Crl Op/16387/2019 Of Anjugaselvi Alagiri v. The Deputy Director Of Income Tax (Inv)

IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on :27.06.2022Pronounced on:05.07.2022 CORAM: THE HONOURABLE DR. JUSTICE G. JAYACHANDRAN Crl.O.P.Nos.16387,16390, 23229, 23330, 23252, 23327, 23332,23320 & 23324 of 2019 in Crl.M.P.Nos.8216, 8218,12253,12201,12246,12257,12242 & 12244 of 2019 Smt.Anjuga Selvi Alagiri .. Petitioner in all Crl.OPs /versus/ The Deputy Director of Income Tax (Inv),Unit-I(1),Income Tax Office,Mahathma Gandhi Salai, Nungambakkam,Chennai 600 034. Prayer:Criminal Original Petition has been filed under Section482 of Criminal Procedure Code to invoke Section 482 of Cr.P.C.,and call for the entire records pertaining to the complaint inEOCC.No.149 of 2018, dated 23.04.2018 (Crl.O.P.No.16387 of 2019)EOCC.No.148 of 2018, dated 23.04.2018 (Crl.O.P.No.16390 of 2019)EOCC.No.151 of 2018, dated 05.04.2018 (Crl.O.P.No.23229 of 2019)EOCC.No.152 of 2018, dated 05.04.2018 (Crl.O.P.No.23330 of 2019)EOCC.No.153 of 2018, dated 05.04.2018 (Crl.O.P.No.23252 of 2019)EOCC.No.154 of 2018, dated 05.04.2018 (Crl.O.P.No.23327 of 2019)EOCC.No.155 of 2018, dated 05.04.2018 (Crl.O.P.No.23332 of 2019)EOCC.No.156 of 2018, dated 05.04.2018 (Crl.O.P.No.23320 of 2019)EOCC.No.157 of 2018, dated 05.04.2018 (Crl.O.P.No.23324 of 2019) on the file of the Additional Chief Metropolitan Magistrate(EO-II), Egmore at Allikulam Commercial Complex, Chennai andquash the same. For Respondent :M/s M.Sheela, Spl.P.P.(Income Tax) COMMON ORDER These batch of Criminal Original Petitions are filed toquash the complaints laid by the Income Tax Department forprosecution under Sections 276 CC and 276C (1) of the Income TaxAct, 1961. 2. The prosecution details of each case which is the subjectmatter of these petitions are tabulated as below:- (i)Prosecution under Section 276 CC of the Income Tax Act,1961 (ii)Prosecution under Section 276 C (1) of the Income TaxAct, 1961 3. According to the Income Tax Department, the petitionerherein, an income tax assessee having taxable income failed tofile her Return of Income for the Assessment Years 2011 to 2016.She also failed to pay the tax due before the due date of filingthe return of income with wilful intention to evade tax payableto the Exchequer. Under Section 139 (1) of the Income tax Act,1961, the assessee has to file the Return of Income within thetime prescribed, failing which, the assessee is liable forprosecution under Section 276 CC of the Income Tax Act, 1961. Ifthe assessee attempts to evade tax, penalty and interestchargeable wilfully, it is punishable under Section 276C (1) ofthe Income Tax Act, 1961. 4. In this case, the petitioner failed to file her Return intime. In the course of enquiry made under Section 131(1A) of theIncome Tax Act, 1961, M/s Ganesan Associates, CharteredAccountant represented the assessee and admitted the failure tofile Returns. The enquiry revealed non-filing of Return in timeand there was also an attempt to evade tax wilfully. Show causenotices were issued for each Assessment Years calling forexplanation, why prosecution proceedings should not be initiatedfor violation of Sections 276 CC and 276C (1), which are twodistinct offences. 5. The assessee in response to the show cause notices,contended that she had paid the tax for the relevant AssessmentYears with interest. The delay in filing the Return of Incomewas not wilful or deliberate, but beyond her control, since sheleft India and settled in USA and was not abreast of Indian TaxLaw. Not satisfied with the explanation, prosecution waslaunched as tabulated above and the said prosecution is underchallenge in these batch of petitions. 5. The assessee in response to the show cause notices,contended that she had paid the tax for the relevant AssessmentYears with interest. The delay in filing the Return of Incomewas not wilful or deliberate, but beyond her control, since sheleft India and settled in USA and was not abreast of Indian TaxLaw. Not satisfied with the explanation, prosecution waslaunched as tabulated above and the said prosecution is underchallenge in these batch of petitions. 6. The quash petitions are pegged on the ground that duringthe enquiry proceedings, the representative of the assesseesought time to furnish detailed written statement to show thatthe delay in payment of tax is neither wilful nor with anyintention to evade tax payable. As soon as the notice, the taxpayable was remitted with interest, to show the bonafide that nointention or attempt to evade payment of tax. Non-communicationof her with the auditor and misplacement of records were thereasons for the delayed payment of tax. The entire tax payable remitted on 20/02/2018. This reason accepted by the Departmentand compounded the offences for the assessment year 2010-2011and 2011-2012 and the prosecutions under Section 276 CC of theIncome Tax Act closed. The same logic and reasoning applies tothe remaining cases also. 7. Alleging malafide in prosecuting her, it is contendedthat the show cause notice was not properly served on her. Thecopy of the show cause notice was not furnished to herrepresentative. No communication received after payment of taxdue. No summons was issued based on the complaint. Only onhearing from the News through visual media that the trial Courthas issued NBW on 06/03/2019, she came to know about theprosecution, which was launched with malafide after receivingthe entire tax due. 8. The details of payment of tax for the respectiveAssessment Years, with challan numbers and date mentioned in thepetitions as under:- 9. The Leaned counsel for the petitioner furthersubmitted that, the assessment made by the Department is underchallenge and in so far as prosecution launched for non-filingof returns in time for the Assessment Years, 2010-2011 and 2011-2012 cases were compounded. The same yardstick ought to havebeen followed in the remaining cases also, but for no reason,the Department is not inclined to compound the rest of thecomplaints. 10. The Learned counsel for the petitioner also submittedthat, when the assessment by the Department demanding exorbitanttax, penalty and interest it challenged before the appellateAuthority and still pending. Therefore, the pre-conceivedsanction to prosecute without the issue regarding tax payablefinally determined is bad in law. Hence, the complaints are tobe quashed. 11. In support of the above submissions, the learned counselfor the petitioner rely upon the following judgments: (i)S.P.Velayutham v. The Assistant Commissionerof Income Tax, Non Corporate Circle -14(1), AnnexBuilding, Room No.606, No.121, M.G.Road, Chennai-34made in Crl.O.P.No.17906 of 2017 dated 20.01.2022. (ii)M/s S.M.J.Housing represented by itsPartners Accused 2 to 4 and others v. TheAssistant Commissioner of Income Tax, CentralCircle-II(1), Chennai made in Crl.O.P.No.20998 of2016 dated 21.10.2021. (iii)Ganga Devi Somani v. State of Gujarat inCrl.M.P.No.22512 of 2019 dated 06.07.2019. 11. In support of the above submissions, the learned counselfor the petitioner rely upon the following judgments: (i)S.P.Velayutham v. The Assistant Commissionerof Income Tax, Non Corporate Circle -14(1), AnnexBuilding, Room No.606, No.121, M.G.Road, Chennai-34made in Crl.O.P.No.17906 of 2017 dated 20.01.2022. (ii)M/s S.M.J.Housing represented by itsPartners Accused 2 to 4 and others v. TheAssistant Commissioner of Income Tax, CentralCircle-II(1), Chennai made in Crl.O.P.No.20998 of2016 dated 21.10.2021. (iii)Ganga Devi Somani v. State of Gujarat inCrl.M.P.No.22512 of 2019 dated 06.07.2019. 12. The Respondent-Department has filed a common counterwherein it is stated that, complaints under Section 200 Cr.P.C.,for the offences under Section 276CC and 276(1) of the IncomeAct 1961 for the Assessment Year 2010-11, 2012-13, 2013-14,2014-15 and 2015-16 were taken on file in EOCC 146 to 157 of2018. The complaints in respect of two assessment years (AY2010-2011 & 2011-12) in EOCC.Nos.146, 147, 152 & 153, it wascompounded and the respondent has withdrawn these complaints andthe complaints in EOCC Nos.148, 149, 150, 151, 154, 155, 156,157 of 2018 are pending before the ACMM EO-II Court. Thepetitioner was statutorily bound to file the return of incomefor the each assessment years from A.Y 2010-11, 2011-12, 2012-13, 2013-14, 2014-15, 2015-16 as mandated under Section 139(1)of the Income Tax Act, 1961. The factum of non filing of returnsand evasion was brought to light by the Investigation Wing ofthe Income Tax Department. The respondent issued show causenotices under Section 276CC and Section 276C(1) of the I.T. Actto the petitioner on 08.02.2018 for which replies were filed andthe reasons given by the petitioner for violation of the IncomeTax Act were not found to be plausible and hence sanction forprosecution was accorded to proceed under Section 276CC & 276C(1) of the Income tax Act. Accordingly the complaints were filedbefore the Economic Office Court (II) at Egmore. There was novoluntary compliance of the statutory requirement by thepetitioner which amounts to violation of the Income Tax Actthereby attract protection for the offences under Section 276CC,Section 276C(1) of Income Tax Act 1961. If not for theinvestigation proceedings, the assessee would have not comeforward to file her returns and the exchequer would have beendeprived of its legitimate dues. Thus, the wilful element whichis sine qua non is very much present in the case of thepetitioner. 13. The Act of the petitioner by filing the returns upondetection and with concealed income which is violation of thestatute thereby constitutes an offence. Thus, the accused cannot be given a clean chit, and her default is wilful. If thetimelines and schedules as per the laws are not followed, thenit would adversely impact the Government's revenue interest. 14. The Learned Counsel for the Rspondent-Department relyupon the following judgments to buttress her submissions:(i)P.Jayappan v. S.K.Perumal, FirstIncome Tax Officer, Tuticorin reported in AIR1984 SC 1693; (ii)Prakash Nath Khanna & Anr. v.Commissioner of Income Tax and Anr made inAppeal (Crl.) 1260-1261 of 1997 dated16.02.2004; (iii)Sasi Enterprises v. AssistantCommissioner of Income Tax made in Crl.A.No.61of 2007 dated 30.01.2014;(iv)J.Dinakaran v. The Deputy Director ofIncome Tax (investigation) Unit -3(1),Nungambakkam,Chennai600034inCrl.O.P.nos.28469, 28482 to 28484, 28487 and28492 of 2018 dated 05.03.2019; (v)Shri Raman Krishna Kumar v. DeputyCommissioner of Income Tax, Non CorporateCircle-3, VI Floor, Wanaparthy Block, RoomNo.623 A, No.121, Nungambakkam High Road,Chennai 600 034 in Crl.O.P.No.25561 of 2016dated 26.10.2021; (ii)Prakash Nath Khanna & Anr. v.Commissioner of Income Tax and Anr made inAppeal (Crl.) 1260-1261 of 1997 dated16.02.2004; (iii)Sasi Enterprises v. AssistantCommissioner of Income Tax made in Crl.A.No.61of 2007 dated 30.01.2014;(iv)J.Dinakaran v. The Deputy Director ofIncome Tax (investigation) Unit -3(1),Nungambakkam,Chennai600034inCrl.O.P.nos.28469, 28482 to 28484, 28487 and28492 of 2018 dated 05.03.2019; (v)Shri Raman Krishna Kumar v. DeputyCommissioner of Income Tax, Non CorporateCircle-3, VI Floor, Wanaparthy Block, RoomNo.623 A, No.121, Nungambakkam High Road,Chennai 600 034 in Crl.O.P.No.25561 of 2016dated 26.10.2021; (vi)M/s World Bridge Logistics PrivateLtd., Rep. By its Director, J.Hilda Mary v.The Deputy Commissioner of Income Tax,Corporate Circle-3(2), Room No.414, 4[th] Floor,Wanaparthy Block, Aaykar Bhavan, No.121,M.G.Road,Nungambakkam,Chennai-34inCrl.O.P.No.11998 of 2018 dated 28.01.2022; and(vii)S.J.Surya v. The Deputy Commissionerof Income Tax, Central Circle II(4), Chennai-34 in the impact of Crl.O.P.No.29914 to 29919of 2015 dated 26.05.2022. 15. Regarding the impact of pendency of the Departmentalappeal of the criminal prosecution on alleged evasion of Tax,the Bedrock case, P.Jayappan v. S.K.Perumal, First Income TaxOfficer, Tuticorin reported in , wherein onconsidering the provisions of Sections 276C and 277 of IncomeTax Act, 1961, the Hon'ble Supreme Court has held as below:-“On a careful consideration of the relevantprovisions of the Act, we are of the view thatthe pendency of the reassessment proceedingscannot act as a bar to the institution of thecriminal prosecution for offences punishable under Section 276 C or Section 277 of the Act.The institution of the criminal proceedingscannot in the circumstances also amount to anabuse of the process of the Court. The HighCourt was therefore, right in refusing to quashthe prosecution proceedings in the four casesinstituted against the petitioner under Section482oftheCr.P.C”.(Emphasis added) 16. Followed by Jayappan case, there are a catena ofjudgments of this Court as well as the Hon'ble Supreme Courtwherein it is held that the pendency of appeal before the TaxAppellate Authority cannot be a bar for prosecuting the assesseefor not filing the Return in time or for the attempt to evadetax. 17. In this case, the facts reveals that from the financialyears starting from 2010-2011, 2011-2012, 2012-2013, 2013-2014,2014-2015 till the show cause notice issued to the assessee, shehas not filed Returns for her individual income and her belatedreturn, on investigation found omission of certain income.Particularly, source for payment through credit cards, interestaccumulated in fixed deposits etc. were deducted and therefore,the prosecution has been launched. 18. The undisclosed income for each of the AssessmentYears, deducted by the Department in the course of investigationare:- 19. The sum and substance of the complaints is that whilethe due date for filing the Return for each Accounting Yearslapsed long back, Returns were filed only during the month ofFebruary 2018 as below:- and what self assessment made by the assessee and tax paid onthe declared income were found to be incorrect and such Returnshas been filed wilfully to evade tax. 20. The difference between the income declared by theassessee and the assessment made by the Department for eachFinancial Years is as below:- The self assessment tax on declared income was paid only afterinitiation of enquiry proceedings that too concealingsubstantial part of the income. In such circumstances, severallakh of rupees had been evaded with wilful intention. 19. The sum and substance of the complaints is that whilethe due date for filing the Return for each Accounting Yearslapsed long back, Returns were filed only during the month ofFebruary 2018 as below:- and what self assessment made by the assessee and tax paid onthe declared income were found to be incorrect and such Returnshas been filed wilfully to evade tax. 20. The difference between the income declared by theassessee and the assessment made by the Department for eachFinancial Years is as below:- The self assessment tax on declared income was paid only afterinitiation of enquiry proceedings that too concealingsubstantial part of the income. In such circumstances, severallakh of rupees had been evaded with wilful intention. 21. This Court is of the view that there is enough materialsto proceed against the petitioner for non-filing of Return intime which is punishable under Section 276 CC of the Income TaxAct, 1961 and for filing the Return belatedly with suppressedincome, which is punishable under Section 276C(1)of the IncomeTax Act, 1961. 22. Since Section 278E of the Income Tax Act, 1961 gives apresumption to lay prosecution in case of non-filing of Returnwithin the time limit and suppression of income in the Return filed is with malafide intention to evade Tax, the Court cannotby exercising its power under Section 482 of Cr.P.C., quash theproceedings presuming the contrary. The malafide projected inthese petitions does not carry any merit, since the Departmenthas caused notice to the assessee and the representative of thepetitioner and participated and given an explanation which isfound not satisfactory leading to launching the prosecution. Theabsence of assessee in India or the communication gap betweenherself and her representative cannot be a ground to quash theprosecution. Further compounding offence under IT Act is not anabsolute right vested in the assessee. The compounding of casesbased on facts and merits of each case where the assesseedisclose the true and actual income but file it belatedly cannotbe equated to the case where the assessee undisclosed the trueand actual income also files the returns belatedly. Hence thiscourt holds no merit in these petitions. in view of thepresumption clause. Therefore, these Criminal Original Petitionsare dismissed. Consequently, connected Miscellaneous Petitionsare closed. Sd/- Assistant Registrar(CS III) /True Copy// Sub Assistant Registrar ari To:1. The Additional Chief Metropolitan Magistrate (EO-II), Egmore at Allikulam Commercial Complex, Chennai. 2. The Deputy Director of Income Tax (Inv),Unit-I(1), Income Tax Office,Mahathma Gandhi Salai, Nungambakkam,Chennai 600 034. 3. The Special Public Prosecutor(Income Tax), High Court, Madras – 104. +1cc to M/s M.Sheela, Advocate, S.R.No.43084 JP[co]NSK/26/07/2022 Crl.O.P.Nos.16387,16390, 23229, 23330, 23252, 23327, 23332, 23320 & 23324 of 2019 inCrl.M.P.Nos.8216, 8218,12253,12201,12246,12257,12242 & 12244 of 2019