Crl.p/5715/2015 Of Vishwas Udaysingh Lad v. The Income Tax Department

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22 DAY OF MARCH, 2016) BEERKQO THE HON’BLE MR. JUSTICE PRADEEP D. WAINGANKAR| CRIMINAL PETITION NO.5715/2015 BETWEEN:# VISHWAS UDAYSINGH LAD S/O UDAYSINGH LADAGED ABOUT 39 YEARSR/AT. #2990, 12[‘T]MALN|ts CROSS, H.A.L. Wl STAGEINDIRANAGAR, BENGALURU-560008. .. PETITIONER| (BY SRI: A. H. BHAGAVAN, ADV..,) AND!# THER INCOME TAX DEPARTMENTBY ITS ASSISTANT COMMISSIONEROF INCOME TAX, CIRCLE 12(4)NO.14/3, 4[‘T]FLOOR, RASHTROTHAN BHAVANNRUPATUNGA ROAD, BENGALURU-560001.— RESPONDENT (BY SRI: JEEVAN NEELARGI, ADV.,) THIS CRL.P IS FILED U/S.482 CR.P.C PRAYING TO SET)ASIDE|THE.CORDERDATED22.11.2014PASSED|IN|C.C.NO.366/2014 ON THE FILE OF LRD. SPL. COURT FORECONOMIC ORFENCES AT BENGALURU.THIS|PETITIONHAVINGBEENHERARIAND.RESERVE]|FOR,ORDERS,THISDAYTHECOURTPRONOUNCED THER FOLLOWING: ORDER Petitioner who is the accused in C.C.No.366/2014 on) the file of the Special Court (Economic Offences), Bangalorehas filed this petition to quash the proceedings initiated|against him. 2The Assistant Commissioner of [Income ‘Tapresented a private complaint before the Special Court)against the petitioner for the offences punishable under|Sections 276C(1) and 277 of Income Tax Act 1961. CuThe gist of the complaint is that thepetitioner/accused is an individual who is partner in several|firms and Director and shareholder in several companies. He) CuThe gist of the complaint is that the is also doing business in Lubricants. He is an assessee on the|file of the complainant/respondent. For the Assessment year2012-13, he filed his return of income on 30.09.2012|declaring his taxable total income as_ Rs.2,02,08,570/-. subsequently, he filed revised return on 08.03.2014 declaring|total income as Rs.3,26,58,480/- and paid taxes on the said|declared income. The income shown by the petitioner|consisted of income from salary, house property, business,|short term capital gains and income from other sources.During the pendency of scrutiny proceedings, the Assessing|Officer received information from Director of Income Tax.(Intelligence) that the petitioner had made fixed deposit ofRs.9,62,00,000/- on 29.03.2010 and 27.03.2010 in Tumkur|Grain Merchant Co-Operative Bank Limited in its branches at Bangalore and the interest accrued on the said deposit for|the assessment year 2012-13 amounting to Rs.69,33,914/-.After receipt of the letter to that effect dated 28.01.2014 tromDirector of Income Tax, an enquiry was held. During thecourse of enquity, it was detected that the petitioner hadmade fixed deposit of Rs.9.62 Crores in Tumkur GrainMerchant Co-operative Bank Limited 1n various branches at Bangalore. It was also detected that for the Assessment yeat|2012-15, the petitioner had earned income by way of interest|on the fixed deposit amounting to Rs.69,33,914/-. On thebasis of the said information, the returns of income filed by|the petitioner were examined by the Assessing Officer and 1t|was confirmed that the petitioner had willfully did not)disclose the fixed deposit of Rs.9.62 Crores and the income|earned on it by way of interest. As such, a notice under|Section 148 of the Income Tax Act came to be issued to the.petitioner for reopening the assessment under Section 147.He was also issued with summons under Section 131 of the.Income Tax Act. The petitioner appeared before the)authority on 24.09.2014. The Assessing Officer recorded the|statement of the petitioner. The Assessing Officer concluded|the Assessment vide his Assessment Order dated 30.09.2014.It is the case of the complainant that the petitioner/accused|filed returns without disclosing interest earned on fixed| deposits amounting to Rs.69,33,914/- with an intention to)evade tax. He falsely veritied the return of income containing|inaccurate particulars of his income though he was fully)conscious and aware of fixed deposit of Rs.9.62 Crores and|thereby the petitioner committed offences punishable under|Sections 276C(1) and 277 of the Income Tax Act. The)learned Magistrate took cognizance and issued process to thepetitioner, petitioner appeared before the Magistrate. ‘Thecomplainant was examined as PW.1 in part. When the case)was posted for further examination of PW.1, this petitioncame to be filed by the petitioner to quash the proceedings. AThe submission of the learned Senior Counselsrt. A.H. Bhagavan for the petitioner is that he was not awareof the amount of Rs.9.62 crores deposited by him in fixeddeposits in Tumkur Grain Merchant Co-Operative BankLimited and therefore the non-disclosure of the said fixeddeposit and interest earned out of the fixed deposit is not intentional or deliberate and as soon as he came to knowabout the mistake committed by him, he filed revised incometax return by showing the fixed deposits of Rs.9.62 Crores|and interest earned from the fixed deposit and paid the tax,|thus he has not committed any offence muchless the offencesunder Sections 276C(1) and 277 of the Income Tax Act. Thelearned counsel would also submit that there is a provision 1nthe Income Tax Act which provides for compounding of theoffences. Since the petitioner filed revised income tax returnsby disclosing the fixed deposits and paid the income tax to be|paid under the fixed deposits, the proceedings initiated|against him are liable to be quashed. 5sti. Jeevan Neelarei, Standing counsel for theIncome Tax Department, on the other hand, would submit|that it is impossible to imagine that the petitioner was notaware of the fixed deposit of Rs.9.62 Crores made by him in|various branches of Tumkur Grain Merchant Co-Operative| Bank Limited in Bangalore, at the time of filing of returns for|three financial years. The income which he did not disclose 1sdouble than the income which he disclosed in his income tax.returns. That itself speaks volume about the culpable mental|state of the petitioner. Further, 1t is submitted that the)petitioner made deposits in his name by showing three|ditterent names in the branches of Tumkur Grain Merchant.Co-Operative Bank Limited at Bangalore by showing his|name in one fixed deposit as Vishwas, in another ftxed|deposit Vishwas U. Lad and in yet another fixed deposit|Vishwas S/o Uday Singh Lad for the reason best known to)the petitioner. But he has given the same address for all the|three fixed deposits. He filed revised returns and paid taxes|only after department detected the concealment and therefore|it cannot be called as voluntary disclosure as claimed by the|petitioner. Therefore, the decision relied upon by the)petitioner reported in(2011) 336 ITR 202 of Patna High Courtin the case ofSushil Kumar Saboo vs. State of Bihar and another“not applicable to the facts of the case. |Hence, the learned counsel sought for dismissal of the)petition. — 6.)It is stated that the petitioner 1s a partner invarious firms, he is also a shareholder in various companies.|Therefore, as rightly submitted by the learned Standing|counsel for the Income Tax Department, it is tmpossible toaccept that the petitioner was not aware of ftxed deposit ofRs.9.62 Crores made by him in various branches of Tumkur|Grain Merchant Co-Operative Bank Limited at Bangalore or for that matter he had no intention or motive to evade tax.The modus operandi in taking the fixed deposit receipts by|showing his three different names also speaks his culpable|mental state. There is presumption under Section 278E ofthe Act as to culpable mental state on the part of the) Bihar and another“not applicable to the facts of the case. |Hence, the learned counsel sought for dismissal of the)petition. — 6.)It is stated that the petitioner 1s a partner invarious firms, he is also a shareholder in various companies.|Therefore, as rightly submitted by the learned Standing|counsel for the Income Tax Department, it is tmpossible toaccept that the petitioner was not aware of ftxed deposit ofRs.9.62 Crores made by him in various branches of Tumkur|Grain Merchant Co-Operative Bank Limited at Bangalore or for that matter he had no intention or motive to evade tax.The modus operandi in taking the fixed deposit receipts by|showing his three different names also speaks his culpable|mental state. There is presumption under Section 278E ofthe Act as to culpable mental state on the part of the) petitioner while doing so though it is a defence for the)petitioner/accused to prove the fact that he had no such)mental state which includes intention, motive or knowledge.He cannot say that he had no knowledge about the fixed)deposits of Rs.9 crores and odd for filing returns three years.He cannot plead ignorance about Rs.9 crores deposited in|fixed deposits. Though he claims that 1mmedtately after|coming to know about the mistake he filed revised returns|disclosing the fixed deposits and interest earned and paid theincome tax, he did so only after the department detected the|concealment. In fact, he was informed of the concealment offixed deposits by issuance of notices dated 10.01.2014 and}26.02.2014. Revised returns filed by him on 08.03.2014|showing fixed deposits and interest earned on fixed deposits cannot be called as voluntary disclosure. | [|In the decision of the Patna High Court reliedupon by the petitioner, there is no concealment of the) income while filing returns or there is no false returns havingbeen filed. But the assessee failed to pay the tax within the|time limit and therefore penalty proceedings were initiated|against him. On account of his poor financial capacity, he|had deposited Rs.50,000/- even prior to the application dated13.01.2006 praying for time to deposit the entire amount. Hedeposited a good sum even before passing of the impugned|otder. Finally he paid the entire amount with interest. It 1s in|this context the Patna High Court held that it 1s doubtful|whether the petitioner has willfully evaded the payment of taxand thereby proceedings were quashed. 8Here in this case there 1s non-disclosure of fixeddeposits of Rs.9.62 crores and the interest earned on it forthree consecutive financial years. It 1s only when theauthorities came to know about the concealment and theauthorities issued notice the petitioner filed revised returnsand paid the tax. Had it not been detected by the income tax authorities, the said income would not have come to|limelight. | QBe that as it may, the Magistrate has taken cognizance for the offences under Sections 276C(1) and 277)of the Income Tax Act, 1961. The petitioner appeared beforethe Magistrate, the evidence has commenced. If at all the)petitioner has to establish his 1nnocence during the course ofthe trial. Therefore, it cannot be said that the continuation ofthe proceedings would amount to abuse of process of the)Court. Accordingly, the petition ts|dismissed. In view of disposal of the petition, 1.A.No.1/2015 for| stay does not survive for consideration and the same stands|disposed of. | PMR Sd/-' JUDGE