M/s. Sujata Electrical Infratech Private Limited And 2 Others V. Dy. Commissioner of Income Tax

CRLP/5210/2019

AI Insights

The case involves M/s. Sujata Electrical Infratech Private Limited and its directors, who were accused of willfully defaulting on the payment of self-assessment tax for the assessment year 2014-15, as required under Section 140A of the Income Tax Act, 1961. The Income Tax Department initiated proceedings under Section 276C(2) of the Act, alleging a willful attempt to evade tax. The petitioners argued that there was no intention to evade tax, as they had filed their returns and paid the due tax with interest, though the payment was delayed due to financial difficulties. The court examined whether the actions of the petitioners constituted a willful attempt to evade tax and concluded that the petitioners' conduct did not meet the criteria for such an attempt under the law.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 692319 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 04-11-2022
• Assessment Year: misc
• Other Referred Cases: Vyalikaval House Building Co-operative Society Limited v. The Income Tax Department, Central Circle-1(1), Prem Dass v. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Assessee Lawyers: S RAVI
• Keywords: Financial Difficulties; Income Tax; Quash Proceedings; Self-assessment tax; Willful default
• Section: 276C(2); 482

Judgement Text

"[ 3251 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD FRIDAY,THE FOURTH DAY OF NOVEMEER TWO THOUSAND AND TWENTY TWO PRESENT Between: 1. M/s. Sujata Electrical lnfratech Private Limited, Shed No.2, Survey No. 143, Gandimaisamma X Roads, Domaara Pochampally Village, Quthbulaapul Mandal, R.R District, Telangana - 500043 2. Anll Kumar Reddy Dodla, Managing Director, M/s. Sujata Electrical lnfratech lndia Pvt. Ltd., Flat No. 2403, Saibhargava Apartment, Kukatpally, Hyderabad 3. Uma Deepika Dodla, Director, M/s. Sujata Electrical lnfratech lndia Pvt. Ltd., Flat No. 2403, Saibhargava Apartment, Kukatpally, Hyderabad ...PETITIONERS/ACCUSED No.1,2 and 3 Dy. Commissioner of lncome Tax, Circle -3 (2), Room No. 713, 7th Floor, Signature Towers, Represented by the Special Public Prosecutor, lncome Tax, High Court, State of Telangana, at Hyderabad ...RESPONDENT/COM PLAINANT Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to quash C.C.No.37 of 2018 on the f ile of Special Judge for Economic Offences at Hyderabad. l.A. NO: 1 OF 2019 Petition under Section 482 oI Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to pass an order staying all further proceedings in C.C.No.37 of 2018 on the file of Special Judge For Economic Offences at Hyderabad, including personal appearance of the Petitioners herein. tHe noruounABlE sRt JUslcE K.SURENDER CRIMINAL PETITION No: 5210 oF 20'le AND This Petition coming on for hearing, upon perusing the Memorandum of Grounds of Crimin;:l Petition and upon hearing the arguments of Sri S. Ravi Senior Counsel for Smt. Divya Datla, Advocate fbr the Petitioner and of Sri B. Narasimha Snarma, rep. by Spesial Public Prosecutor (TG) on behalf of the Respondent. The Court made ther following: ORDER I HON'BLE SRI JUSTICE K.SURENDER CRIMINAL PETITION No.521O of 2O19 ORDER: 1. This petition is filed to quash the proceedings against the petitioners/Al to A'3 in CC No.37 of 2018 on the file of Special Judge for Economic Offences, Hyderabad. 2. The 1\"t petitioner fi.ied original return of income tax in the assessment year 2014-15 on 29.11.2014 declaring a total income of Rs.1,03,44,060/-. After ciaiming a tax credit for TDS of Rs.53,016/, out of the admitted tax liability, as per the return of income, the accused liled return of Rs.38,O0,l7Ol-. However, the tax 'rl/as not paid. 3. It is the case of the respondent that the accused has willfully defaulted in paSrment of self assessment tax of admitted income as required under Section 14OA of the Income Tax Act, 1961 attracting the provisions under Section 276C(2 of the Act, which penalizes such default. 4. The Income Tax Department issued a show-cause notice dated 09.06.2016 which was served on the petitioners/accused. The l 2 petitioners repjied in writing on 23.06.2016 infonning that there - was no willful Cefault or matafide intention to evade tax payment, but the same r-as on account of certain financial difficulties beyond control. Along with reply, a letter along with a copy of self assessment ta;r chailan for Rs.50,55,310/- along with interest was paid and requer;ted the department not to initiate any proceedings. 5. However, according to the department, since the accused with arr intention to evade tax filed return without paying self assessment ta>:, the accused committed an offence under Section 276C(2 r/w'.;.788 of the Income Tax Act. Further there is a presumption o[ culpable menta-l state on ttre part of the accused for such defauit. 6. Sri S.Ra.zi, learned Senior Counsel appearing for the Petitioners worrld submit that there is no evasion of tax. Even according to the department, though the assessed tax was Rs.38,00,170/ , the petitioners paid along with interest an amount of Rs.5O,55,31O/-. The said conduct itself indicates that there was never arry intr:ntion or attempt to evade tax payment, lor which reason, the pe::ral provision under Income Tax Act is not attracted. I 3 In support of his contention, he relied on the judgment in the case of Vyalikaval House Building Co-operative Society Limited v. The Income Tax Department, Central Circte-1(1)fCriminal Petition Nos.4891 and 4892 of 2014, dated 14.06.20191 of Karnataka High Court. 7. In the aforesaid judgment, the accused was prosecuted on the ground that though returns were filed, he failed to pay the said tax amount. The Court found that the act of filing returns by itself cannot be constmed as an attempt to evade tax rather it would suggest that there u,as a voluntary declaration to pay the tax. 8. In the case of Prem Dass v. Income Tax Officer [(1999) 5 Supreme Court Cases 24i], the Hon'Lrle Supreme Court held that a positive act on the part of the accused is required to establish a charge under Section 276-C(2l.. 9. Learned Senior Counsel also relied upon the judgment of this Court in Criminal Petition No.3i64 of 2008, dated September, 2015, which r,r,as decided on similar lines. I I I 4 10. Tire Leanred Standing Counsel appearing on behalf of the Income Tax Department submits that whether there vras an intention or nol to evade tax is subject matter of trial and this Court under Section 182 of Cr.P.C cannot decide the said fact. Further, the judgment relied by the leamed Senior Counsel for the petitioners, have no bearing since the facts in present case are distinguishabh on facts of the judgments relied by the learned Senior Counsr:l. He further submits that the Income Ta,x department has to be given an opportunity to establish its case belore the conr:erned Court and the defence of the petitioners can be taken before the trial Court, AS such, petition has to be dismissed. 1 1. In the prt:sent case, the facts are not disputed either by the petitioners or lty the department. The 1\"t petitioner company filed return of Inco:rne Tax admitting the tax liability of Rs.38,00,17O1-, but failed to rnake pa5rment. However, on receiving notice dated 09.06.2076, llal reply, the petitioners enclosed a challan lor an amount of Rs.iiO,55,31O/- (Rs. 12,55,14O l- excess towards interest 5 ald other charges) towards tax. The present prosecution was iaunched on 01.03.2018. 12. Section 276C of Income Tax Act is extracted hereunder: \"276C. 2 Wilful attempt to evade tax, etc. (!) If a person wilfully attempts in any manner whatsoever to evade any tax, pena-lty or interest chargeable or imposable 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,- {!) in a case where the amount sought to be evaded exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six montlls but which may extend to seven years and with fine; {!!l in any other case, with rigorous imprisonment for a term which shall not be less than three monttrs but which may extend to three years and with hne. (!.) If a person wilfully attempts in any manner whatsoever to cvade the pa).rnent of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be irnposable on him under any other provision of this Act, be punishabie with rigorous imprisonment for a term rvhich shall not be less than three months but which may extend to ttlree 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 tiu, penalry or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person- (!) 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 entr5r or statement; or [!) makes or causes to be made any false entry or statement in such books of account or other documents; or {!UI wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or {!yl causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the pa).ment thereof.l\" 13. From the present facts, it has to be ascertained whether requisite mens rea was p{eggnt to infer a willful attempt at evading tax. Unless a person with dishone^st intention tries to conceal facts i .-7 6 arrd consequet)tly atternpts at evading the tax, which he is liable to pay are the rer;uisite ingredients to prosecute person under Section 276C of the Inr:ome Tax Act. 14. It is not the case of the Income Tax department that the self assessment tax returns which v,'ere filed had an element of concea-lment on any factual aspects and tried to evade tax, which is liable to paid. 'Ihere is no dispute regarding the claims made by the petitioners in their income tax returns. 15. Having r€:,leived the notice, the petitioners have paid additional amount of Rsi.L2,55,14Ol- towards interest and other charges, apart from th,:. asSessed tax. It rt as stated that due to hnancial difliculties beyond control, the amount could not be paid in time. 16. As alreaCy discussed, this is not a case wherein false declaration is rnade or that the department has found that there is a deliberate attempt to evade tax by suppressing material information. Vlhether there is willful delay or not are discernible from the facts of the case. I I 7 I 17. The conduct of the petitioners itself would indicate that it was a case of delayed pa5rment of tax or deferred payment. The tax along with interest and penalty was accepted by the department without any resewations. Such delay in the payment wiil not amount to willful attempt to evade tax. Cogent reasons are given stating that tax could not be paid due to hnancial difficulties. It cannot be inferred from the facts of the present case that any attempt was deliberately made to evade the tax payment. For the said reasons, arr abuse of process of the Court. It is a I'it case wherein this Court quash the proceedings against the petitioners. 18. Accordingly the proceedings against the petitioners in CC No.37 of 2018 on the file of Special Judge lor Economic Offences, Hyderabad are hereby quashed and the Criminal Petition is allowed. SD/.T.KRISHNA KUMAR DEPUTV REGISTRAR //TRUE CoPY/' (1,_- secri5r.r oFFrcER One Fair Gopy to the Hon'ble Sri Justice K.SURENDER (For His Lordships Kind Perusal) To, 1. The Special Judge for Economic Offences at Hyderabad- 2. One CC to Smt. Divya Datla, Advocate [OPUC] 3. One CC to Sri B. Narasimha Sarma, Advocate [OPUC] 4. Two GCs to Special Public Prosecutor, High Court for the State of Telangana at Hyderabad. [OUT] 5. 11 LR Copies. 6. The Under Secretary, Union of lndia Ministry of Law, Justice and Company Affairs, New Delhi. 7. The Secretary, Telangana Advocates Association Library, High Court Buildings, Hyderabad. 8. The Secretary, Andhra Pradesh Advocates Association Library, High Court Buildinss, Hyderabad. - 9. T,{vo-&D-Copies the continuation of the proceedings against the petitioners 'nould has to exercise its inherent powers under Section 482 of Cr.P.C to HIGH COUR'T DATED: 04,,1112022 CRL.P.No.51110 of 2019 ALLOW!NG -THE CRIMINAL PETITION t -) 1g DEI ?[?1 ' 0 I ORDER zr,- .} "