Vishwas Udaysingh Lad V. Income Tax Department

CRL.P/5715/2015

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The case involves Vishwas Udaysingh Lad, who was accused by the Income Tax Department of willfully concealing income from fixed deposits totaling Rs.9.62 crores and the interest earned thereon, amounting to Rs.69,33,914, for three consecutive financial years. The complaint was based on the grounds that the petitioner filed inaccurate income tax returns, initially failing to disclose the deposits and the income derived from them. After the Income Tax Department detected the concealment, the petitioner filed revised returns. The court dismissed the petition to quash the proceedings, emphasizing that the petitioner had to prove his innocence during the trial.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 807560 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 22-03-2016
• Assessment Year: misc
• Other Referred Cases: Sushil Kumar Saboo vs. State of Bihar and another
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEELARGI
• Assessee Lawyers: A H BHAGAVAN
• Keywords: Fixed Deposit; Income Tax; Non-disclosure; Revised return; Tax Evasion
• Section: 147; 148; 131; 276C(1); 277; 278E

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF MARCH, 2016 BEFORE THE HON’BLE MR. JUSTICE PRADEEP D. WAINGANKAR CRIMINAL PETITION NO.5715/2015 BETWEEN:- VISHWAS UDAYSINGH LAD S/O UDAYSINGH LAD AGED ABOUT 39 YEARS R/AT. #2990, 12TH MAIN 8TH CROSS, H.A.L. II STAGE INDIRANAGAR, BENGALURU-560008. ... PETITIONER (BY SRI: A. H. BHAGAVAN, ADV.,) AND:- THE INCOME TAX DEPARTMENT BY ITS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(4) NO.14/3, 4TH FLOOR, RASHTROTHAN BHAVAN NRUPATUNGA ROAD, BENGALURU-560001. ... RESPONDENT (BY SRI: JEEVAN NEELARGI, ADV.,) THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET ASIDE THE ORDER DATED 22.11.2014 PASSED IN C.C.NO.366/2014 ON THE FILE OF LRD. SPL. COURT FOR ECONOMIC OFFENCES AT BENGALURU. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS, THIS DAY THE COURT PRONOUNCED THE FOLLOWING: 2 ORDER Petitioner who is the accused in C.C.No.366/2014 on the file of the Special Court (Economic Offences), Bangalore has filed this petition to quash the proceedings initiated against him. 2. The Assistant Commissioner of Income Tax presented a private complaint before the Special Court against the petitioner for the offences punishable under Sections 276C(1) and 277 of Income Tax Act 1961. 3. The gist of the complaint is that the petitioner/accused is an individual who is partner in several firms and Director and shareholder in several companies. He is also doing business in Lubricants. He is an assessee on the file of the complainant/respondent. For the Assessment year 2012-13, he filed his return of income on 30.09.2012 declaring his taxable total income as Rs.2,02,08,570/-. 3 Subsequently, he filed revised return on 08.03.2014 declaring total income as Rs.3,26,58,480/- and paid taxes on the said declared income. The income shown by the petitioner consisted of income from salary, house property, business, short term capital gains and income from other sources. During the pendency of scrutiny proceedings, the Assessing Officer received information from Director of Income Tax (Intelligence) that the petitioner had made fixed deposit of Rs.9,62,00,000/- on 29.03.2010 and 27.03.2010 in Tumkur Grain Merchant Co-Operative Bank Limited in its branches at Bangalore and the interest accrued on the said deposit for the assessment year 2012-13 amounting to Rs.69,33,914/-. After receipt of the letter to that effect dated 28.01.2014 from Director of Income Tax, an enquiry was held. During the course of enquiry, it was detected that the petitioner had made fixed deposit of Rs.9.62 Crores in Tumkur Grain Merchant Co-operative Bank Limited in various branches at 4 Bangalore. It was also detected that for the Assessment year 2012-13, the petitioner had earned income by way of interest on the fixed deposit amounting to Rs.69,33,914/-. On the basis of the said information, the returns of income filed by the petitioner were examined by the Assessing Officer and it was confirmed that the petitioner had willfully did not disclose the fixed deposit of Rs.9.62 Crores and the income earned on it by way of interest. As such, a notice under Section 148 of the Income Tax Act came to be issued to the petitioner for reopening the assessment under Section 147. He was also issued with summons under Section 131 of the Income Tax Act. The petitioner appeared before the authority on 24.09.2014. The Assessing Officer recorded the statement of the petitioner. The Assessing Officer concluded the Assessment vide his Assessment Order dated 30.09.2014. It is the case of the complainant that the petitioner/accused filed returns without disclosing interest earned on fixed 5 deposits amounting to Rs.69,33,914/- with an intention to evade tax. He falsely verified the return of income containing inaccurate particulars of his income though he was fully conscious and aware of fixed deposit of Rs.9.62 Crores and thereby the petitioner committed offences punishable under Sections 276C(1) and 277 of the Income Tax Act. The learned Magistrate took cognizance and issued process to the petitioner, petitioner appeared before the Magistrate. The complainant was examined as PW.1 in part. When the case was posted for further examination of PW.1, this petition came to be filed by the petitioner to quash the proceedings. 4. The submission of the learned Senior Counsel Sri. A.H. Bhagavan for the petitioner is that he was not aware of the amount of Rs.9.62 crores deposited by him in fixed deposits in Tumkur Grain Merchant Co-Operative Bank Limited and therefore the non-disclosure of the said fixed deposit and interest earned out of the fixed deposit is not 6 intentional or deliberate and as soon as he came to know about the mistake committed by him, he filed revised income tax return by showing the fixed deposits of Rs.9.62 Crores and interest earned from the fixed deposit and paid the tax, thus he has not committed any offence muchless the offences under Sections 276C(1) and 277 of the Income Tax Act. The learned counsel would also submit that there is a provision in the Income Tax Act which provides for compounding of the offences. Since the petitioner filed revised income tax returns by disclosing the fixed deposits and paid the income tax to be paid under the fixed deposits, the proceedings initiated against him are liable to be quashed. 5. Sri. Jeevan Neelargi, Standing counsel for the Income Tax Department, on the other hand, would submit that it is impossible to imagine that the petitioner was not aware of the fixed deposit of Rs.9.62 Crores made by him in various branches of Tumkur Grain Merchant Co-Operative 7 Bank Limited in Bangalore, at the time of filing of returns for three financial years. The income which he did not disclose is double than the income which he disclosed in his income tax returns. That itself speaks volume about the culpable mental state of the petitioner. Further, it is submitted that the petitioner made deposits in his name by showing three different names in the branches of Tumkur Grain Merchant Co-Operative Bank Limited at Bangalore by showing his name in one fixed deposit as Vishwas, in another fixed deposit Vishwas U. Lad and in yet another fixed deposit Vishwas S/o Uday Singh Lad for the reason best known to the petitioner. But he has given the same address for all the three fixed deposits. He filed revised returns and paid taxes only after department detected the concealment and therefore it cannot be called as voluntary disclosure as claimed by the petitioner. Therefore, the decision relied upon by the petitioner reported in (2011) 336 ITR 202 of Patna High 8 Court in the case of Sushil Kumar Saboo vs. State of Bihar and another not applicable to the facts of the case. Hence, the learned counsel sought for dismissal of the petition. 6. It is stated that the petitioner is a partner in various firms, he is also a shareholder in various companies. Therefore, as rightly submitted by the learned Standing counsel for the Income Tax Department, it is impossible to accept that the petitioner was not aware of fixed deposit of Rs.9.62 Crores made by him in various branches of Tumkur Grain Merchant Co-Operative Bank Limited at Bangalore or for that matter he had no intention or motive to evade tax. The modus operandi in taking the fixed deposit receipts by showing his three different names also speaks his culpable mental state. There is presumption under Section 278E of the Act as to culpable mental state on the part of the 9 petitioner while doing so though it is a defence for the petitioner/accused to prove the fact that he had no such mental state which includes intention, motive or knowledge. He cannot say that he had no knowledge about the fixed deposits of Rs.9 crores and odd for filing returns three years. He cannot plead ignorance about Rs.9 crores deposited in fixed deposits. Though he claims that immediately after coming to know about the mistake he filed revised returns disclosing the fixed deposits and interest earned and paid the income tax, he did so only after the department detected the concealment. In fact, he was informed of the concealment of fixed deposits by issuance of notices dated 10.01.2014 and 26.02.2014. Revised returns filed by him on 08.03.2014 showing fixed deposits and interest earned on fixed deposits cannot be called as voluntary disclosure. 7. In the decision of the Patna High Court relied upon by the petitioner, there is no concealment of the 10 income while filing returns or there is no false returns having been filed. But the assessee failed to pay the tax within the time limit and therefore penalty proceedings were initiated against him. On account of his poor financial capacity, he had deposited Rs.50,000/- even prior to the application dated 13.01.2006 praying for time to deposit the entire amount. He deposited a good sum even before passing of the impugned order. Finally he paid the entire amount with interest. It is in this context the Patna High Court held that it is doubtful whether the petitioner has willfully evaded the payment of tax and thereby proceedings were quashed. 8. Here in this case there is non-disclosure of fixed deposits of Rs.9.62 crores and the interest earned on it for three consecutive financial years. It is only when the authorities came to know about the concealment and the authorities issued notice the petitioner filed revised returns and paid the tax. Had it not been detected by the income tax 11 authorities, the said income would not have come to limelight. 9. Be that as it may, the Magistrate has taken cognizance for the offences under Sections 276C(1) and 277 of the Income Tax Act, 1961. The petitioner appeared before the Magistrate, the evidence has commenced. If at all the petitioner has to establish his innocence during the course of the trial. Therefore, it cannot be said that the continuation of the proceedings would amount to abuse of process of the Court. Accordingly, the petition is dismissed. In view of disposal of the petition, I.A.No.1/2015 for stay does not survive for consideration and the same stands disposed of. Sd/- JUDGE PMR "