Crlatr/76/2018 Of M/S. Yamuna Agro-Farms 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 PRESENT THE HON'BLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL [(TR) ]NOS: 76 AND 86 OF 2018 cRL.A.(TR) NO.76 0F 2018: Criminal Appeal under Section 37 4(2) of Cr.P.C against the Judgment datedOgll1l2014 in CC No.129 of 2011 on the file of the Court of the Special Judge forEconomic Offences at Hyderabad. Between: 1. M/s Yamuna Agro Farms P!t. Ltd., B-79, t\iladhura Nagar, Hyderabad-38, rep.by its lvlanaging Director Shri K.Gopalakrishnam Raju, S/o.Shri K.Rama RAju,aged about 51 yearsby its lvlanaging Director Shri K.Gopalakrishnam Raju, S/o.Shri K.Rama RAju,aged about 51 years 2. Shri K.Gopalakrishnam Raju, S/o.Shri K.Rama rAju, aged about 51 [years,]Director of M/s Yamuna Agro Farms Pvt. Ltd., 8-3-22218.17135, 36/D-92 & 93Flat No.304, Madhura Nagar, SR Nagar, Hyderabad.....AppellanU Accused 1 & 5Director of M/s Yamuna Agro Farms Pvt. Ltd., 8-3-22218.17135, 36/D-92 & 93Flat No.304, Madhura Nagar, SR Nagar, Hyderabad.....AppellanU Accused 1 & 5 AND Dy. Commissioner of lncome Tax, Central Circle [-9, ]Room NO.813, [Bth ][Floor,]Aayakar Bhavan, Basheerbagh, Hyderabad-500004. For the Apperanrs : sRr vrNoD KUMAR DESHpAN;E::s'ondenutomPlainantSRI G.ASHOK REDDY For the Respondent : SRI B.NARASIMHA SHARMA, SC FOR l.T. CRIMINAL APPEAL(TR) NO: 86 OF 2018: Criminal Appeat under Section 37 4(2) of Cr.P.C against the Judgment [dated]OglO1t2O14 in CC No.129 of 2011 on the file of the Court [of ][the ][Special Judge for]Economic Offences at Hyderabad. Between: 1. Smt B.Nandini Raju, Wo.Shri B.Ramalinga Raju, aged [about ][51 years,]Director of M/s. Yamuna Agro Farms P!,t. Ltd., Plot [No.1242, Road ][No.62,]Jubilee Hills, Hyderabad-33.Director of M/s. Yamuna Agro Farms P!,t. Ltd., Plot [No.1242, Road ][No.62,]Jubilee Hills, Hyderabad-33. 2. Shri D.Srinivasa Raju, S/o.Shri D.Sayanarayana [Raiu, ][aged about 43 ][years,]Director of M/s. Yamuna Agro Farms Pvt. Ltd., Rl/o.H.No.H-75, [Madhura]Nagar, Hyderabad-38.Director of M/s. Yamuna Agro Farms Pvt. Ltd., Rl/o.H.No.H-75, [Madhura]Nagar, Hyderabad-38. 3. Shrhi LJanaki Rama Raju, [S/o.l.Mallapa ][Raiu, ][aged about 41 years, Director]of M/s. Yamuna Agro Farms [Pvt., Ltd., ][Rl/o. ][H.No.2-1213/1 ][, ][Satyam]Enclave,NH-7, Jeedimetla [(V), Secunderabad.]of M/s. Yamuna Agro Farms [Pvt., Ltd., ][Rl/o. ][H.No.2-1213/1 ][, ][Satyam]Enclave,NH-7, Jeedimetla [(V), Secunderabad.]4. Shri B.Rama Raju, S/o.Shri [B.Ramalinga ][Ra.iu, ][aged about 31 years, Director]of M/s. Yamuna Agro Farms [Pvt. Ltd., Plot No.12544, Road ][No.63, ][Jubilee]Hills,Hyderabad-33.of M/s. Yamuna Agro Farms [Pvt. Ltd., Plot No.12544, Road ][No.63, ][Jubilee]Hills,Hyderabad-33. ....Appellants/ Accused, 2, 3,4 & 6 And Dy. Commissioner of lncome [Tax, Central Circle -9, Room No.813, ][Bth ][Floor,]Aayakar Bhavan, Basheerbagh, [Hyderabad-500000 ]....*".oondenu comprainant For rhe Appellants : sRl VINoD [DESHPANDE, Sr. COUNSEL ] SRI V.SURENDER RAO For the Respondent : SRI B.NARASIMHA [SHARMA, SC FOR ][I.T.] The Court delivered the following [: ] THE HON'BLE DR. JUSTICE D.NAGARJUNCRIMINAL APPEAL [(TRI]Nos.86 and 76 of 2O18COMMON JUDGMENT: ....Appellants/ Accused, 2, 3,4 & 6 And Dy. Commissioner of lncome [Tax, Central Circle -9, Room No.813, ][Bth ][Floor,]Aayakar Bhavan, Basheerbagh, [Hyderabad-500000 ]....*".oondenu comprainant For rhe Appellants : sRl VINoD [DESHPANDE, Sr. COUNSEL ] SRI V.SURENDER RAO For the Respondent : SRI B.NARASIMHA [SHARMA, SC FOR ][I.T.] The Court delivered the following [: ] THE HON'BLE DR. JUSTICE D.NAGARJUNCRIMINAL APPEAL [(TRI]Nos.86 and 76 of 2O18COMMON JUDGMENT: Crl.A.(TR).No.76 of 2018 is filed by A1 and A5 i.e.,Compaly and its Director respectively, whereas Crl.A.(TR).No.86of 2018 is fiied by A,2 to A4 and A6, who are other Directors ofA 1 / company, being aggrieved by the conviction and sentenceimposed by the learned Special Judge for Economic Offences atHyderabad in C.C.No.129 of 2071 vide Judgment datedO9.OL.2O|4, wherein Accused Nos. i to 6 were found guilty ofthe oflences punishable under Section 276-C(21 read withSection 278-8 of the Income Tax Act, 196 1 [(for ]short, "the [Act")]consequently accused No.1 was sentenced to pay fine [of]Rs.1O,OOO/- and in default of payment of fine to initiateappropriate proceedingsAS required under Section 421 ofCr.P.C., whereas Accused Nos.2 to 6 were sentenced to undergorigorous imprisonment for a [period ]of [one ][year ]each and to [pay]fine of Rs. 10,000/- each and in default of [payment ]of line byaccused Nos.2 to 6, 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. 2. For convenience, convenience, the parties parties herein are referred are referred to as theyas theyare arrayed before the tria_l Court. i.e., Appellant No. 1 asAccused No.l/Company and Appellant Nos.2 to 6 as AccusedNos. 2 to 6. For convenience, convenience, the parties parties herein are referred are referred to as theyas theyto as theyas they 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. l/Company - M/s. yemuna Agro FarmsPrivate 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 6 hereinare the Directors of Accused No. 1/Company. i0 Accused No.l/Company has acquired lands to anextent of Ac.7.00 guntas in Sy.No.l96p and 197 under thelimits of Bachupally Mandal, Ranga Reddy District duringtft_e{inancial year 2OO2-2O03 and developed the said lands by incurring some zunounts during the financial years2OO2-03 to 2007-08. Accused No.1/Company along withother companies, who have lands contiguous to the landsof Accused No.1/Company, have agreed to develop [the]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.l/company, was allowedto be sold to various buyers by M/s. Mytas Property [Private]Limited and pass on the sale proceeds to AccusedNo.1/Company. ii| For the assessment year 2008-09, accusedNo.1/company has filed income tax returns on 30.09.2008under Ex.Pl by bifurcating the sale proceeds into long termcapital gains accrued from the sa-le proceeds ol the landsand short term capital gains accrued from the, [sa,1e]proceeds of the constructed area by showing gross taxableincome as Rs.7,59,44,3O9 l-, out of which an amount ofRs.4,86,86,4241- was shown as long term capital gain andRs.2,78,78,148/- was shown as short term capital gains. ii| For the assessment year 2008-09, accusedNo.1/company has filed income tax returns on 30.09.2008under Ex.Pl by bifurcating the sale proceeds into long termcapital gains accrued from the sa-le proceeds ol the landsand short term capital gains accrued from the, [sa,1e]proceeds of the constructed area by showing gross taxableincome as Rs.7,59,44,3O9 l-, out of which an amount ofRs.4,86,86,4241- was shown as long term capital gain andRs.2,78,78,148/- 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 208 ol the Act or at least along with filing 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.2,25,4O,1361- by therespondent/complainant and raised a demand underSection 156 read with Section 143 of the Act and issued anintimation to Accused No.l /Company under 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.ll.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 25.08.2010 under Ex.p6under Section 221 (Il read with Section 143-A of the Act. Finaliy, one more opportunity was also given by theDepartment by giving another show-cause notice dated11.10.2010 (Ex.P7) under Sectior.22l (1) read with Section143-A of the Act. An opportunity of being heard was [a-1so]given 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.49,O0,0O0/-\AI S imposed by way of order dated25.lO.2OlO (Ex.PB) under Section 221 read with Section140-A(3) of the Act and the said proceedings vtere servedon accused No. 1 on 29.lO.2OlO [.] 4. Considering the willful evasion of payment of tax, therespondent/complainant has decided to initiate prosecution andaccordingly a notice was issued to accused No.l/company andother Directors under Section 276-C(21 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 toaccused No.l/Company and its directors under Exs.PlO andP11 dated 11.01.2011 asking them as to why [prosecution ]shall / / not be initiated under Section 226-C(21 of the Act. Again replieswere filed by accused No.1/company and its Directors/accusedNos.2 to 6 under Exs.Pl2 and p13 stating that there was nointention of willful evasion of tax. 5. As Accused No. l /Company and its Directors/accusedNos.2 to 6 have not paid the tax in response to the demaldnotice issued under Section 143 (i) of the Act and also failed topay the penalty, the respondent/complainant after obtainingsanction order dated 16.03.2011 for launching of prosecutionfiled a complaint before the Special Court for EconorRic Offencesagainst accused No.1 and accused Nos.2 to 6, the otherDirectors, alleging that they have committed offence punishableunder Section 276-C(21 read with Section 228-B of the Act, asthey have willfully evaded tax even though they were havingsufficien t resources. 6. The Special Court for Economic Offences took cognizanceof the offences against Accused No.1/Company and its Directorsi.e., Accused Nos. 1 to 6, 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 2Z*-B(I) of the Act and all the accused have pleaded not guilty of the charges andclaimed to be tried. 6. The Special Court for Economic Offences took cognizanceof the offences against Accused No.1/Company and its Directorsi.e., Accused Nos. 1 to 6, 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 2Z*-B(I) of the Act and all the accused have pleaded not guilty of the charges andclaimed to be tried. 7. In order to prove the charges leveled against theappeilants, the respondent/complainant has examined PWs.1 to3 and got marked Exs.Pl to P14. After closure ol evidence of thecomplainant, the incriminating evidence elicited against [the]appellants was read over and explained to them under Section313 ol the Cr.P.C., for which all of them have denied andreported that they did not choose to examine any r,l,itness ontheir behalf. However, they got marked Exs.D1 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, therespondent/complainant has processed the same under Section143(1) of the Act and issued intimation determining the totaltaxable income asRs.7,59,44,310 I- and tax liabilityASRs.2,47,72,860/-. The evidence of PW2/Income Tax officer is tothe extent that he has considered the annual report ol accusedNo.1/company for the financial year [2OO7 ]-O8 under Ex.P3 andbank 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 sufficient funds. pw3 is the Income Tax officer,who has succeeded pW2. His evidence is that he has passedpenalty order under Ex.p8 imposing penalty of Rs.49 lakhs 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 section 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 fu11-fledged trial, on considering the entire materiai onrecord, the trial Court has found Accused No.l/Company andA2 to A6, the Directors of A1 company, guilty of the offencespunishable under Sections 276-C(21 and, 2Zg_B of the Act andwere sentenced as stated supra. Aggrieved by the said judgmentand conviction of Special Judge for Economical Offences atHyderabad, the present appeats are filed originaily before theMetropolitan Sessions Judge Court at Hyderabad. 10. The erstwhile High Court for the States of Telangala [and]Andhra Pradesh has issued circular ROC.No.34, CriminalSection/20 17, dated 2a.Oa.2OI7, wherein it is clarified [that]against any orders passed by the Special Judge for [Economic]Offences, Hyderabad, in the State of Telangana andVisakhapatnam in the State of Andhra Pradesh, the [High Court]has the jurisdiction to entertain the appeals, not the SessionsCourt. In view of the said circular, these appeaJs filed by [the]appellants have been transferred from Metropolitan [Sessions]Judge Court, Hyderabad, to the High Court for the State [of]Telangana. 1i. The summary of grounds of appeal as filed by theappellants in brief are as under: accuseda) The trial Court has failed to see that No.l/company was not having funds to pay the tax on the [due]date as reflected in Ex.P4-bank statements and that accusedNo. t has not received aly sale proceeds from s. [Mytas]Property Private Limited, thereby the respondent/ complainanthas not produced any evidence to show that accused No.l/Company has received sale proceeds from M/s. MytasProperty Private LimitedProperty Private Limited b) The trial court has misconstrued the presumption undersection 278-E of the Act a',d erred in holding that the burden ofproof is on the accused to prove that there was no willful evasionof payment of tax. 1i. The summary of grounds of appeal as filed by theappellants in brief are as under: accuseda) The trial Court has failed to see that No.l/company was not having funds to pay the tax on the [due]date as reflected in Ex.P4-bank statements and that accusedNo. t has not received aly sale proceeds from s. [Mytas]Property Private Limited, thereby the respondent/ complainanthas not produced any evidence to show that accused No.l/Company has received sale proceeds from M/s. MytasProperty Private LimitedProperty Private Limited b) The trial court has misconstrued the presumption undersection 278-E of the Act a',d 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 hording that the accused failed toprove non-existence of culpable mental state in non_payment oftaxes 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 any cogent evidence to show that a1l 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 all the assets belong toaccused No.l/Company were attached under Section 2g1_B ofthe Act and due to paralyzing of financial activities of accusedNo.I, tax could not be paid in time. e) The trial court 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 thatthe trial Court could not consider that accused No.l has notreceived Rs.7 crores 59 lakhs from M/s. Mytas Property PrivateLimited. f) The Trial Court should not have concluded that accusedNos.2 to 6 are responsible for day to day affairs of accusedNo. l/company and should have taken into consideration thenotices issued under Section 27 8-B of the Act proposing theprosecution did not refer accused Nos. 2 to 6 as principal oflicersand thereby accused Nos.2 to 6 should have been acquitted. 12. Heard Sri Vinod Kumar Deshpande, learned Senior counselfor the appellants and Sri B. Narasimha Sharma, learnedStanding counsel for the income tax department, considered theentire material on record, relevarrt provisions of the Act and theauthorities cited. 13. Appellant No.l/company has filed an application underSection 391 Cr.P.C., along with the appeal for receiving of twodocuments i.e., (1) Common order passed by the AppellateTribunal in ITA.No.1O1O of 2014, dated 22.05.2015 and (2) consequential order, dated 2I.O3.2016 passed by the AssessingOfficer, Assistant Commissioner of Income Tax, Central Circle-3(2), Hyderabad, as additional evidence. As per the commonorder of the Tribunal, dated 22.OS.2OLS (document No.1), theorder of the Tribunal, dated 22.OS.2OLS (document No.1), theassessment order dated 02.12.2O1O on which the prosecution isinitiated was directed to be modified. Basing on the orders of theinitiated was directed to be modified. Basing on the orders of theIncome Tax Appellate Tribunal, the assessment officer hasmodified the earlier orders dated 02.12.2O1O by re-assessing thetax liability, which the appellants were expected to pay for thetax liability, which the appellants were expected to pay for theassessment yeal 2OO7 -2OOB (document No.2). Considering theabove, and on hearing both sides, this Court is of the opinionthat these two documents are very relevant to consider thethat these two documents are very relevant to consider theappeals on hand, thereby these documents are received. 14. It is submitted vehemently by the iearned Senior Counselfor 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 iearned Senior Counselfor 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 2OOB-09. Aggrieved by the same, theappellants 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.O5.2015 in ITA.No.943lHydl2Ola and others finding that [the]Assessing Officer has committed error in calculating the [ta-x to]be paid by the appellants and directed the Assessing Of{icer [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 subsequentto 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. 129 of 2011 by the learned Special [Judge.]It is also submitted by the iearned Senior counsel that [the]Assessing Officer has re-assessed the tax as [per ]the directions olthe Tribunal and passed consequential order, dated 21.03.2016,wherein the tax liabiiity was substantially reduced and foundthat the tax, which was already paid to the tune of Rs.2,2.5,40,136/- was in excess of the revised tax thereby, theexcess tax paid Rs. 1,41,3 1,827 I - and interest of Rs.50,03,756/_the total of which was Rs. | ,g I ,35,634 /,, was ordered to berefunded and the sarne was also adjusted against the demandfor the accounting year 2009-10 vide RO.No.3O3524 dated28.O3.2016.the total of which was Rs. | ,g I ,35,634 /,, was ordered to berefunded and the sarne was also adjusted against the demandfor the accounting year 2009-10 vide RO.No.3O3524 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. Learned 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.l/company has {i1ed annual returns (Ex.p3), through itschartered Accountant for the financial year 2oo7-og rerevant forthe assessment year 20O8-Og, according to which Accused No. 1made profit on sale of land to a tune of Rs.Z ,77 ,97 ,174 l_ and the bank statements show that Accused No. i /Company [has ][received]part of sale consideration in respect of "Mytas Hill County" fromtime to time, but did not choose to [pay ]the [advance ]tax. [It ][is]further submitted that the balance sheet of [Accused]No. l/Company also shows Rs.9,40,02,642/- 'ander the [head]reserves and surplus, so a-lso Rs. [1 ]1,99,99,737 /- []under ][the ][head]current assets by way of loans and advances. It is [further]submitted that accused No.l/Company having [enough liquid]cash during the relevant accounting [year, ][willfully ][evaded ][in]payment of tax, thereby the accused have committed the [offence]punishable under Section 276-C(21 read with [Section ]278-8 [of]the Act and hence conviction recorded by [the ][trial ][Court ][is]proper. i6. Now, the points for determination in [these appeals ][are:] i6. Now, the points for determination in [these appeals ][are:] 1) Whether the conviction recorded based [on]the assessment order dated 02.12.2010 [can ][be]sustained, since the said assessment [order ][dated]02.12.20 10 was subsequently [revised?]the assessment order dated 02.12.2010 [can ][be]sustained, since the said assessment [order ][dated]02.12.20 10 was subsequently [revised?] 2l Whether the accused have committed [willful]evasion of tax?evasion of tax? 3) To u'hat relieP Point No. 1: 17. The cause of action for the respondentdepartment/ complainant to lile the complaint against theappellants is the assessment order dated 02. 12.2OlO, accordingto which the appellants were asked to pay tax ofRs.2,25,40,136 /- for the taxable income of Rs.7,59,44 ,3O9 /- 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.2,02,92,299 I - was not paid by theappellants. It is also an admitted fact that after initiating theprosecution, the appellalts have paid the entire tax demandedalong 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 appellaats. 18. It is to be noted that the Income Tax Appellant Tribunalhaving considered the appeals of the appellants found that theassessment order, dated 02.12.2OIO directing the appellalts topay Rs.2,25,40,136 l- was incorrect and the Assessment Officer was directed to assess the income tax afre sh in terms of thedirections given by the Tribunal. Accordingiy, the [Assessment]officer has re-assessed the income tax and passed modifiedorders, dated 2i.03.2016 determining the tax liability, which [is]far less than what was assessed at the first place. [The ]basis [for]respondent/ complainant to initiate [prosecution ]against [the]appeilants is the assessment order, dated O2.12.2O1O, on [the]ground that the appellants have committed default in [payment of]the tax as per the said assessment order. When [assessment]order dated 02.72.2O1O 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 wiilfully evaded. When [the]assessment order dated O2.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 therespondent/complainant, conviction recorded by the trial Court,cannot sustain. Basing on the fresh assessment order, dated21.03.2016, it is to be examined afresh that whether the appellants have committed any willful evasion of tax, as delinedunder Section 276-C of the Act. 19. Therefore, on considering the above discussion, it is clearthat the finding ol the triar court that the appeilants were guiltyof the offences under Section 276-C(2) read with Section 278-8of the Act 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.l is decided in favour ofthe appellant s/accused.the appellant s/accused. POINT No.2:- 20. The appellants have also raised other issues i.e., they havenot committed any wil1ful evasion in pay,rnent of tax since, as onthe due date there were no liquid funds in their accounts andthe appellants - Accused Nos. 2 to 6, who are the Directors, arenot responsible for the day to day activities of accusedNo.l/Company as on the date of the alteged default, the trialCourt has misconstrued the presumption under Section 2TgE ofthe Act, the trial Court failed to record admission of pW.3, that the amount received towards share application does not attractthe tax etc. Considering the same, point No.l is decided in favour ofthe appellant s/accused.the appellant s/accused. POINT No.2:- 20. The appellants have also raised other issues i.e., they havenot committed any wil1ful evasion in pay,rnent of tax since, as onthe due date there were no liquid funds in their accounts andthe appellants - Accused Nos. 2 to 6, who are the Directors, arenot responsible for the day to day activities of accusedNo.l/Company as on the date of the alteged default, the trialCourt has misconstrued the presumption under Section 2TgE ofthe Act, the trial Court failed to record admission of pW.3, that the amount received towards share application does not attractthe tax etc. 21. This Court has already came to the [conclusion ][while]discussing point No.1 that the conviction and [sentence ][recorded]in favour of the appellants required to be [set aside, on ][account ][of]the fact that ttre assessment order dated [O2.12.2O1O ][on ][which]the conviction was recorded was modified and [a ][lresh]assessment order came into force, [hence, ]the [issues raised ][by]the appellants, need not be answered. 22. Learned Senior Counsel for the appellants [has ][placed]reliance on the authority passed by the Honble [Supreme Court]in the case of V.Srinivas Reddy Vs. State of Andhra [Pradeshl,]wherein it was held as follows: "13. It u.tas then urqed [bu ][Mr. Arunachalam ][that ][if]tLrc High Court felt ttwt .further euidence [LUas ][necessory].for [di.sposal ][of ][the ][case ][tlwn ][it auld ][haue exercised its].pouter [under ][Section ][391 ][Cr. P.C. ][and ][ouqht ][not ][to ][haue]set aside the order of acquittal and [remanded ][the ][matter].for fresh [disposal. ][This argument also ][did ][not ][impress ][us]because the Hiqh Court instead [of recordinq the ][additional]euidence in terms of Section [391 ][Cr. ][P.C.; ][prefened ][to]remand the motter back to the tial [court ]for [disposal ][in]accordance uith laut. It also [appears ]from [tte ][record thot]some of tLLe documents including [FDRs, ][loan ][oppLications]etc., should also haue been brought [on ][record ]for [effectiue] disposal of tLLe controuerstt raised in the case and_ to d.o.justice [between ]the [parties. ]It is needless to sc:ll that thetrial court utilL stictlu adhere to the obseruations anddirectiotts giuen bg the High Court in its judgment.".justice [between ]the [parties. ]It is needless to sc:ll that thetrial court utilL stictlu adhere to the obseruations anddirectiotts giuen bg 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 modilied and fresh assessmentorder dated 2l .03.2016 came into force, the conviction andsentence recorded against the appellants basing on the incorrectassessment orders dated 02.12.2010 shall be set aside. 24 . Accordingly, both these criminal appeals are disposed ofsetting aside the conviction and sentence dated O9.O 1.2014recorded by Special Court for Economical Offences at Hyderabadand c.c.No. 129 of 2o11 is remanded back to the trial court witha direction to consider the documents i.e., (1) Common orderand c.c.No. 129 of 2o11 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.1O10 of 2014, dated22.05.2015 and (2) consequential order, dated 21.03.2016passed by the Assessing Officer, Assistant Commissioner ofpassed by the Assessing Officer, Assistant Commissioner of \ To Kj 24 . Accordingly, both these criminal appeals are disposed ofsetting aside the conviction and sentence dated O9.O 1.2014recorded by Special Court for Economical Offences at Hyderabadand c.c.No. 129 of 2o11 is remanded back to the trial court witha direction to consider the documents i.e., (1) Common orderand c.c.No. 129 of 2o11 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.1O10 of 2014, dated22.05.2015 and (2) consequential order, dated 21.03.2016passed by the Assessing Officer, Assistant Commissioner ofpassed by the Assessing Officer, Assistant Commissioner of \ To Kj 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, il any, made bythis Court touching merits of the case while passing orders.further evidence, if any. However, the trial Court shall not beinfluenced by the comments and observations, il any, made bythis Court touching merits of the case while passing orders. As a sequel, pending miscellaneous appiications, if any,shall stand closed. Sd/.K,SRINIVASA RAOJOINT.REGISTRAR', (.tr \ \\\, r ',SECTION OFFICER //TRUE COPYII 1 . The Special Judge for Economic Offences at Hyderabad.2. The Dy. Commislioner of lncome Tax, Central Circle [-9, ][Room ][No.B13, ][8th]Floor, Aayakar Bhavan, Basheerbagh, Hyderabad-500004.2. One CC to Sri V.Surender Rao, Advocate IOPUC]4One CC to Sri B.Narasimha Sharma, SC for [1.T.,]tOPUC]5One CC to Sri G.Ashok Reddy, Advocate [OPUC1tTwo CD Copies7One Spare Copy\v HIGH COURTDATED:1710612022 Firr, Qa2(\?tflCOMMON JUDGMENToo[,qs.CRLA(TR).Nos.76 and 86 of 2018////C DISPOSING oF THE BoTH cRL.A.(TR)s. @xG,-