Crlatr/4/2018 Of M/S. Sindhu Greenlands Pvt. Lt.d v. Dy. Commissioner Of Income-Tax

IN THE HIGH COURT AT HYDERABAD FRIDAY,THE SEVENTEENTH TWO THOUSAND AND TWENTY PRESENT THE HONOURABLE DR, [D.NAGARJUN] CRIMINAL APPEAL TRANSFER [Nos:4 ][and ][39 ] [2018] Crl.A. Tr.No. 4 [of ][2018 ][:] Crl.Appeal Under Section [374 (2) ][of ][Cr.P ] [aggrieved ][by the ][Judgment]dated O9-Oi-)014 [in ][CC. No, ][125 ][of ][2011 on ][the ][file ][of ][the ][Court ][of ][the ][Special]Judge for [Economic Offences at Hyderabad] Between: 'ttigar, M/s. Sindhu Vousutguda, Greenlands Hyderabad45, [Pvt. ][Lt.d., Flant ]Rep by Shri [No.102, Dhanunlaya ]D V S Subba [N-est ]Raju' [Raliv]S/oD.KJishnam Raju, [aged about ][46 years.]D.KJishnam Raju, [aged about ][46 years.])ShriD.V.S.SubbaRaju,DirectorofM/s.sindhuGreenlandsPvtLtd,FlatNo'ioi, bnanunlaya [Nedt, ][Raiiv Nagar, Yousufguda, Hyderabad-4s]ioi, bnanunlaya [Nedt, ][Raiiv Nagar, Yousufguda, Hyderabad-4s] ... ApPellants / Accused [1&4] AND Dv.Commissioneroflncome-tax,CentralCircle-9,RoomnoB13,8thFloor,46yakar Bhavan, [Basheerbagh, Hyderabad-500004] ...RESPONDENT/ [ComPlainant] CounselfortheAppellant:SRIVINoDKUMARDESHPANDESR.CoUNSELFOR SRI. G ASHOK REDDY Counsel for the Respondent: [SRI B .NARASIMHA ] [l'T'] CRIMINAL APPEAL [TRANSFER NO: 39 ] [2018] Crl.Appeal Under [Section 374 ][(2) ][of ][Cr.P ] [aggrieved by the Judgment]dated 09-01-2014 [in ]cc. [No. ][125 ][of ][201 ][1 ][on the ][file ][of ][the ][courtof ][the ][special]Judge for Economic [Offences at Hyderabad] Between: 1B. Jhansi Rani, Wo. [Shri ][B. ][Suryanarayana Raju, ][Aged ][about ][M/s ][Sindhu]cr#.,rrnar [Fui. ][lta., ][Rlo. ][H. ][No.' ][1 ][-1 ][2314, ][Satyim ][Enclave, ][Pet ][Bashirabad](V), N, H. No.7, Secund€rabad-5o0855.cr#.,rrnar [Fui. ][lta., ][Rlo. ][H. ][No.' ][1 ][-1 ][2314, ][Satyim ][Enclave, ][Pet ][Bashirabad](V), N, H. No.7, Secund€rabad-5o0855. 2. N Rana Ralu S/o. N Venkat Ra1u. aged about 49 [years. ][Drrector ][of ][lVl/s]Sindhu Greenlands Pvt Ltd . Flat No.201, [H.No. ][1-1 ][1-192. Kamala ][Arcade]Shamlal Buildings. Begumpet. Hyderabad-l6. .. Appellants / Accused 2 & 3 AND Dy. Commissioner of lncome-tax, Central Circle-9, Room [No ][813, ][Bth Floor,]Aayakar Bhavan. Basheerbagh, Hyderabad-500004. ...RESPONDENT/ Complainant Counsel for the Appellants : SRI VINOD KUMAR DESHPANDE SR. FOR SRI. V SURENDER RAO Counset for the Respondent: SRI B. NARASIMHA SARMA SC [for ][l.T.] The Gourt Delivered the following: Common Judgment THE HON'BLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL [(TRI]Nos.4 and 39 of 2018 COMMON JUDGMENT: Crl.A.(TR).No.4 of 2Ol8 is filed b-y and [44 i'e., ][Company]and one of its Directors respectively, [whereas ][Crl.A.(TR).No.39 ][of]20 1B is filed by ,{2 and 43, who are the [Directors ][of]A1/company, being aggrieved by the conviction and [sentence]imposed by the learned Special Judge lor [Economic ][Offences ][at]Hyderabad in C.C.No.125 of 2oll [vide ][Judgment ][dated]O9.O1.2O14, wherein Accused Nos. I to 4 [were ][found ][guilty ][of]the offences punishable under Section [276-C(21 ][read ][with]Section 278-8 of the Income Tax Act, [1961 ][(for short, "the ][Act")]consequently accused No.l was sentenced to [pay ][fine ][of]Rs.10,0OO/- and in default of [payment ]of fine to [initiate]appropriate proceedings as required under [Section ][427 ][of]Cr.P.C., whereas Accused Nos.3 and 4 [were ][sentenced ][to]undergo rigorous imprisonment for a [period of ][one ][year ][each and]A2 was sentenced to undergo 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 to [4, ][to ][undergo ][simple]imprisonment for a period of one month each. Since the issues involved in these appeals are one and thesame, both the appeals are being disposed of by this commonjudgment..judgment.. Since the issues involved in these appeals are one and thesame, both the appeals are being disposed of by this commonjudgment..judgment.. 2. For convenience, the parties herein are referred to as theyare arrayed before the trial Court. i.e., Appellant No.1 asAccused No.l/Company and Appellant Nos.2 to 4 as AccusedNos. 2 to 4. 3. The genesis of these cases, genesis of these cases, of these cases, these cases, cases, which lead the lead the the appellants_accused to prefer these appeats, are narrated in brief as under: The genesis of these cases, genesis of these cases, of these cases, these cases, cases, which lead the lead the the appellants_ i) Accused No.1/Company - M/s. Sindhu Greenlands Private Limited, which was registered under the CompaniesAct with the Registrar of Companies at Hyderabad asPrivate Limited Company, was engaged in the business ofacquisition and sale of lands. Appellant Nos. 2 to 4 hereinare the Directors of Accused No. 1/ Company. ii) Accused No.1/Company has acquired lands to anextent of Ac.7.OO guntas in Sy.No.193(P) under the limits ofBachupally Mandal, Ranga Reddy District during thefinancial year 2002-2003 and developed the said lands by incurring some amounts during the financial years 2002-03 to 2007-OB. Accused No.1/Company along with othercompanies, who have lands contiguous to the lands ofAccused No.1/Company, have agreed to develop the landsjointly with M/s. Mytas Property Private Limited. As perthe said development agreement, the built up area agreedto be given to Accused No. l/company, was allowed to [be]sold to various buyers by M/s. Mytas ProperQr [Private]Limited and pass on the saie proceeds to AccusedNo.1/Company. iii) For the assessment year 2008-09, accusedNo.1/company has filed income tax returns on 30.09.2008under Ex.P1 by bifurcating the sale [proceeds ]into [long term]capital gains accrued from the sale [proceeds ]of the [iands]and short term capital gains accrued from the saleproceeds of the constructed area by showing gross taxableincome as Rs.7,65,64,5701-, out of which an amount [of]Rs.4,86,86,424 l- was shown as [long ]term capital [gain ][and]Rs.2,78,78,148 I - was shown as short term capital [gains.] irr) Accused No. 1 / Company is expected to pay theincome tax either by way of advance tax as required underSection 208 of the Act or at ieast along with liling ofreturns in terms of Section 140-4 of the Act. As perSection 143 (1) of the Act, the tax liability of Accused No.1was arrived at Rs.2,27,74,267 l- by therespondent/complainant and raised a demand underSection 156 read with Section 143 of the Act and issued anintimation to Accused No.1/Company under Dx.P2.Accused No.1/company was required to pay the taxdemanded within 3O days of service of notice, but it hascommitted default. v) Respondent/ complainant has issued show-camsenotice dated 17.ll.2OO9 under Section 221 (ll of the Actunder Ex.PS, wherein the appellants were asked to showcause as to why penalty should not be levied forcommitting default in pa5rment of tax. As there was nor€sponse from the appellants, the complainant has issuedarlother show-cause notice dated 25.08.201O under Ex.P6under Section 221 (l\ read with Section 143-A of the Act. Finally, one more opportunity was also given by theDepartment by giving another show-cause notice dated1i.10.2010 (Ex.P7) under Section22l (l) read with Section143-,4. of the Act. An opportunity of being heard was alsoto Accusedgiven by the respondent/ complainant No. 1/Company fixing the date of hearing as 18.10.2010,but there was no response, on which a [penalty ]ofRs.5O,O0,0OO/-\ [ras]imposed by way of order dated25.lO.2OlO (Ex. PB) under Section 221 read with Sectioni40-A(3) of the Act and the said proceedings were senedon accused No.1 on 25.10.2010. Finally, one more opportunity was also given by theDepartment by giving another show-cause notice dated1i.10.2010 (Ex.P7) under Section22l (l) read with Section143-,4. of the Act. An opportunity of being heard was alsoto Accusedgiven by the respondent/ complainant No. 1/Company fixing the date of hearing as 18.10.2010,but there was no response, on which a [penalty ]ofRs.5O,O0,0OO/-\ [ras]imposed by way of order dated25.lO.2OlO (Ex. PB) under Section 221 read with Sectioni40-A(3) of the Act and the said proceedings were senedon accused No.1 on 25.10.2010. 4. Considering the willful evasion of payment of tax, therespondent/ complainant has decided to initiate prosecution [and]accordingly a notice was issued to accused No.l/company [and]other Directors under Section 276-C(2) of the Act, as to [why]prosecution shall not be initiated against them for willful evasionof the tax. All of them have given reply stating that there was [no]intention to evade payment of tax. Another notice was issued toaccused No.l/Company arrd its directors under Exs.P10 andPl1 dated 11.0i.2011 asking them as to why prosecution shall not be irritiated under Section 276-C(21 of the Act. Again replieswere filed by accused No. 1/company and its Directors/ accusedNos.2 to A4 under Exs.Pl2 and P13 stating that there was nointention of willful evasion of tax. 5. As Accused No. 1/Compaly arrd its Directors/ accusedNos.2 to 4 have not paid the tax in response to the demandnotice issued under Section 143 (1) of the Act and also faiied topay the penalty, the respondent/ complainant after obtainingsanction order dated 16.03.201 1 for launching of prosecutionfiled a complaint before the Special Court for Economic Offencesagainst accused No.1 and accused Nos.2 to 4, the otherDirectors, alleging that they have committed offence punishableunder Section 276-C(21 read with section 278-8 of the Act, asthey have willfully evaded tax even though they were havingsufficient resources. 6. The Special Court for Economic Offences took cognizanceof the offences against Accused No.1/Company ald its Directorsi.e., Accused Nos. 1 to 4, under Section 276-C(2) read withSection 278-8 of the Act and charges were frarned against themunder Section 276 - C(2) read with Section 27g-B(ll of the Act and al1 the accused have pleaded not guilty of the charges andclaimed to be tried 7. In order to prove the charges leveled against theappellants, the respondent/ complainant has examined [PWs. ]1 [to]3 and got marked Exs.Pl to P14. After closure of [evidence of the]complainant, the incriminating evidence elicited against [the]appellants was read over and explained to them under Section313 of the Cr.P.C., for which all of them have denied [and]reported that they did not choose to examine any witness [on]their behalf. However, they [got ]marked Exs.Dl to D3 on theirbehalf. B. The substance of the evidence of PW1 is that after [receiving]of returns of income tax filed by accused No. l/company, [the]respondent/complainant has processed the same under [Section]1a3(1) of the Act and issued intimation determining the totaltaxable income as Rs.7,65,64,57O1- and tax liability [as]Rs.2,50,3O, [1 ]64 I -. The evidence of PW2 /Income [Tax officer is to]the extent that he has considered the annual report of accusedNo.l/company for the financial year 2OQ7-O8 under Ex.P3 andbank account slatements of accused No.l/Company with the AXIS B;rnk Limited under Bx. P4 and found that accusedNo.1/Compar.ry did not pay the tax returns in spite ol havingsurplus and sufficient funds. PW3 is the Income Tax Officer,who has succeeded PW2. His evidence is that he has passedpenalty order under Ex.PB imposing penalty of Rs.50 lakhs andraised clemand under Ex.P9 and the same u,as served on theaccused. He also deposed that as there was no response fromthe accused, show cause notices under Section 276-C ol the Actwere issiued against all the accused through '"r,hich accused wereinformed that the department is initiating criminal proceedingsand consequently the department has fi1ed the complaint. AXIS B;rnk Limited under Bx. P4 and found that accusedNo.1/Compar.ry did not pay the tax returns in spite ol havingsurplus and sufficient funds. PW3 is the Income Tax Officer,who has succeeded PW2. His evidence is that he has passedpenalty order under Ex.PB imposing penalty of Rs.50 lakhs andraised clemand under Ex.P9 and the same u,as served on theaccused. He also deposed that as there was no response fromthe accused, show cause notices under Section 276-C ol the Actwere issiued against all the accused through '"r,hich accused wereinformed that the department is initiating criminal proceedingsand consequently the department has fi1ed the complaint. 9. After full-fledged trial, on considering the entire material onrecord, the trial Court has found Accused No.l/Company andA2 to .\4, the Directors of A1 company, guilty of the offencespunishable under Sections 276-C(2\ and 278-8 of the Act andwere sentenced as stated supra. Aggrieved by the said [judgment]and conviction of Special Judge for Economica-l Offences [at]H),der:Lbad, the present appeals are filed originally before [the]Metropolitan Sessions Judge Court at Hyderabad. 10. The erstwhile High Court for the States of Telangana and Andhra Pradesh has issued circular ROC.No.34, CriminalSection/20 17, dated 28.O8.2017, wherein it is clarilied thatagainst any orders passed by the Special Judge for [Economic]Offences, Hyderabad, in the State of Telangana [and]Visakhapatnam in the State of Andhra [Pradesh, ]the High [Court]has the jurisdiction to entertain the appeals, not the [Sessions]Court. In view of the said circular, these appeals filed by [the]appellants have been transferred from Metropolitan [Sessions]Judge Court, Hyderabad, to the High Court for the [State ][of]Telangana. 11. The summarJi of grounds of appeal as [filed ][by ][the]appellants in brief are as under: a) The trial Court has failed to see that [accused]No.l/company was not having funds to [pay ]the tax on [the ][due]date as reflected in Ex.P4-bank statements and that [accused]No.1 has not received any sale [proceeds ][from ]M/s. [Mytas]Property Private Limited, thereby the [respondent/ complainant]has not produced any evidence to show that [accused] No.l/Company has received sale proceeds from M/s. MytasProperty Private Limited. b) The trial court has misconstrued the presumption underSection 278-E of the Act and erred in holding that the burden ofproof is on the accused to prove that there was no wil1fu1 evasionof payment of tax. c) The trial Court erred in holding that the accused failed toprove non-existence of culpable mental state in non-payment oftaxes on the date of filing returns and as on the date of demandnotice ald that the trial Court failed to appreciate that in spite ofnot having any cogent evidence to show that all the accusedhave willfully evaded the tax, the trial Court has concluded thataccusect have committed willful evasion in payment of tax. d) The trial court failed to see that ail the assets belong toaccused No.1/Company were attached under Section 281-B ofthe Act and due to paralyzing of financial activities of accusedNo.1, tex could not be paid in time. e) Tl-re tria,l court failed to consider the admission of pW3 that the amount received by Accused No. l/Company is towards share application money does not attract tax liability and thatthe trial Court could not consider that accused No.1 has notreceived Rs.7 crores 65 lakhs from M/s. M-ytas Property PrivateLimited. f) The Trial Court should not ha\re conciuded that accusedNos.2 to 4 are responsible for day to day affairs of accusedNo. 1 / company and should have taken into consideration thenotices issued under Section 27 B-B of the Act proposing theprosecution did not refer accused Nos, 2 to 4 as principal officersand thereby accused Nos.2 to 4 should have been acquitted. e) Tl-re tria,l court failed to consider the admission of pW3 that the amount received by Accused No. l/Company is towards share application money does not attract tax liability and thatthe trial Court could not consider that accused No.1 has notreceived Rs.7 crores 65 lakhs from M/s. M-ytas Property PrivateLimited. f) The Trial Court should not ha\re conciuded that accusedNos.2 to 4 are responsible for day to day affairs of accusedNo. 1 / company and should have taken into consideration thenotices issued under Section 27 B-B of the Act proposing theprosecution did not refer accused Nos, 2 to 4 as principal officersand thereby accused Nos.2 to 4 should have been acquitted. 12. Heard Sri Vinod Kumar Deshpande, Iearned Senior counselfor the appellants and Sri B. Narasimha Sharma, learnedStanding counsel for the income tax department, considered theentire material on record, relevant provisions of the Act and theauthorities cited. 13. Appellants have filed an application under Section 39 ICr.P.C., along with the appeals for receiving of two documentsi.e., (1) Common order passed by the Appellate Tribunal inITA.No. 1OO2 of 2014, dated 22.05.2015 and (2) consequential order, dated 21.03.20 i6 passed by the Assessing Officer,Assistant Commissioner of Income Tax, Central Circle-3(2),Hyderabad, as additional evidence. As per the common order ofthe Tribr.rnal, dated 22.O5.2015 (document No.1), the assessmentorder dated O2.l2.2OlO on which the prosecution is initiatedwas directed to be modiiied. Basing on the orders of the IncomeTax Appellate Tribunal, the assessment officer has modified theearlier orders dated 02.12.2010 by re-assessing the tax liability,which the appellants were expected to pay for the assessmentyear 2OO7 -2008 (document No.2). Considering the above, andon hearing both sides, this Court is of the opinion that these twodocuments are very relevant to consider the appeals on hand,thereby these documents are received. 14. It is submitted vehemently by the learned Senior Counselfor the appellants that during the pendency of the complaintbefore the trial Court, the accused have paid entire tax asdemanded, including the penalt5r and interest and that theappellants have challenged the assessment orders dated02.12.21) 10 tinder Ex.D2 before the learned CIT(A). On hearingboth siies, learned CIT(A) has found that there are no merits in the contentions raised by the appellants, and dismissed theappeal upholding the orders passed by the Assessing Officer forassessment year 20OB-09. Aggrieved by' the sarne, [the]appellants have preferred appeal before the Income Tax AppellateTribunal (in short, "the Tribunal"), and on hearing both sides,learned Tribunal has partly allowed the appeal [vide ]orders dated22.O5.2015 in ITA.No.943lHydl2OV and batch finding that [the]Assessing Officer has committed error in calculating the [tax ][to]be paid by the appellants and directed the [Assessing ][Officer ][to]re-assess the tax by computing the income of the appellantsfrom the transfer of lands held by accused No.l/company ascapital assets by way of development agreement and [subsequent]to sale of flats and bungalows received as [consideration ][for ][such]transferred amounts to stock in trade on conversion. [These]orders are passed after passing conviction vide [judgment ]dated09.Ol.2OL4 in C.C.No.125 of 2011 by the learned [Special Judge.]It is also submitted by the learned Senior counsel that [the]Assessing Officer has re-assessed the tax as [per ]the directions ofthe Tribunal and [passed ]consequential order, [dated 21.03.2016,]wherein the tax liability was substantially reduced and foundthat the tax, which was already paid to the tune of Rs.2,27,74.267 I n,as in excess of the rerrised tax thereby, theexcess trrx paid Rs,1,43,64, i08/- and interest of Rs.42,53,507/the total of rvhich was Rs. 1,86,17,6161-, \ras ordered to bethe total of rvhich was Rs. 1,86,17,6161-, \ras ordered to berefunded and the same was also adjusted against the demandfor the accounting year 2009-10 vide RO.No.30351g dated28.O3.2016.for the accounting year 2009-10 vide RO.No.30351g dated28.O3.2016. On considering the submissions of the learned Seniorcounsel it is clear that the appellants have not only paid the taxdemanded along with interest and penalty, but also on accountof re-assessment of tax, the tax already paid was in excess of taxliability, and that the same was adjusted for future tax liabilityand hence, sought for allowing of the appeals.counsel it is clear that the appellants have not only paid the taxdemanded along with interest and penalty, but also on accountof re-assessment of tax, the tax already paid was in excess of taxliability, and that the same was adjusted for future tax liabilityand hence, sought for allowing of the appeals. 15. lrarned standing counsel representing the Income TaxDepartment stated that as on the due date, the accused have notpaid th e tax having sufficient funds and committed willfulevasion of payment of tax. It is also submitted that AccusedNo.l/cornpany has filed annual returns (Ex.p3), through itsChartered Accountant for the finaacial year 2OOZ -O8 relevant forthe assessment year 2OO8-O9, according to which Accused No. Imade profit on sale of land to a tune of Rs.7,23,27,941 l- and the bank statements sho\ [/ ]that Accused No. 1/Company has receivedpart of sale consideration in respect ol "Mytas Hill County" fromtime to time, but did not choose to pay the advance tax. lt isfurther submitted that the balance sheet of AccusedNo.1/Company also shows Rs.9,32,69,O74/- under the headreserves and surplus, so also Rs. 1 1,73,54,237 l- under the headcurrent assets by way of loans and advances. It is furthersubmitted that accused No.1/Compaly having enough liquidcash during the relevant accountlng year, willfully evaded inpayment of tax, thereby the accused have committed the offencepunishable under Section 276-C(2\ read with Section 278-8 ofthe Act and hence conviction recorded by the trial Court isproper. 16. Now, the points for determination in these appeais are: 1) Whether the conviction recorded based onthe assessment order dated 02.12.2010 can besustained, since the said assessment order dated02.l2.2OlO was subsequently revised?the assessment order dated 02.12.2010 can besustained, since the said assessment order dated02.l2.2OlO was subsequently revised? 2l Whether the accused have committed willfulevasion of tax?evasion of tax? 3) To [q'hat ]relieP Point No. 1: 17. The cause of action for the respondentdepartment/ complainant to file the complaint against theappellants is the assessment order dated 02.12.20 10, accordingto whir:h t he appellants \ [/ere ]asked to pay tax ofRs.2,27 ,7 4,267 I - for the taxable income of Rs.7,65,64 ,57O / - andaccordin gly an intimation was sent by the Assessing officer tothe appt:llar-rts under Section 143 (1) of the Act. Admittedly ason the clate of initiating the prosecution against the appellants,demanded tax of Rs.2,05,08,1221- was not paid by theappellants. It is also an admitted lact that after initiating theprosecution, the appellants have paid the entire tax demandedalong with penalty, interest etc. Therefore, as on the date ofpronoullcement of the judgment by the trial Court, there was notax liab,lity to be paid by the appellants. 18. It is to be noted that the Income Tax Appellant Tribunalhaving considered the appeals of the appellants found that theassessnrent order, dated 02.12.2010 directing the appellants topay Rs.2,27,74,267 l- was incorrect and the Assessment Officer 18. It is to be noted that the Income Tax Appellant Tribunalhaving considered the appeals of the appellants found that theassessnrent order, dated 02.12.2010 directing the appellants topay Rs.2,27,74,267 l- was incorrect and the Assessment Officer was directed to assess the income tax a-fre sh in terms of thedirections given by the Tribunal. Accordingly, the Assessmentoflicer has re-assessed the income tax and passecl modifiedorders, dated 21.03.20 16 determining the tax liability, which isfar less than what was assessed at the first place. The basis forrespondent/complainalt to initiate prosecution against theappellants is the assessment order, dated O2.l2.2OlO, on theground that the appellants have committed default in payment ofthe tax as per the said assessment order. When asiessmentorder dated 02.I2.2OlO itself is re-assessed as per the directionsof the Tribunal which held that the assessment of tax datedO2.l2.2OlO is incorrect and the tax to be paid was substantiallyreduced, it cannot be alleged that the appellants have committeddefault in payment of tax and willfully evaded. When theassessment order dated O2.L2.2OIO itself was modified holdingthat the Assessment Officer has incorrectly assessed the tax,whatever the consequential proceedings that have been initiated,including the initiation of prosecution of the appellants by therespondent/complainant, conviction recorded by the trial Court,cannot sustain. Basing on the fresh assessment order, dated21.O3.2OL6, it is to be examined afresh that whether the\ . -'.\- appellants have committed any willfui evasion [of ]tax, as [defined]under Section 276 C of the Act. 19. Therefore, on considering the above discussion, it is [clear]that the finding of the tria-1 Court that the appellants '*,ere guiltyof the olTences under Section 276-C(2\ read with Section 278-8of the r\ct is erroneous as the same is based on incorrectassessment order, dated O2.l2.2OlO and hence, shall notsustain, and required to be set aside Considering the same, point No. i is decided in favour ofthe appellants/ accused. POINT IIo.2:- 20. The appellalts have also raised other [issues i.e., they ][have]not committed any l,r.illful evasion in [payment ]of tax since, as onthe due date there were no liquid funds in their accounts [and]the appellants - Accused Nos. 2 to 4, who are the [Directors, ][are]not responsible for the day to day activities of [accused]No.l/Company as on the date of the alleged default, the trialCourt has misconstrued the presumption under Section [27 ]8tr ofthe Act, the trial Court faiied to record admission of [PW.3, ]that the amount received torr",ards share application does not attractthe tax etc. 21. This Court has aireadt' came to the conclusion r.i'hilediscussing point No.1 that the conviction and sentence recordedin favour of the appellants required to be set aside, on account ofthe fact that the asse ssment order dated 02 . 12.20 [1 ]0 on u'hichthe conviction \^/as recorded was modified and a lreshassessment order came into force, hence, the issues raised bythe appellants, need not be answered. 22. Learned Senior Counsel for the appellants has placedreliance on the authority passed by the Hon'lcle Supreme Courtin the case of V.Srinivas Reddy Vs. State of Andhra Pradeshr,wherein it was held as follows: *13. It uas th.en urged bg Mr. Arunachalam that iftLrc Hiqh Court felt that .further euidence was necessaryfor [disposal ][of ][tte ][case then ][it ][could haue ][exercised ][its]power under Section 391 Cr. P.C. and ouqht not to haueset aside the order of acquittal and remanded tte matterfor fresh [disposal. ][This ][argument olso ][did ][not ][impress ][us]because the Hiqh Court instead of recordirLo the additionaleuidencp in terms of Section 391 Cr. P.C.; prefered toremand the matter bock to the tial court for disposal inaccordance with law. It also appears from the record thatsome of the documents including FDRs, loan applicationsetc., should also haue been brought on record for effectiue *13. It uas th.en urged bg Mr. Arunachalam that iftLrc Hiqh Court felt that .further euidence was necessaryfor [disposal ][of ][tte ][case then ][it ][could haue ][exercised ][its]power under Section 391 Cr. P.C. and ouqht not to haueset aside the order of acquittal and remanded tte matterfor fresh [disposal. ][This ][argument olso ][did ][not ][impress ][us]because the Hiqh Court instead of recordirLo the additionaleuidencp in terms of Section 391 Cr. P.C.; prefered toremand the matter bock to the tial court for disposal inaccordance with law. It also appears from the record thatsome of the documents including FDRs, loan applicationsetc., should also haue been brought on record for effectiue di,sposal of the controuersu raised in the case and to dojusrice betueen the parties. It is needless to sall that thetnal court uill stictlu adhere to the obseruations onddir<:ctions giuen by the High Court in its judgment. " Thr: rationale in the above authoritlr of the Apex Courtsquarely applicable to the facts of the case on handsquarely applicable to the facts of the case on hand 23. Consrdering the facts and circumstances, this Court is ofthe considered opinion that as the assessment orders datedO2.l2.2OlO on which the prosecution was initiated itself doesnot exist and that the same was modified and lresh assessmentorder dated 2l .03.2016 came into force, the conviction andsentence recorded against the appellants basing on the incorrectassessment orders dated 02.12.2OlO shall be set aside. 24. Accordingly, both these criminal appeals are disposed ofsetting aside the conviction and sentence dated 09.O 1.20 14recorde,l by Special Court for Economical Offences at Hyderabadand C.O.No.125 of 2Ol1 is remanded back to the trial Court witha direction to consider the documents i.e., (1) Common orderpassed by the Appellate Tribunal in ITA.No.1002 of 2014, dated22.O5,2015 and (2) consequential order, dated 21.03.2016passed by the Assessing Oflicer, Assistalt Commissioner of Income Tax, Central Circle-3(2), [Hyderabad, ][fiied by ][the]appellants and decide the complaint [afresh ][in ][accordance ][with]law, after giving an opportunity to both sides [to ][adduce ][any]further evidence, if any. However, the trial Court [shal1 ][not ][be]influenced by the comments and observations, [if ][any, ][made ][by]this Court touching merits of the [case ][while ][passing orders.] As a sequel, pending misceilaneous [applications, ][if ][any,]shall stand closed. / / ['tRuE ][coPY ]I I sD/-K.SRtNTVASA RAOJOINT REGIR5-'/SECTION OFFICER TO 't . The Special Judge for Economic Offences at Hyderabad 2. Dy. Co,'llmissioner [oiincome{ax,, ][Central ][Circle'9, Aayakar Bhavan' ][Room No ][805']8[h Ftoor, Ftoor, [Basheerbagh, Hyderabad-500004']8[h Ftoor, Ftoor, [Basheerbagh, Hyderabad-500004'] 8[h Ftoor, Ftoor, 3. The Assessing Officei, [Asiistant ][Commissioner ][of ][lncome ][Tax, ][Central Circle ][-3 ][(2)]Hyderabad.Hyderabad.4. One CC to [SRl. ][G. ] [Advocate ]5. One CC to [Sri ][V. SURENDER ][RAO, ][Advocate ][(OPUg]-]6. il; ac io Snr. [s. ] [sARMA' ][Advocate ][[oPUC]]7. Two CD CoPies5. One CC to [Sri ][V. SURENDER ][RAO, ][Advocate ][(OPUg]-]6. il; ac io Snr. [s. ] [sARMA' ][Advocate ][[oPUC]]7. Two CD CoPies + HIGH COUIlT DATED: lt 10612022 1';1i [l"i;';1]t4:COMMAN JUDGMENTICRLA(TR).t,lOS.4 AND 39 [2018]2Z srP 2W.0 DISPOSING OF [CRL. ][APPEALS(TR)]