B. Radha V. Dy Commissioner of Income-tax,

CRLATR/20/2018

AI Insights

The case involves appeals by M/s Gomati Agro Farms Pvt Ltd and its directors against their conviction for willful evasion of tax under the Income Tax Act, 1961. The appellants were found guilty by the Special Judge for Economic Offences at Hyderabad, which led to their conviction and sentencing. The main arguments in the appeals centered around the lack of funds to pay the assessed tax, the misinterpretation of the burden of proof regarding willful evasion, and the improper attribution of responsibility to the directors for the company's financial conduct. The High Court found substantial issues in the trial court's judgment, particularly concerning the evidence and the application of legal principles regarding willful evasion of tax.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 726589 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 17-06-2022
• Assessment Year: misc
• Other Referred Cases: Alkinapalli Sujatha (smt.) and others v. State of Telangana Public Prosecutor, High Court of Telangana, Hyderabad and another, POOJA RAVINDER DEVIDASANI v. STATE OF MAHARASHTRA, National Small Industries Corporation v. Harmeet Singh Pahwa, Gunmala Sales Private Ltd. v. Anu Mehta, Pepsi Foods Ltd. v. Special Judicial Magistrate, Alka Khandu Avhad v. Amar Syamprasad Mishra and another
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Assessee Lawyers: VINOD KUMAR DESHPANDE; G RE DDY
• Keywords: Book profit; Criminal Appeal; Income Tax Return; Penalty; Tax liability; Willful evasion of tax
• Section: 143(3); 143(1); 208; 115JB; 156; 221(1); 374; 281-B; 276-C(2); 140-A; 278-8; 221(1) read with Section 143-A; 276-C(2) read with Section 278-8

Judgement Text

"IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD FRIDAY .THE SEVENTEENTH DAY OF JUNE TWO THOUSAND AND TWENTY TWO 2. Alluri Venkata Raghava Ra.ju, S/o. A. Venkata Rama Raju, Director of Mis. Gomati Agro Farms Pvt. Ltd., 2-13131, SS Nagar, Opp. Hydernagar, Hyderabad. ... Appellants/ Accused 1 & 2 AND ...RESPONDENT/ Complainant Counsel for the Appellant : SRI VINOD KUMAR DESHPANDE SENIOR COUNSEL FOR SRI. G ASHOK REDDY Counsel forthe Respondent: SRI B. NARASTMHA SARMA, SC FOR t.T, Crl.Appeal Under Section 374 of Cr.P.C. aggrieved by the Judgment dated 09-01-2014 in C.C.No. 116 of 2011 on the file of the Court of the Special Judge fot Economic Offences at Hyderabad Between Dy- Commissioner of lncome{ax, Central Circle€, Aayakar Bhavan, Room No.805, 8th Floor, Basheerbagh, Hyderabad-500004. Smt. B. Radha, Wo. Shri B. Rama Raju, Brother of Sri B. Ramalinga Raju, Ex- Chairman of M/S SCSL, Hyderabad, Director of M/s. Gomati Agro Faims Pvt. Ltd., Plot No,2-13131 , S.S. Nagar, Opp. Hydernagar, Hyderabad. ... AppellanU Accused No. 3 I t. i , I I I I PRESENT THE HONOURABLE DR. JUSTICE D.NAGARJUN . CRIMINAL APPEAL (TR) NO: 52 AND 20 OF 2018 CRL.APPEAL (TR) No. 52 of 2018 Crl.Appeal Under Section 374 of Cr.P.C. aggrieved by the Judgment dated 09-01-2014 in C.C.No. 116 ot 201'l on the file of the Court of the Special Judge for Economic Offences at Hyderabad Between: 1 M/s Gomati Agro farms Pvt Ltd , 2-13131 . SS Nagar, Opp Hydernaqar, Hyderabad, Rep by Sri A.V Raghava Ralu, S/o A Venkata Rama Ralu, aged about 47 years. CRIMINAL APPEAL (TRl NO: 20 OF 2018 AND nVCommissiollerofn.]ome{ax,CentralCircle-8'AAyakarbhaveln,FloomNo.S05, 6in ftoor, Basheerb; ;tr, Hyderabad-500004 ...RE SPCrl.ltrEN.[/ Complainant CounselfortheAp:rellant:SRtVINODKUMARDESHPAIII)ESENIOR COUNSEL FOR SRI. V SURE]IOER RAO Counsel forthe Rer pondent: SRI B. NARASIMHA SARMI' The Court deliverer the following: Judgment I I THE HON'BLE DR. JUS'IICE D.NAGARJUN os.52 and 20 of 2OLB COMMON ORDER: Cri.A.(TR).No.52 of 2018 is filed by A1 and A2 i.e., C<.,mpany ald one of its Directors respectively, whereas crl.A.(TR)'No.2o of 20r8 is fired by 43, who is another Director of A 1 / company, being aggrievecr b-v the conviction and sentence imposed by the learned Special Jr.rdge lor Economic Offences at Ifi,derabad in C.C.No.l l6 of ,O1 I vicie Juclgrnent dated O9.Ol .2014, wherein Accusecl Nos. I to 3 were found guilty of the oifences punishable under Secti on 226_C(21 read with Section 278-8 of the Income 'lax Act, 1961 (for short, .,the Act,,) consequently accused No.1 was sentenced to pay fine of Rs. l0,OO0/- and in default of payment of fine to initiate appropriate proceedings as required under Secti on 42L of Cr.P.C., whereas Accused No.2 was sentenced to undergo rigorous imprisonment for a penod of one year and A3 was sentenced to rmdergo rigorous imprisonment for a period of six months and to pay fine of Rs. 10.000/_ each and in default of payment of fine by accused Nos.2 and 3, to undergo simple imprisonment for a period of orte rnonth each. I 2 Since tl-r ' rssues involvecl in these appeals irr(-' o le and the same, both tl e appeals are being disposed ol bi this common judgment. 2.Forcon.enience,thepar.tieshereinarereft:r-edtoasthey are arrayed l:cfore the trial Court' i'e'' Appellant No' 1 as Accused No.1 'Company and ' ppellant Nos'2 and 3 ;rs Accused Nos.2 and 3. 3. The ger esis of these cases, 'lvhich tead the appellartts- accused to pr rfer these appeals, are narrated in lrrref i1s under: i) Ar cused No'l/Company - M/\"' Gonrati r gro Farms Privateimited,whichwasregisteredunderl:heCompanies Act wil h the Registrar of Companies :rr- Hy Cerabad as Private Limited Company, was errgaged in the business of acquisi ion and sale of lands' Appellant Nos' 2 and 3 herein Lre the Directors of Accused No'1/Company' ii) A:cused No.l/Company has acquired lands to an extent ,f Ac.S1.00 guntas in Sy'Nos'189' 19r)' 'O1 and 203 under the limits of Bachupally Mandal' Rrmga Reddy Distric rluring the financial years 2OOO-12[rOl to 2OO4-O1 3 and developed the said lands by incurring some amounts during the financial years 200 1-02 to 2OO7-08. Accused No.1/Company has floated 9 companies by name M/s. Kanj al Green Fields Private Limited and eight others with 1O0% holding in the year 2006-07 and sold lands under 9 different sa,ie deeds for the financial vear 2OO7 -OB and claimed exemption of such transfer by invoking provisions under Section 47 of the Act. iii) For the assessment year 2OO8-09, accused No. i/company has filed income tax returns on 3O.09.2008 under Ex.P1 by showing taxable income as Nil and book profit under Section 11SJB as Rs.24,41,41,876/-, which is more than regular income. Since the book profit was more thal regular income, the same has been taken for the purpose of taxation and tax liability was arrived at Rs.2,76,61,267 /-. iv) Accuseci No.1/Company 1S expected to pay the income tax either by way of advance tax as required under Section 2O8 of the Act or at least along with filing of returns in terms of Section l4O-A-qfJhe Act. As per a / j I .+ Sectir r 143 (1) of the Act, the tax liability. of {ccused No.1 on br rl< profit lr,as arrived at Rs.3,37,60,5,85/- by the respo dent/complainant and raised a de:land under Scctio r 156 read with Section 143 o[ the: A.r:t and issued arl int.imi -i,rn to Accused No. 1/Cornpa:rr under Bx.P5. Accus d No. 1/company was required t,r ray the tax demar ded within 30 days of service of :tt-,tic:, but it has comnr :ted default v) I lespondent/complainant has issur:d show-cause notice trnder Section 221 (l) of the y'.o_ under E;x.P7, vvhere ,r the appellants were asked to shory ,:atrse as to why penalt should not be levied for com.nLitting default in payme rt of tax. As there was no reriponrie from the appell nts, the complainant has issuerderr; As a r ':r1uel, pending miscellaneous aprlrL.cations, if any, shall stand , osed. ,TRUE COPY// Sd/. t(. SRINIVASA RAO .IOINl' REGISTRAR /. t-.w IJECTION OFFICER 3. One CC to SR G ASHOK REDDY, Advocate [OPUC] 4. One CC to Sri '/. SURENDER RAO, Advocate (OPUC;) 5. One CC to SRI B. NARASIMHA SARMA, Advocate [CIF'UC] 6. Two CD CoPie ; I To i - tt \" Soecial Jt lcle for Economic Offences it Hyderab:td' z. iii. or. C\"mrr sl;ioner of lncome'tax, Central Circle-8 A'ayakar Bhavan, - Room'No.805, lth Floor, Basheerbagh, Hyderabad'S0( 004' i.-.r- '- - -- &* , J.- HIGH COURT DATED:17|(t(it CzZ COMMON JL'D ;IUIEN'r CRL.APPEAL 'I ?.Nos.52 AND 20 ot 2018 DISPOSING OI I'HE CRL.APPEALS TR. 6\":1F\" 14 16: t .l rl o () 2 / At]I| 2U0 i. ,i ,.', ./ )7 + !1 t.- (B) % "