Crlatr/55/2018 Of M/S. Swarnagiri Greenfields Pvt. Ltd v. Dy. Commissioner Of Income-Tax

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD FRIDAY, THE SEVENTEENTH DAY OF JUNETWO THOUSAND AND TWENTY TWO PRESENTTHE HONOURABLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL [(TR) ]NOS: 12 AND s5 OF 2018 CRL.A.(TR) NO.12 0F 2018: Criminal Appeal under Section 374(2) of Cr.P.C against the Judgment dated0910112014 in CC No.126 of 2011 on the file of the Court of the Special Judge forEconomic Offences at Hyderabad. Between: Smt B.Radha, W/o.Shri B.Rama Raju, tr,4/s. Swarnagiri Greenfields Pvt. Ltd., F|/o.PlotNo. ['1326, ]Road No.66, Jubilee Hills, Hyderabad. ...APPELLANT/ ACCUSED NO.2 AND Dy. Commissioner of lncome-Tax, Central Circle-9, Room No.813, 8th Floor, AayakarBhavan, Basheerbagh, Hyderabad-500004. ...RESPONDENT/ COMPLAINANT For the Petitioner: SRI VINOD KUMAR DESHPANDE, SENIOR COUNSEL FORSRI V.SURENDER RAO For the Respondent : SRI B.NARASIMHA SARMA, SC FOR I.T.DEPARTMENT CRL.A.(TR) NO.55 0F 2018: Criminal Appeal under Section 37 4(2) of Cr.P.C against the Judgment dated0910112014 in CC No.126 ot 2011 on the file of the Court of the Special Judge [for]Economic Offences at Hyderabad. Between: 1. Ivl/s. Swarnagiri Greenfields Pvt. Ltd., [2-13131 ], S.S.Nagar, Opp: [Hydernagar,]Hyderabad-72, rep. by its Managing Director Shri A.V.Raghava RajuHyderabad-72, rep. by its Managing Director Shri A.V.Raghava Raju2. Shri N.S.L.R.Prasad Raju, S/o.N.Venkat Raju, Director, of M/s. SwarnagiriGreenfields Pvt. Ltd., Flat No.202, H.No.B-55, Sai Vaishnavi Vihar,Vengalarao Nagar, S.R.Nagar Post, Hyderabad-38.Greenfields Pvt. Ltd., Flat No.202, H.No.B-55, Sai Vaishnavi Vihar,Vengalarao Nagar, S.R.Nagar Post, Hyderabad-38. 3. Shri A.V.Raghava Raju, S/o.A.V.Rama Raju, Director of M/s. SwarnagiriGreenfields Pvt. Ltd.,2-13131 , S.S.Nagar, Opp: Hydernagar, Kukatpally,Hydetabad-72. ....Appellants/ Accused 1, 3 & 4 AND Dy. Commissioner of lncome-Tax, Central Circle-9, Room No.B13, gth Floor, AayakarBhavan, Basheerbagh, Hyderabad-500004. ...RESPONDENT/ COMPLAINANT For the Appellants : SRI VINOD KUMAR DESHPANDE, FORSRl G.ASHOK REDDY For the Respondent : SRI B.NARASIMHA SARMA, SC FOR t.T.DEPARTMENT The Court delivered the following: COMMON JUDGMENT THE HON'BLE DR.. JT'STICE D.NAGARJUN CRIMINAL APPEAL [(TRl ]Nos. 12 and 55 of 2O18 COMMON JUDGMENT: Crl.A.(TR).No.55 of 2018 is {iled by A1, A3 and A4 i.e.,Company and its two Directors respectively, [whereas]Crl.A.(TR).No .12 of 2OlB is liled by 42, who [is ]another [Director ][of]Al/company, being aggrieved by the conviction and [sentence]imposed by the learned Special Judge for Economic [Offences at]Hyderabad in C.C.No.126 of 2O7 i vide Judgment [dated]O9.Ol.2Ol4, wherein Accused Nos. 1 to [4 ][were ][found ][guilty ][of]the offences punishable under Section 276-C(21 [read ][with]Section 278-8 of the Income Tax Act, [i96 ][1 ][(for ]short, "the [Act")]consequently accused No.l was [sentenced ]to [pay ][fine ][of]Rs. 10,000/- and in default of [payment ]of fine to [initiate]appropriate proceedings as required under Section [421 ][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 ]l- [each ][and ][in ][default]of payment of fine by [accused Nos.2 ][to ][4, ][to ][undergo ][simple]fmprisonment 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.same, 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. l/Company and Appellalt Nos.2 to 4 as AccusedNos. 2 to 4. Since the issues involved in these appeals are one and thesame, both the appeals are being disposed of by this commonjudgment.same, 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. l/Company and Appellalt 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 appeals, 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_appellants_ i) Accused No.1/Company - M/s. Swarnagiri Greenfields Private Limited, which was registered under theCompanies Act with the Registrar of Companies atHyderabad as Private Limited Company, was engaged inthe business of acquisition and saie of lands. AppellantNos. 2 to 4 herein are the Directors of AccusedNo.1/Company.Companies Act with the Registrar of Companies atHyderabad as Private Limited Company, was engaged inthe business of acquisition and saie of lands. AppellantNos. 2 to 4 herein are the Directors of AccusedNo.1/Company. Accused ii) No.i/Company has acquired acquired lands to anto ananextent of Ac.7.13 guntas in Sy.Nos.2Ol and 194 under thelimits of Bachupally Mandal, Ranga Reddy District during Accused No.i/Company has acquired acquired lands to anto anan the financiai year 2002-2003 and developed the said landsby incurring some a-rnounts during the financial [years]2OO2-O3 to 2OO7-OB. Accused No.1/Company along withother companies, who have lands contiguous to the landsof Accused No.1/Company, have agreed to develop thelands jointly with M/s. Mytas Property Private Limited. Asper the said development agreement, the built up areaagreed to be given to Accused No.1/company, was allowedto be sold to various buyers by M/s. Mytas Property PrivateLimited and pass on the sale proceeds to [Accused]No.1/Company. iii) For the assessment year 2O0B-09, accusedNo.1/compaly has filed income tax returns on 30.09.2008under Ex.Pl by bifurcating the sale [proceeds ]into [long ][term]capital gains accrued from the sale [proceeds ]of the [lands]and short term capital gains accrued from the [sale]proceeds of the constructed area by showing [gross ]taxableincome as Rs.3,47,82,191 l-, out [of which ][an ][amount ][of]Rs.2,21,17 ,547 f - was shown as [long ]term [capital ][gain ][and]Rs.1,26,64,6 44 I - 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 ol the Act or at least a.long with filing ofreturns in terms of Section 140_4 of the Act. As perSection 143 (l) of the Act, the tax tiability of Accused No. 1was arrived at Rs.1,03,46,020/_ 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 Ex.p2.Accused No. l/company was required to pay the taxdemanded within 3O days of service of notice, but it hascommitted default. v) Respondent/complainant has issued show_causenotice dated L7.LI.2OO9 under Section 221 (l) 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 complainant has issuedanother show-cause notice dated 25.Og.2OlO under Ex.p6under Section 22I (ll read with Section 143-4 of the Act. v) Respondent/complainant has issued show_causenotice dated L7.LI.2OO9 under Section 221 (l) 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 complainant has issuedanother show-cause notice dated 25.Og.2OlO under Ex.p6under Section 22I (ll read with Section 143-4 of the Act. Finally, one more opportunity was also given by theDepartment by giving another show-cause notice dated11.10.2010 (Ex.P7) under Section22l [(11 ]read with Section143-4, of the Act. An opportunity of beit.tg heard was alsogiven by the respondent/complainant to AccusedNo.1/Company fixing the date of hearing as 18.10.20i0,but there was no response, on which a penaity ofRs.23,00,000/-\vasimposed by way of order dated25.10.2010 (Ex. PB) under Section 221 read with Section14O-A(3) of the Act and the said [proceedings ]were servedon accused No.1 on 29.10.2010. 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.1/company andother Directors under Section 276-C(2) of the Act, as to whyprosecution 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 ][to]accused No.1/Company and its directors under Exs.PlO [and]Pl i dated 1 1.0 i.20 I 1 asking them as to why [prosecution shall] not be initiated under Sectiorr 276-C(21 of the Act. Again replieswere fiied by accused No. 1/ company and its Directors/ accusedNos.2 to A,4 under Exs.Pl2 and p13 stating that there was nointention of r,r,iliful evasion ol 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 143 (1) of the Act and also failed topay the penalty, the respondent/complainant after obtainingsanction order dated 16.03.20 I I 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(2) read with Section 2Zg-B of the Act, asthey have willfully evaded tax even though they were havingsufficient resources. 6. The Special Court for Economic Oflences took cognizanceof the offences against Accused No. 1/ company and its Directorsi.e., Accused Nos. 1 to 4, under Section 226-C(21 read withSection 278-B of the Act and charges were framed against themunder Section 276 - C(2) read with Section 279-B(l\ 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/compiainant [has examined ][PWs.1 ][to]3 and got marked Exs.Pl to P14. [After ][ciosure of ][evidence ][of ][the]complainant, the incriminating evidence [elicited against ][the]appellants was read over and explained [to ][them ][under ][Section]3i3 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-D ] [to ][D3 on ][their]behalf. 8. The substance of the evidence of PWl [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(1) of the Act and issued intimation [determining ][the ][total]taxabie income as Rs.3,47,82,190/- [and ][tax ][liability ][as]Rs. 1,13,70,840 I -. The [evidence of ][PW2/lncome Tax oflicer ][is ][to]the extent that he [has ][considered ][the ][annual ][report ][of ][accused]No.1/company for the [finarrcial ][year ][2OO7 ][-OB ][under ][Ex.P3 ][and]bank account Satements [of ][accused ][No.l/Company ][with ][the] 8. The substance of the evidence of PWl [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(1) of the Act and issued intimation [determining ][the ][total]taxabie income as Rs.3,47,82,190/- [and ][tax ][liability ][as]Rs. 1,13,70,840 I -. The [evidence of ][PW2/lncome Tax oflicer ][is ][to]the extent that he [has ][considered ][the ][annual ][report ][of ][accused]No.1/company for the [finarrcial ][year ][2OO7 ][-OB ][under ][Ex.P3 ][and]bank account Satements [of ][accused ][No.l/Company ][with ][the] AXIS Bank Limited under Ex. p4 and found that accusedNo. 1 I Company did not pay the tax returns in spite of havingsurplus and sufficient funds. pW3 is the Income Tax Officer,who has succeeded pW2. His evidence is that he has passedpenalty order under Ex.pg imposing penalty of Rs.23 lakhs andraised demald under Ex.p9 and the same was served on theaccused. He also deposed that as there was no response fromthe accused, shovv cause notices under Sectio n 276_C of the Actwere issued against all the accused through which accused wereinformed that the department is initiating criminal .proceedingsand consequently the department has filed the complaint. 9. After full-{ledged trial, on considering the entire material onrecord, the trial Court has found Accused No. 1 / Company andA2 to A4, the Directors of A1 company, guilty of the oflencespunishable under Sections 226_C(2) arrd. 27g_B of the Act andwere sentenced as stated supra. Aggrieved by the said judgmentand conviction of Special Judge for Economical Offences atHyderabad, the present appeals are filed originally before theMetropolitan Sessions Judge Court at Hyderabad. 10. The erstwhile High Court for the States of Telangana andAndhra Pradesh has issued circular ROC.No.34, CriminalSection/2017, dated 28.08.2017, wherein it is clarified 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 Courthas the jurisdiction to entertain the appeals, not the [Sessions]Court. In view of the said circular, these appeais [filed ][by ][the]appellants have been transferred from Metropolitan [Sessions]Judge Court, Hyderabad, to the High Court [for ][the ][State ][of]Telangana. 11. The summar5r 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.1/company was not having funds to [pay ]the [tax on ][the ][due]date as reflected in Ex.P4-bank [statements ][and ][that ][accused]No.l 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.1/Companl' has received sale proceeds lrom M/s. MytasPropertv Private Limited. b) The trial court has misconstrued the presumption under section 278-E of the Act and erred in holding that the burden ofproof is on the accused to prove that there was no willful evasionof paynnent of tax. c) The trial Court erred in holding that the accused failed to prove non-existence of culpable mental state in non_payment oftaxes on the date of filing retums and as on the date of demandtaxes on the date of filing retums and as on the date of demandnotice and that the trial court failed to appreciate that in spite ofnot having a,,y cogent evidence to show that a[ the accusedhave willfully evaded the tax, the trial Court has concluded thatnot having a,,y cogent evidence to show that a[ the accusedhave willfully evaded the tax, the trial Court has concluded thataccused have committed willful evasion in payment of tax. d) The trial court failed to see that a-11 the assets belong toaccused No. l/company were attached under Section 2g1-B ofthe Act ald due to paralyzing of financial activities of accusedNo.1, tax could not be paid in time. e) prove non-existence of culpable mental state in non_payment oftaxes on the date of filing retums and as on the date of demandtaxes on the date of filing retums and as on the date of demandnotice and that the trial court failed to appreciate that in spite ofnot having a,,y cogent evidence to show that a[ the accusedhave willfully evaded the tax, the trial Court has concluded thatnot having a,,y cogent evidence to show that a[ the accusedhave willfully evaded the tax, the trial Court has concluded thataccused have committed willful evasion in payment of tax. d) The trial court failed to see that a-11 the assets belong toaccused No. l/company were attached under Section 2g1-B ofthe Act ald due to paralyzing of financial activities of accusedNo.1, tax could not be paid in time. e) e) The trial court failed to consider the admission of pw3 thatthe amount received by Accused No.l/Company is towards"rr^ share application money does not attract tax liability and thatthe trial Court could not consider that accused No.l has notreceived Rs.3 crores 47 iakhs from M/s. Mytas Property PrivateLimited. f) The Trial Court should not have concluded that accusedNos.2 to 4 are responsible for day to day affairs of accusedNo.l/company and should have taken into consideration [the]notices issued under Section 278-B of the Act [proposing ][the]prosecution 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 Deshp.ande, [learned ][Senior counsel]for the appellants and Sri B. Narasimha Sharma, [learned]Standing counsel for the income tax department, [considered ][the]entire material on record, relevant provisions of the Act and [the]authorities cited. 13. Appellants have {iled an application under Section [39I]Cr.P.C., along with the appeals for [receiving ]of two [documents]i.e., (l) Common order [passed ]by the Appellate Tribunal [in]ITA.No.1018 of 2014, dated 22.05.2015 and [(2) ][consequential] order,. dated 21.03.2016 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.OS.2OlS (document No.1), the assessmentorder dated o2.12.2oro on which the prosecution is initiatedwas directed to be modified. Basing on the orders of the IncomeTax Appellate Tribunal, the assessment officer has modified theearlier orders dated 02.12.2olo by re-assessing the tax liability,which the appellants were expected to pay for the assessmentyear 2007-2008 (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 Counsellor the appellants that during the pendency of the complaintbefore the trial Court, the accused have paid entire tax asdemanded, including the penalty and interest and that theappellants have challenged the assessment orders datedO2.l2.2OlO under Ex-D2 before the learned CIT(A). On hearingboth sides, learned CIT(A) has found that there are no merits in 14. It is submitted vehemently by the learned Senior Counsellor the appellants that during the pendency of the complaintbefore the trial Court, the accused have paid entire tax asdemanded, including the penalty and interest and that theappellants have challenged the assessment orders datedO2.l2.2OlO under Ex-D2 before the learned CIT(A). On hearingboth sides, 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 [for]assessment year 2008-09. Aggrieved by the same, [the]appellants have preferred appeal before the [Income Tax Appellate]Tribunal (in short, "the Tribunal"), and on hearing both [sides,]learned Tribunal has partly allowed the appeal [vide orders ][dated]22.05.2015 in ITA.No.943lHydl2ola and batch finding [that ][the]Assessing Oflicer 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. [appellants]from the transfer of lands held by accused No.l/company [as]capitat 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]09,Ol.2Ol4 in C.C.No. 126 of 201l by the [learned ][Specia-l ][Judge.]It is also submitted by the learned Senior counsel that [the]Assessing Officer has re-assessed the tax as [per ]the directions [of]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. 1,0Q,46,019/- was in excess of the revised tax thereby, theexcess tax paid Rs.66,26,976 l- and interest ol Rs. 1g,71,704/_the total of which was Rs.84,98,680/-, was ordered to berefunded and the same was also adjusted against the demandfor the accounting year 2OO9-|O vide RO.No.3O3519 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. 15. l,earned standing counsel representing the Income TaxDepartment stated 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 filed annual returns (Ex.p3), through itsChartered Accountant for the hnancial year 2OO7 -OB relevant forthe assessment year 2OO8-O9, according to which Accused No.1made profit on sale of land to a tune of Rs.3,39,93 ,506 I _ 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.1/Company also shows Rs.6,30,34,7221- under the headreserves and surplus, so also Rs.7, i4,54,836/- under the [head]current assets by way of loans and advances. It is furthersubmitted that accused No.l/Company having enough liquidcash during the relevant accounting year, willfully evaded [in]payment 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 [is]proper. 16. Now, the points for determination in these appeals [a-re:] 1) Whether the conviction recorded based on lthe assessment order dated 02. l2.2OlO can besustained, since the said assessment order [dated]02.l2.2OlO was subsequently revised?the assessment order dated 02. l2.2OlO can besustained, since the said assessment order [dated]02.l2.2OlO was subsequently revised? 16. Now, the points for determination in these appeals [a-re:] 1) Whether the conviction recorded based on lthe assessment order dated 02. l2.2OlO can besustained, since the said assessment order [dated]02.l2.2OlO was subsequently revised?the assessment order dated 02. l2.2OlO can besustained, since the said assessment order [dated]02.l2.2OlO was subsequently revised? Whether the accused have committed wiliful2) evasion of tax?evasion of tax? 3) To what reliep Point No. l: 17. The cause of action for the respondentdepartment/complainant to file the complaint against theappellants is the assessment order dated 02. ),2.2O1O, accordingto which the appellants were asked to pay tax ofRs. 1,03,46,020/- for the taxable income of Rs.3,47,82 ,191/_ andaccordingly an intimation was sent by the Assessing officer tothe appellants under Section 143 (1) of the Act. Admittedly ason the date of initiating the prosecution against the. appellants,demanded tax of Rs.93, 16,551/- was not paid by the appellants.It is also an admitted fact that after initiating the prosecution,the appellants have paid the entire tax demanded along withpenalty, interest etc. Therefore, as on the date ofpronouncement of the judgment by the tria.l 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 apperants found that theassessment order, dated 02.I2.2OIO directing the appellants topay Rs. 1,O3,46,O20/- was incorrect and the Assessment Officer was dirpcted to assess the income tax afre sh in terms of thedirections 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 isfar less than what was assessed at the first place. The basis forrespondent/complainant to initiate prosecution against theappellants is the assessment order, dated O2.l2.2OlO, on [the]ground that the appellants have committed default in [payment ][of]the tax as per the said assessment order. When assessmentorder dated 02.l2.2OLO itself is re-assessed [as ][per the directions]of the Tribunal which held that the assessment of tax [dated]O2.l2.2OlO is incorrect and the tax to be [paid was ]substantiallyreduced, it cannot be alleged that the appellants have [committed]default in payment of tax and willfully evaded. When [the]assessment order dated O2.12.2O1O 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 fresh [assessment ][order, ][dated]2l .03.2016,, it is to be examined afresh that [whether ][the]./ appellants have committed any willful evasion of tax, as definedunder Section 276-C of the Act. 19. Therefore, on considering the above discussion, it is clearthat the finding of the trial court that the appelants were guilt]rof the offences under Section 226-C(21 read with Section 27g_Bof the Act is erroneous as the same is based on incorrectassessment order, dated O2.|2.2OIO and hence, shall notsustain, and required to be set aside. Considering the same, point No.1 is decided in favour ofthe ap pellants / accused.the ap pellants / accused. POINT 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 due 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.l/Company as on the date of the alleged default, the trialCourt has misconstrued the presumption under Section 2ZgD ofthe Act, the trial Court failed to record admission of pW.3, that the amgunt received towards share application does not attractthe ta-x etc. Considering the same, point No.1 is decided in favour ofthe ap pellants / accused.the ap pellants / accused. POINT 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 due 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.l/Company as on the date of the alleged default, the trialCourt has misconstrued the presumption under Section 2ZgD ofthe Act, the trial Court failed to record admission of pW.3, that the amgunt received towards share application does not attractthe ta-x etc. 21. This Court has already came to the conclusion u'hilediscussing point No.1 that the conviction ald sentence recordedin favour of the appellants required to be set aside, on account ofthe fact that the assessment order dated O2.|2.2OIO on whichthe conviction was recorded was modified and a freshassessment 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'ble Supreme Courtin the case of V.Srinivas Reddy Vs. State of Andhra Pradeshr,wherein it was held as follows: "13. It was then urqed by Mr. Antnachalam that ifthe Hiqh Court felt that further euidence uras necessary.for [disposal ][of ][the ][case ][then ][it ][could haue exercised its]power under Section 391 Cr. P.C. and ought not to haueset aside tLe order of acqittal and remanded the matterfor fresh [di.sposal. ][Thi.s ][argument also ][did ][not impress us]because tLte High Court irstead of rearding tle additionaleuidence in terms of Section 391 Cr. P.C.; preferred toremond the mdtter back to the trial court for disposat inaccordance with law. It also appears from the record thotsome of ttrc documents includinq FDRs, loan applicottonsetc., should also haue been brought on record for effectiue r(1998) 9 SCC 331 disposal of the controuerstt raised in the case and to dojustice between the parties. It is needless to say thot thetial court will stictlu adhere to ttrc obseruations and.directions giuen by the High Court in its judgment.,'justice between the parties. It is needless to say thot thetial court will stictlu adhere to ttrc obseruations and.directions giuen by the High Court in its judgment.,' The rationale in the above authority of the Apex Courtsquarely applicable to the facts of the case on hand.squarely applicable to the facts of the case on hand. 23. Considering 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 fresh assessmentorder dated 21 .03.2016 came into force, the conviction andsentence recorded against the appellants basing on the incorrectassessment orders dated 02.72.2010 shall be set aside. 24 . Accordingly, both these criminal appeals are disposed ofsetting aside the conviction and sentence dated 09.01.2014recorded by Special Court for Economical Offences at Hyderabadand C.C.No. 126 of 20 I 1 is remanded back to the trial Court witha direction to consider the documents i.e., (1) Common orderand C.C.No. 126 of 20 I 1 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.1O18 of 2014, dated22.05.2015 and (2) consequential order, dated 2l .03.2016passed by the Assessing Officer, Assistant Commissioner of I I \ 24 . Accordingly, both these criminal appeals are disposed ofsetting aside the conviction and sentence dated 09.01.2014recorded by Special Court for Economical Offences at Hyderabadand C.C.No. 126 of 20 I 1 is remanded back to the trial Court witha direction to consider the documents i.e., (1) Common orderand C.C.No. 126 of 20 I 1 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.1O18 of 2014, dated22.05.2015 and (2) consequential order, dated 2l .03.2016passed by the Assessing Officer, Assistant Commissioner of I I \ Income Tax, Central Circle-3(2), Hyderabad, filed by theappellants and decide the complaint afresh in accordance withlaw, after giving an opportunity to both sides to adduce anyfurther evidence, if any. However, the trial Court shall not beinfluenced by the comments and observations, if any, made bythis Court touching merits of the case while passing orders.appellants and decide the complaint afresh in accordance withlaw, after giving an opportunity to both sides to adduce anyfurther evidence, if any. However, the trial Court shall not beinfluenced by the comments and observations, if any, made bythis Court touching merits of the case while passing orders. As a sequel, pending miscellaleous applications, if any,shall stand closed. Sd/-B.S.CHIRANJEEVIJO-INJ REPISTRAR//TRUE COPY/I i_tu-r,\r1\r,SECTION OFFICER To1. The Special Judge for Eco.nomic OJfences 2. The Dy. Commissioner of lncome Tax, Central at Hyderabad. (with records, bir.l" _s, ioo, rrtoiii, 0,f",,if any)^ [Floor, ][Aayakar Bhavan, Basheerbagh, ][Hyderabad_500004.]9. 9n" [to ][Sri ][V.Surender ][Rao, ]noioiatti fOFUcl [-] 1. 9nu [to ][Sri ][G.Ashok ][RedOv,'nOvocate ]iOpUC-i5. One CC to Sri B.Narasimha s'tirrma, SCfi"'t.i.6'epartment 6. Two CD CopiestopUCI 7. One Spare Copy\>-\>- Kj HIGH COURTDATED:1710612022 ,.(g-rr\TE O/^bTAot}\i:r.i'ffi;. tr. )'+ ili.- [r]a//ORDERCRLA(TR).Nos.12 and 55 of 2018 t DlsPosrNG oF rHE BOrH CRL.A.(TR) @