Crlatr/54/2018 Of B.teja Raju v. Dy. Commissioner Of Income-Tax

IN THE HIGH AT HYDERABAD FRIDAY ,THE TWO THCUSAND PRESENTTHE HON'BLE [DR. ] [D. ] CR!MINAL APPEAL[ (TR][) ][Nos. ][3 ][and][ 54 ][of ][2018] Crl.A.(TR) [NO:3][ oF ][2018] Crl. Appeal [Under ][Section ][374 ][l2l ][of ][Cr'P'C' ][aggrieved ][by ][the]Judgment [dated ][09-01-2014 ][in ][C'C'No' ][130 ][of 2011 ][on the ][file ][of the ][Court ][of]the Special [Judge ][for ][Economic ][Offences ][at Hyderabad'] Between 1. ' M/s. n"J Vamsadhara ov it, Ntanaging [Agro ][Pvt Ltd, B-79' ]oiieitor Shri K [Madhura ]Gopalakrishnam [Nagar' ][lyder?bal. ]Raiu S/o Shri [39-]KRama Raju, [aged ][about ][51 ]YearsRama Raju, [aged ][about ][51 ]Years2 Shri [K. ][Gopalakrishnu, ][n'1' ][S/o ][K..R9m3, ][Raru ][Aoed ][about ][51 ][years]Director or [M/s ][Vamsadhara ][Asro ][Pvt ][Ltd ]' [*'" ].?il*l"i-i [lliiei}s'i6tD]92 & 93 , [Flat ][No ][aoa, ][iii ][Rimana ][Enclave' Madhura ][Nagar' ][S R Nagar]Post, HYderabad.Director or [M/s ][Vamsadhara ][Asro ][Pvt ][Ltd ]' [*'" ].?il*l"i-i [lliiei}s'i6tD]92 & 93 , [Flat ][No ][aoa, ][iii ][Rimana ][Enclave' Madhura ][Nagar' ][S R Nagar]Post, HYderabad.3. Shri DVS [Subba Ralu ][s/o. ][D. ][Krishnam RAju, aged about ][46 years' ][Director]of M/s Vamsaonara [n-g; ][Pvt ][Ltd, R/o ][Flat ][No ]['102' ][Dhanunjaya ][Nest]i""j, r.r"gu, [Yousufgud-a, ][Hyderabad-4s ]o""rr#?:l?Tof M/s Vamsaonara [n-g; ][Pvt ][Ltd, R/o ][Flat ][No ]['102' ][Dhanunjaya ][Nest]i""j, r.r"gu, [Yousufgud-a, ][Hyderabad-4s ]o""rr#?:l?T And ircle [-9, ]Room [No. ][813, ][Brh ][Floor,]-i"y"ka, Dy. Commissioner Bhavan, [of ]Basheerbagh, [lncome ]- [tax, ]Hyderabad[Central ][C]- [500004.]Respondent [/ ][ComPlainant] Counsel [for ][the Appellant ][. ] [' ][Senior ][Counsel]Counsel [for ][the ][Respondent ] [for ] Crl.A.[(TR]) [NO: ][5][4 ][0F ][2014] Crl. Appeal [Under Section ][374 ][\2) ][of ][Cr'P ] [aggrieved ][by ][the ][Judgment]dated0g-01-2014inC,C,No'l3oof20llonthefileofthecourtoftheSpecialfor [Economic ][Offences ][at Hyderabad]Judge Between: Shri B. Teja Raju S/o B flamalinga Raju, aged about 34 [years, ][Director ][of ][M/s.]Vamsadhara Agro Pvt Ltd., H.Plot No. ['1245 ]a , Road No. 63, Jubilee Hills,Hyderabad -33 ,... [[Appellant ][/ ]][[/ ]][Accused]No.2 ,... [[Appellant ][/ ]][[/ ]][Accused] And Dy. Comm ssioner of lnr:ome - tax. Centrat Circle -9, Room No. 813. 8th Floor,Aayakar []havan, Basheerbagh, Hyderabad. - 500004Respondent / ComplaihantCounsel for the Appellant r SRI VINOD KUMAR DESHPANDE , Senior CounselCounsel for the Respondent : SRI B. NARASIMHA SHARMA [for ] The Court nrade the follovr ing Common Order lII THE HON'BLE DR. [JUSTICE D.NAGARJUN] CRIMINAL APPEAL {TRI[Nos.3 ][and 54 ][of ][2O18] COMMON ORDER: Between: Shri B. Teja Raju S/o B flamalinga Raju, aged about 34 [years, ][Director ][of ][M/s.]Vamsadhara Agro Pvt Ltd., H.Plot No. ['1245 ]a , Road No. 63, Jubilee Hills,Hyderabad -33 ,... [[Appellant ][/ ]][[/ ]][Accused]No.2 ,... [[Appellant ][/ ]][[/ ]][Accused] And Dy. Comm ssioner of lnr:ome - tax. Centrat Circle -9, Room No. 813. 8th Floor,Aayakar []havan, Basheerbagh, Hyderabad. - 500004Respondent / ComplaihantCounsel for the Appellant r SRI VINOD KUMAR DESHPANDE , Senior CounselCounsel for the Respondent : SRI B. NARASIMHA SHARMA [for ] The Court nrade the follovr ing Common Order lII THE HON'BLE DR. [JUSTICE D.NAGARJUN] CRIMINAL APPEAL {TRI[Nos.3 ][and 54 ][of ][2O18] COMMON ORDER: ol [20 ][l8 ][is ][liled ][b-v ][A1, ][43 ][and ] [i'e ]'Crl.A.(TR).No.3 and its [two ][Directors ][respectively, ][whereas]Company Crl.A.(TR).No.54 [of ][2018 ][is ][filed ][by ][A2, ][who is ][another Director of]A I / company, being [aggrieved ][by the ][conviction ][and ][sentence]learned [Special ][Judge ][for ][Economic ][Offences ][at]imposed by the in C.C.No.130 [of ][2O11 ][vide ][Judgment ][dated]Hyclerabad 09.01.20 14, wherein [Accused ][Nos' ] [to ][4 ][wcre ][lound guilty ][of]the offences [punishable ][under ][Section 276-C(2) ][read ][with]Section 278-B of the [Income Tax ][Act, ][196 ] [(for ][short, "the ][Act")]accused [No.1 ][was ][sentenced ][to ][pay ][fine ][of]r:onsequently and [in ][default ][of ][payment ][of ][fine ][to ][initiate]Rs.10,000/- appropriate [proceedings ][as ][required ][under ][Section ][421 ][of]Cr.P.C.,whereasAccusedNos.2to4weresentencedtoundergorigorous imprisonment [for a ][period of ][one ][year ][each ][and ][to ][pay]fine of Rs. lO,00O/- [each ][and ][in ][default ][of ][payment ][of ][line ][b1']accused [Nos.2 ][to ][4, ][to ][undergo simple ][imprisonmcnt ][Ibr a ][period]of one month [each.] Since the issues involved in these appeals are one and thesarne, both the appeals are being disposed of by this commonjudgment.sarne, both the appeals are being disposed of by this commonjudgment. 2. For convenience, the parties herein are referred to as theyare arrayed before the trial Court. i.e., Appellant No.1 asAccused No.1/Company arld Appellant Nos.2 to 4 as AccusedNos. 2 to 4 3. The genesis genesis of these cases, which tead the these cases, which tead the cases, which tead the which tead the tead the the appellants_accused to prefer these appeals, a-re narrated in brief as under: The genesis genesis of these cases, which tead the these cases, which tead the cases, which tead the which tead the tead the the appellants_ i) Accused No.l/Company - M/s. Vamshadara Agro Private Limited, which was registered under the CompaniesAct witl.r 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 Drrectors of Accused No. 1 / Company. ii) Accused No.i/Company has acquired lands to anextent ol Ac.7.50 guntas in Sy.Nos. 19g and l98 (p) underthe limits of Bachupally Mandal, Ranga Reddy Districtduring-fbe financial year 2O02-2003 and developed the said lands by incurring some amounts during the linancialyears 2002-03 to 2007-08. Accused No.1/Company alongwith other companies, who have lands contiguous to thelands of Accused No. 1/Company, have agreed to developthe lands jointly with M/s. Mytas Property Private Limited.As per the said development agreement, the built up areaagreed to be given to Accused No. 1/company, was [allowed]to be sold to various buyers by M/s. Mytas Property [Private]Limited and pass on the sale proceeds to [Accuscd]No.1/Company. ii) Accused No.i/Company has acquired lands to anextent ol Ac.7.50 guntas in Sy.Nos. 19g and l98 (p) underthe limits of Bachupally Mandal, Ranga Reddy Districtduring-fbe financial year 2O02-2003 and developed the said lands by incurring some amounts during the linancialyears 2002-03 to 2007-08. Accused No.1/Company alongwith other companies, who have lands contiguous to thelands of Accused No. 1/Company, have agreed to developthe lands jointly with M/s. Mytas Property Private Limited.As per the said development agreement, the built up areaagreed to be given to Accused No. 1/company, was [allowed]to be sold to various buyers by M/s. Mytas Property [Private]Limited and pass on the sale proceeds to [Accuscd]No.1/Company. iii) For the assessment year 2OOB-O9, 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 lrom the sale proceeds ol the [lands]and short term capital gains accrued from the saleproceeds of the constructed area by showing gross taxableincome as Rs.7,34,49,O181 -, out of lvhich an amount ofRs.4,72,95,383/ - was shown as long term capital gain andRs.2,70,81,629 l- was shown as short term capital gains. iv) Accused No. 1/Company is expected to pay theincome tax either by way of advance tax as required underSection 2OB of the Act or at least along with filing ofreturns in terms of Section l4O_A of the Act. As perSection 143 (1) of the Act, the tax liabitity of Accused No.1was arrived at Rs.2,l7 ,73,295 / _ by therespondent/complainant and raised a demand underSection 156 read with Section 143 of the Act and issued anintimation to Accused No. l under /Company Ex.p2.Accused No. l/company was required to pay the taxdemanded within 30 days of service of notice, but it hascommitted default. v) Respondent/complainant has issued show-causenotice dated 17.11.2OO9 under Section 221 (11 of the Actunder Ex.P5, wherein the appellants were asked to showcause as to why penalty should not be levied forcommitting default in payment of tax. As there was noresponse from the appellants, the complajnant has issuedanother show-cause notice dated 25.0g.2010 under Ex.p6under Section 22 1 (1) read with Section 143-4 of the Acr. ..? Finally, one more opportunity was also given by the Department by giving another shorv-cause notice dated1i.10.2010 (Ex.P7) under Section 221 (l) read with Section.l 43-A of the Act. An opportunity of being heard was alsogiven by the respondent/complainant to AccusedNo.1/Company fixing the date of hearing as 18.10.2010,but there was no response, on which a penalty ofRs.47,00,000/-was imposed by way of order dated25.10.2010 (Ex. PB) under Section 221 read with Section140-A(3) ol the Act and the said proceedings were servedon accused No.1 on 29.10.2O1O.4. Considering the willful evasion of payment ol tax, therespondent/ complainant has decided to iniliate prosecution andaccordingly a notice was issued to accused No.1/company andother Directors under Section 276 C(21 of the Act, as to whyprosecution shall not be initiated against them lor willlul evasionof the tax. A11 of them have given reply stating that there was nointention to evade payment ol tax. Another notice was issued toaccused No. I and its directors under Exs.PlO and/Company Pl I dated I i.01.20 1 I asking them as to u,hy prosecution shall F-- not be initiatecl under Section 276-c(2) of the Act. Again replieswere filed by accused No. 1/company and its Directors/ accusedNos.2 to 44 under Exs.pl2 and p13 srating that there was nointention of willful evasion of tax. F-- not be initiatecl under Section 276-c(2) of the Act. Again replieswere filed by accused No. 1/company and its Directors/ accusedNos.2 to 44 under Exs.pl2 and p13 srating that there was nointention of willful evasion of tax. 5. As Accused No. 1/Company and its Directors/accusedNos.2 to 4 have not paid the tax in response to the demandnotice issued under Section 1a3 (1) of the Act and also failed topay the penalty, the respondent/complainant after obtainingsanction order dated 16.03.201 1 lor launching of prosecutionfiled a complaint before the Special court for Economic offencesagainst accused No. 1 and accused Nos.2 to 4, the otherDirectors, aileging that they have committed offence punishableunder Section 276-C(2) read with Section 2ZB_B of the Act, asthe1, have willfully evaded tax even though they were havingsufficient resources. 6. The Special Court for Economic Offences took cognizanceof the ollences against Accused No. 1/Company and its Directorsi.e., Accused Nos. 1 to 4, under Section 226_C(21 read withSection 278-8 of the Act and charges were framed against themunder Section 276 - C(2) read with Section 228-B(ll of the Act and all the accused have [pleaded ][not guilty of the ][charges ][and]claimed to be tried. 7. In order to prove the [charges leveled ][against ][the]appellants, 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 ][Section]313 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 ] [on ][their]behalf.8. The substance of the evidence [of ] [is ][that ][after ][receiving]of returns of income tax [filed ][by ][accused ][No' ][l/company, ][the]respondent/complainant [has ][processed ][the ][same ][under ][Section]143(l ) of the Act and issued [intimation ][determining ][the ][total]taxable income as Rs.7 ,34,49,O2O l- [and ][tax ][liability ][as]Rs.2,39,30,050/-. The evidence of [PW2/Income ][Tax officer is ][to]the extent that he has considered the annual [report ol ][accused]NoHfgompany for the Iinancial [year ][2OO7-O8 ][under ][Ex'P3 ][and]bank account statements of [accused ][No. ][1 ]/ [Company ][with ][the] AXIS Bank Limited under Ex. p4 and found that accusedNo.1/Company did not pay the tax returns in spite of havingsurplus and stLllicient funds. pW3 is the Income Tax Officer,who has succerlded pW2. His evidence is that he has passedpenalty order under Ex.pB imposing penalty of Rs.47 iakhs andraised demand under Ex.p9 and the same was served on theaccused. He also deposed that as there was no response fromthe accused, show cause notices under Sectio n 226_C of the Actwere issued against all the accused through which accused wereinformed that the department is initiating criminal proceedingsand consequently the department has liled the complaint.9. After fuil-lledged trial, on considering the entire material onrecord, the tria.l Court has found Accused No.i/Company andA2 lo A4, the Directors of A1 company, guilty of the offencespunishable under Sections 226-C(21 and 27g_B of the Act andwere sentenced as stated supra. Aggrieved by the said judgmentand conviction ol Special Judge for Economical Offences atHyderabad, the present appeals are filed originally before theMetropolitan Sessions .Judge Court at Hvderabad. 10. The erstwhiie High Court for the States of [Telangana ][and]Andhra Pradesh has issued circular ROC.No.34, [Criminal]Section/20 17, dated 28.O8.2O17, wherein it is [clarilied ][that]against any orders passed by the [Special ][Judge ][for ][Economic]in [. ]the State of [Telangana ][and]Offences, Hyderabad, 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 lrom Metropolitan [Sessions]Judge Court, Hyderabad, to the High Court [lor ][the ][State ][of]Telangana. 11. The summary of grounds of appeal as [filed ][by ][the]appellants in brief are as under:a) The trial Court has failed to see that [accu sed]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. t has not received any sale proceeds from M/s. [Mytas]Property Private Limited, thereby the respondent/ complainanthas not produced any evidence to show that [accused] No.1/Companl has received sale proceeds from M/s. MytasProperty Private Limited.Property Private Limited. b) The trial court has misconstrued the presumption underSection 278-tr of the Act and erred in holding that the burden ofproof is on the accused to prove that there was no willful 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 and that the trial Court failed to appreciate that in spite ofnot having an) cogent evidence to show that a,l1 the accusedhave wi1lfu11y evaded the tax, the trial Court has concluded thataccused have committed wiliful evasion in payment of tax. d) The trial court failed to see that all the assets belong toaccused No.1/Oompany were attached under Section 281-B ofthe Act and due to paralyzing of Iinanciai activities of accusedNo.1, tax could not be paid in time. e) The trial ccurt failed to consider the admission of pW3 thatthe amount received by Accused No. l/Company is towards share application money does not attract [tax liability ][and ][that]the trial Court could not consider Lhat accused [No.1 ][has ][not]received Rs.7 crores 3O lakhs from M/s. Mytas [Property ][Private]Limited. The Trial Court should not have concluded [that ][accused]f) Nos.2 to 4 are responsible for day to day [affairs ][of ][accused]No.i/company and should have taken [into ][consideration ][the]notices issued under Section 278-8 [of ][the ][Act ][proposing ][the]prosecution did not reler accused Nos.2 to 4 [as ][principal ][officers]and thereby accused Nos.2 to 4 should [have been ][acquitted.] 12. Heard Sri Vinod Kumar Deshpande, [learned ][Senior counsel]for the appellants and Sri B. Narasimha [Sharma, ][learned]Standing counsel for the income tax department, [considered ][the]entire materia.l on record, relevant [provisions of ][the Act and ][the]authorities cited. 13. Appellants have liled an application under Section [39 ][I]Cr.P.C., along with the appeals for receiving of two documentsi.e., (1) Common order passed by the Appellate Tribunal inITA.No. 1O2O of 2O14, dated 22.O5.2O15 and (2) consequential 12. Heard Sri Vinod Kumar Deshpande, [learned ][Senior counsel]for the appellants and Sri B. Narasimha [Sharma, ][learned]Standing counsel for the income tax department, [considered ][the]entire materia.l on record, relevant [provisions of ][the Act and ][the]authorities cited. 13. Appellants have liled an application under Section [39 ][I]Cr.P.C., along with the appeals for receiving of two documentsi.e., (1) Common order passed by the Appellate Tribunal inITA.No. 1O2O of 2O14, dated 22.O5.2O15 and (2) consequential orcler, dated 21.O3.2016 passed by the Assessing Officer,Assistant Commissioner of Income Tax, Central Circle-3(2),Hyderabad, as additional evidence. As per the common order ofthe Tribunal, dated 22.O5.2015 (document No.1), the assessmentorcler dated 20.12.2010 on which the prosecution is initiatedwas directed to be modified. Basing on the orders of the IncomeTa-x Appellate 'lribunal, the assessment officer has modified theearlier orders rlated 20.12.2olo by re-assessing the tax liability,which the appellants were expected to pay for the assessmentyeer 2OO7-2008 (document No.2). Considering the above, andon hearing both sides, this Court is of the opinion that these twodo<:uments a-re 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 ol the complaintbefore the trial Court, the accused have paid entire tax asdemanded, including the pena_1ty and interest and that theappellants have challenged the assessment orders dated20.l2.2OlO under Ex.D2 before the learned CIT(A). On hearingboth sides, lear-ned CIT(A) has found that there are no merits in the contentions raised [by ][the ][appellants, ][and ][dismissed ][the]appeal upholding the orders [passed ][by ][the ][Assessing ][Officer ][for]assessment year 2OOB-09. [Aggrieved ][by the ][sarne, ][the]have [preferred ][appeal before ][the ][Income ][Tax Appellate]appellants Tribunal (in short, "the [Tribunal"), ][and on ][hearing ][both ][sides,]learned Tribunal has partiy [allowed ][the ][appeal vide orders ][dated]22.O5.2015 in ITA.No'943lHydl2Ola [and ][batch ][linding that ][the]Assessing Officer has committed [error ][in ][calculating ][the ][tax ][to]be paid by the appellants [and ][directed ][the ][Assessing ][Ollicer ][to]re-assess the tax by [computing ][the ][income ][of ][the ][appellants]from the transfer of lands [held ][by ][accused ][No'1/company ][as]capital 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 ][dated]in C.C.No'130 [of ][2011 by the learned ][Special ][Judge']Og.Ol.2O14 It is also submitted by [the ][learned ][Senior ][counsel ][that ][the]officer [has ][re-assessed ][the tax ][as ][per ][the ][directions of]Assessing the Tribunal and [passed ][consequential ][order, dated ][21'03'2016']wherein the tax liability [was substantially ][reduced ][and ][found]that the tax, which [was ][already ][paid ][to the ][tune ][of] Rs.2,17,73,295/- was in excess of the revised tax thereby, theexcess tax paid Rs, 1,37, 16,262/_ and interest of Rs.46,98,637/_the total of which was Rs. l,g4,15.,3gg/_, was ordered to berefunded and the same was also adjusted against the demandfor the accounting year 2009_ 10 vide RO.No.3O352 1 dated28.O3.2016. Rs.2,17,73,295/- was in excess of the revised tax thereby, theexcess tax paid Rs, 1,37, 16,262/_ and interest of Rs.46,98,637/_the total of which was Rs. l,g4,15.,3gg/_, was ordered to berefunded and the same was also adjusted against the demandfor the accounting year 2009_ 10 vide RO.No.3O352 1 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 liabilitythe 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. Learned standing counsel representing the Income TaxDepartment staterd that as on the due date, the accused have notpaid the tax having sufficient funds and committed willfulevasion of payment of tax. It is also submitted that AccusedNo.1/company has liled annual returns (Ex.p3), through itschartered Accountant for the financial year 2ooz -og relevant forthe assessment year 2OOg-09, according to which Accused No. 1made profit on sale of land to a tune of Rs.7,35, 19,24O/_ and the bank statements show that Accused No. 1 /Company has receivedpart of sale consideration in respect of "Mytas Hill County" fromtime to time, but did not choose to pay the advance tax. It isfurther submitted that the balance sheet of AccusedNo.l/Company also shou,s Rs.9,33,53,420/- under the headreserves and surplus, so also Rs.11,38,13,095/ under the headcurrent assets of loans and advances. It is furtherby way submitted that accused No.1/Company having enough liquidcash during the relevant accounting year, willfully evaded inpayment of tax, thereby the accused have committed the oflencepunishable under Section 276-C(21 read with Section 278-8 ofthe Act and hence conviction recorded by the trial Court isproper. 16. Now, the points for determination in these appeals are: i ) Whether the conviction recorded based onthe assessment order dated 20. 12.2010 can besustained, since the said assessment order dated20.12.2O1O was subsequently revised? 2) Whether the accused have committed willfulevasion of tax?evasion of tax? 3) To v,hat relieP Point No.1: 17. The cause of action for the respondentdepartment/cornplainant to file the complaint against theappellants is the assessment order dated 20.12.2010, accordingto which the appellants were asked to pay tax ofRs.2,39,30,050/- for the taxable income of Rs.7,34,49,01g/_ andaccordingly an intimation was sent by the Assessing officer tothe appellants under Section 143 (1) of the Act. Admittedly ason the date ol initiating the prosecution against the appellants,demanded tax of Rs.2,39,30,050/- was not paid by theappellants. It is also an admitted fact that after initiating theprosecution, the appellants have paid the entire tax demandedalorrg with penalty, interest etc. Therefore, as on the date ofpronouncement of the judgment by the trial Court, there was notax liability 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 theassessment order, dated 20.12.2O1O directing the appellants topay Rs.Q*.3p,30.050/- 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 theassessment order, dated 20.12.2O1O directing the appellants topay Rs.Q*.3p,30.050/- was incorrect and the Assessment Officer was directed to assess the income tax afresh in terms of [the]directions given by the Tribunal. Accordingly, the Assessmentofficer has re-assessed the income tax and passed modifiedorders, dated 21.03.2016 determining the tax liability, which [is]far less than what was assessed at the lirst p1ace. The basis forrespondent/complainant to initiate prosecution against [the]appellants is the assessment order, dated 20.12.2010, on [the]ground that the appellants have committed delault in [payment ]ofthe tax as per the said assessment order. When assessmentorder dated 20.12.2OlO itself is re-assessed as [per ]the directionsof the Tribunal which held that the assessment of tax [dated]20.12.2O1O is incorrect and the tax to be [paid ][u'as ]substantiallyreduced, it cannot be atleged that the appellants [have committed]default in payment of tax and willfuliy evaded. [When ][the]assessment order dated 20 .l2.2OlO itself was modified [holding]that 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 ][the]respondent/complainant, conviction recorded by the trial [Court,]cannot sustain. Basing on the lresh assessment order, [dated]21.03.2016, it is to be examined afresh that [whether ][the] appellants have commrtted any u,i11ful evasion of tax, as definedundr-'r Section')'76-C of the Act. 19. Therefore, on considering the above discussion, it is clearthat the finding of the trial Court that the appellants were guiltyof the oflences trnder Section 276-C(2) read with Section 278-8of the Act is erroneous as the same is based on incorrectassessment order, dated 20.12.2O1O and hence, shall notsustain, and required to be set aside. Considering the same, point No. 1 is decided in favour ofthe appellants / accused.the appellants / accused. POIIIT No.2:- 20. The appellants have also raised other issues i.e., they havenot committed any willful evasion in payment of tax since, as onthe <lue date there were no liquid funds in their accounts andthe appellants - Accused Nos. 2 to 4, who are the Directors, arenot responsible for the day to day activities of accusedNo.1/Company as on the date of the alleged default, the trialCourt has misconstrued the presumption under Section 27 BE ofthe Act, the trial Court faiied to record admission ol pW.3, that the amount received towards share application does not attractthe ta,x etc. 21 . This Court has already came to the conclusion whiiediscussing point No.1 that the conviction and sentence recordedin favour of the appellants required to be set aside, on account ofthe fact that the assessment order dated 2O.l2.2OlO on whichthe conviction was recorded was modified and a freshassessment order carne 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'ble Supreme Courtin the case of V.Srinivas Reddy Vs. State of Andhra Pradesht,wherein it was held as follows: "13. It tuas then urqed bu Mr. Arunachalam that ifthe Hiqh Court felt that further euidence was necessarufor [disposal ][of ][the ][cose ][then ][it ][could ][haue exercised ][its]pou..ter under Section 391 Cr. P.C. and ouqht not to haueset aside tlrc order of acquittal and remanded the matterfor fresh [dbposal. ][This ]arqument olso did not impress usbecause the Hiqh Court instead of recordinq the additionaleuidence in terms of Section 391 Cr. P.C.; preferred toremand the matter back to the trial court for disposal inaccordance with latu. It also appears from the record thatsome of the doanments includinq FDRs, loan applicationsetc., should also haue been brought on record for effectiue I i "13. It tuas then urqed bu Mr. Arunachalam that ifthe Hiqh Court felt that further euidence was necessarufor [disposal ][of ][the ][cose ][then ][it ][could ][haue exercised ][its]pou..ter under Section 391 Cr. P.C. and ouqht not to haueset aside tlrc order of acquittal and remanded the matterfor fresh [dbposal. ][This ]arqument olso did not impress usbecause the Hiqh Court instead of recordinq the additionaleuidence in terms of Section 391 Cr. P.C.; preferred toremand the matter back to the trial court for disposal inaccordance with latu. It also appears from the record thatsome of the doanments includinq FDRs, loan applicationsetc., should also haue been brought on record for effectiue I i disposal justice between of the controuersu raised. the paftiei. It is needleisl;";"; in the case and that to thed.otrktl courl ttitt stictLu adhere to the obslrroiior" oradirections qiuen bg the High Couft in it" L"ag^";." The rationale in the above authority of the Apex Courtsquarely applicable to the lacts of the case on hand. a.)Consideritrg the facts and circumstances, this Court is ofthe considered opinion that as the assessment orders dated20.12.2010 on which the prosecution was initiated itself doesnot exist and that the same was modified and fresh assessmentorder dated 21.O3.2016 came into force, the conviction andsentence recorded against the appellants basing on the incorrectassessment orders dated 20. 12.2OlO shall be set aside. 24. Accordinglv, both thesecriminal appeals are disposed ofsetting aside the convictionand sentence dated 09.01.2014recorded by Special Court for Economical Offences at Hyderabadand C.C.No. 130 of 2011 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.iO20 of 2014, dated,22'oi;'2o15 and (2) consequential order, dated 21.03.2016passed by the r\ssessing orficer, Assistant commissioner of Income Tax, Centrai Circle_3(2), Hyderabad, filed by theappellants and decide the complaint alresh in accordance withlaw, alter giving an opportunity to both sides to adduce anyfurther evidence, if any. However, the triar court sharl not beinfluenced by the comments and observations, if any, made bythis Court touching merits of the case while passing orders. As a sequel, pending miscellaneousapplications, il ary,shall stand closed.sD/-K.SRtNtvAs I I [rRUE ]copy | /JOINT sD/-K.SRtNtvAs RAOJOINT REGISTRAR/', Jl-,SECTION OFFICER To1. The Metropolitan Sessions [Judge, ][Hyderabad]2. The Speciil Judge for Economic [Offences ][at-Hyderabad. ]-3. The D'eputv Commissioner [of ][lncome ]- [Tax, ][Central ][Circle ][-9 ][,]Room No. -813, 8tn Floor Aayakar Bhavan, Basheerbagh, Hyderabad4. One GC to Sri Vinod Kumai [Deshpande ], [advocate ][(OPUC)]5. One CC to Sri B- Narasimha [Sharma, ][Senior Counsel ][for ][l'T'](oPUC)6. Two CD Copies HIGI-I COURT DATED fi/0612027 ORDERCRPLA.TR.NO.54 OF 20181l, [F: ] ,ari-oOB SFP2ff72\ :j-DISPOSING THE BOTH CRL APPEALS