No.1- Company, who is responsible for day-to-day conduct of business of accused No.1-Company. Therefore by issuing notice under Section 2(35) of Income Tax Act, 1961, he is treated as a Principal Officer of accused No.1-Company. It is the case of the complainant that accused No.1-Company had deducted TDS during the financial year 2014-15 on various Printed from counselvise.com - 3 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 heads under Section 192, 194C, 194H, 194I and 194J of Income Tax Act, 1961 to an extent of Rs.31,12,102/-. However, the accused have not remitted the same to the Central Government well within time. As per Rule 30 of the Income Tax Rules read with Section 200 of Income Tax Act, accused No.2 being the Managing Director, though had knowledge about non-remittance, has failed to remit the same. 3. It is further alleged that the Commissioner of Income Tax (TDS) issued show cause notice dated 10.02.2017 to the accused informing about the offence. The said notice was duly served. The accused, vide correspondence dated 02.12.2017 replied to the said show cause notice stating that due to severe financial crisis, there was delay in remittance of TDS. Therefore, the accused has admitted the default of non- remittance of TDS. Hence, complaint was filed. 4. After taking cognizance, case was registered in C.C.No.289/2019 and summons was issued. In response to summons, accused appeared before the trial Court and enlarged on bail. Substance of plea was recorded. Accused pleaded not guilty and claimed to be tried. Printed from counselvise.com - 4 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 5. To bring home the guilt of the accused, the complainant has been examined as PW1 and 11 documents were marked as Ex.P1 to Ex.11. On closure of complainant's evidence, statement under Section 313 of Cr.P.C was recorded. Accused has denied the evidence of PW1 and adduced the evidence of accused No.2 as DW1 and 8 documents were marked as Ex.D1 to Ex.D8. 6. Having heard the arguments on both sides, the trial Court acquitted the accused for the offence under Section 276B r/w 278B of the Income Tax Act, 1961. 7. The learned counsel for the appellant would submit that the trial Court ought to have followed the decisions relied by the appellant. The trial Court ought to have seen that decisions relied upon by the trial Court are not applicable to the facts of the case and same are distinguishable. The trial Court erred in holding that complainant has not produced reliable materials to prove belated payments without appreciating the materials produced by the appellant to prove the same. The trial Court erred in not considering the evidence and materials produced by the appellant and has not given sufficient reasons Printed from counselvise.com - 5 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 for acquitting the accused for the alleged commission of offences. The respondents/accused have not produced the sufficient materials to prove financial crisis and delay was not explained properly. The trial Court has not assigned proper, valid reasons for acquitting the accused. 8. Learned counsel for the respondents has filed written synopsis. 9. I have examined the materials placed before this court. On perusal of the impugned judgment, the trial Court in paragraphs 12 to 26 of its judgment has discussed in length and considered all the contentions taken by the complainant. After proper appreciation of materials on record, the trial Court has rightly held that the complainant has failed to prove the guilt beyond all reasonable doubt. 10. Before appreciation of evidence and record, it is necessary to mention here as to the recent judgment of the Apex Court in the Case of CONSTABLE 907 SURENDRA SINGH AND ANOTHER v. STATE OF UTTARAKHAND passed in Criminal Appeal No.355 of 2013 connected with Criminal Appeal No.788 of 2013 decided on 28th January, 2025, as also, judgments in Printed from counselvise.com - 6 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 the case of BABU SAHEBGOUDA RUDRAGOUDAR AND OTHERS v. STATE OF KARNATAKA reported in (2024)8 SCC 149; in the case of CHANDRAPPA v. STATE OF KARNATAKA reported in (2007)4 SCC 415; and in the case of H.D. SUNDARA v. STATE OF KARNATAKA reported in (2023)9 SCC 581. In the case of H D SUNDARA (supra), the Apex Court has summarized the principles governing exercise of appellate jurisdiction while dealing with an appeal against judgment of acquittal under section 378 of Code of Criminal Procedure. The same are as follows: “(i) The acquittal of the accused further strengthens the presumption of innocence; (ii) The appellate court, while hearing an appeal against acquittal, is entitled to re-appreciate the oral and documentary evidence; (iii) The appellate court, while deciding an appeal against acquittal, after re-appreciating the evidence, is required to consider whether the view taken by the trial court is a possible view which could have been taken on the basis of the evidence on record; (iv) If the view taken is a possible view, the appellate court cannot overturn the order of acquittal Printed from counselvise.com - 7 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 on the ground that another view was also possible; and (v) The appellate court can interfere with the order of acquittal only if it comes to a finding that the only conclusion which can be recorded on the basis of the evidence on record was that the guilt of the accused was proved beyond a reasonable doubt and no other conclusion was possible.” 11. At paragraph 41 of the Judgment, it is further observed that, it is beyond the pale of doubt that the scope of interference by an appellate court for reversing the judgment of acquittal recorded by the trial court in favour of the accused has to be exercised within the four corners of the following principles: 41.1. That the judgment of acquittal suffers from patent perversity; 41.2. That the same is based on a misreading/omission to consider material evidence on record; and 41.3. That no two reasonable views are possible and only the view consistent with the guilt of the accused is possible from the evidence available on record. Printed from counselvise.com - 8 - HC-KAR NC: 2025:KHC:51635 CRL.A No. 1247 of 2023 12. Considering the facts and circumstances of the case and keeping in mind the aforementioned decisions, I do not find any legal error in the impugned judgment passed by the trial Court. In the result, I proceed to pass the following: ORDER Appeal, being devoid of merits, dismissed at the stage of admission. Pending IAs, if any, stand disposed of. Sd/- (G BASAVARAJA) JUDGE RL List No.: 1 Sl No.: 0 Printed from counselvise.com "