In Support Of His Contention, He Relied On The Judgment In The Case Of Vyalikaval House Building Co-Operative Society Limited v. The Income Tax Department, Central Circte-1(1)Fcriminal Petition Nos.4891 And 4892 Of 2014, Dated 14.06.20191 Of Karnataka High Court

IN THE HIGH COURT FOR THE STATE OF TELANGANAAT HYDERABAD FRIDAY,THE FOURTH DAY OF NOVEMEERTWO THOUSAND AND TWENTY TWO PRESENTtHe noruounABlE sRt JUslcE K.SURENDER CRIMINAL PETITION No: 5210 oF 20'le Between: 1. M/s. Sujata Electrical lnfratech Private Limited, Shed No.2, Survey No. 143,Gandimaisamma X Roads, Domaara Pochampally Village, QuthbulaapulMandal, R.R District, Telangana - 500043Gandimaisamma X Roads, Domaara Pochampally Village, QuthbulaapulMandal, R.R District, Telangana - 500043 2. Anll Kumar Reddy Dodla, Managing Director, M/s. Sujata Electrical lnfratechlndia Pvt. Ltd., Flat No. 2403, Saibhargava Apartment, Kukatpally, Hyderabadlndia Pvt. Ltd., Flat No. 2403, Saibhargava Apartment, Kukatpally, Hyderabad3. Uma Deepika Dodla, Director, M/s. Sujata Electrical lnfratech lndia Pvt. Ltd.,Flat No. 2403, Saibhargava Apartment, Kukatpally, HyderabadFlat No. 2403, Saibhargava Apartment, Kukatpally, Hyderabad ...PETITIONERS/ACCUSED No.1,2 and 3 AND Dy. Commissioner of lncome Tax, Circle -3 (2), Room No. 713, 7th Floor,Signature Towers, Represented by the Special Public Prosecutor, lncomeTax, High Court, State of Telangana, at HyderabadSignature Towers, Represented by the Special Public Prosecutor, lncomeTax, High Court, State of Telangana, at Hyderabad ...RESPONDENT/COM PLAINANT Petition under Section 482 of Cr.P.C praying that in the circumstancesstated in the Memorandum of Grounds of Criminal Petition, the High Court maybe pleased to quash C.C.No.37 of 2018 on the [f ]ile of Special Judge forEconomic Offences at Hyderabad. l.A. NO: 1 OF 2019 Petition under Section 482 oI Cr.P.C [praying ]that in the circumstancesstated in the Memorandum of Grounds of Criminal Petition, the High [Court ][may]be pleased to pass an order staying all [further ][proceedings in ]C.C.No.37 [of ][2018]on the file of Special Judge For Economic Offences at Hyderabad, [including]personal appearance of the Petitioners herein. This Petition coming on for hearing, upon perusing the Memorandum ofGrounds of Crimin;:l Petition and upon hearing the arguments of Sri S. RaviSenior Counsel for Smt. Divya Datla, Advocate fbr the Petitioner and ofSri B. Narasimha Snarma, rep. by Spesial Public Prosecutor (TG) on behalf ofthe Respondent. The Court made ther following: ORDER HON'BLE SRI JUSTICE K.SURENDERCRIMINAL PETITION No.521O of 2O19 ORDER: 1. This petition is filed to quash the proceedings against thepetitioners/Al to A'3 in CC No.37 of 2018 on the file of SpecialJudge for Economic Offences, Hyderabad. 2. The 1"t petitioner fi.ied original return of income tax in theassessment year 2014-15 on 29.11.2014 declaring a total income ofRs.1,03,44,060/-. After ciaiming a tax credit for TDS of Rs.53,016/,out of the admitted tax liability, as per the return of income, theaccused liled return of Rs.38,O0,l7Ol-. However, the tax 'rl/as notpaid. 3. It is the case of the respondent that the accused has willfullydefaulted in paSrment of self assessment tax of admitted income asrequired under Section 14OA of the Income Tax Act, 1961 attractingthe provisions under Section 276C(2\ of the Act, which penalizessuch default. 4. The Income Tax Department issued a show-cause notice dated09.06.2016 which was served on the petitioners/accused. Thel 2. The 1"t petitioner fi.ied original return of income tax in theassessment year 2014-15 on 29.11.2014 declaring a total income ofRs.1,03,44,060/-. After ciaiming a tax credit for TDS of Rs.53,016/,out of the admitted tax liability, as per the return of income, theaccused liled return of Rs.38,O0,l7Ol-. However, the tax 'rl/as notpaid. 3. It is the case of the respondent that the accused has willfullydefaulted in paSrment of self assessment tax of admitted income asrequired under Section 14OA of the Income Tax Act, 1961 attractingthe provisions under Section 276C(2\ of the Act, which penalizessuch default. 4. The Income Tax Department issued a show-cause notice dated09.06.2016 which was served on the petitioners/accused. Thel petitioners repjied in writing on 23.06.2016 infonning that there -was no willful Cefault or matafide intention to evade tax payment,but the same \r-as on account of certain financial difficulties beyondcontrol. Along with reply, a letter along with a copy of selfassessment ta;r chailan for Rs.50,55,310/- along with interest wasbut the same \r-as on account of certain financial difficulties beyondcontrol. Along with reply, a letter along with a copy of selfassessment ta;r chailan for Rs.50,55,310/- along with interest waspaid and requer;ted the department not to initiate any proceedings.5. However, according to the department, since the accused witharr intention to evade tax filed return without paying selfassessment ta>:, the accused committed an offence under Section276C(2\ r/w'.;.788 of the Income Tax Act. Further there is apresumption o[ culpable menta-l state on ttre part of the accused forsuch defauit.5. However, according to the department, since the accused witharr intention to evade tax filed return without paying selfassessment ta>:, the accused committed an offence under Section276C(2\ r/w'.;.788 of the Income Tax Act. Further there is apresumption o[ culpable menta-l state on ttre part of the accused forsuch defauit. 6. Sri S.Ra.zi, learned Senior Counsel appearing for thePetitioners worrld submit that there is no evasion of tax. Evenaccording to the department, though the assessed tax wasRs.38,00,170/ , the petitioners paid along with interest an amountof Rs.5O,55,31O/-. The said conduct itself indicates that there wasnever arry intr:ntion or attempt to evade tax payment, lor whichreason, the pe::ral provision under Income Tax Act is not attracted. In support of his contention, he relied on the judgment in the caseof Vyalikaval House Building Co-operative Society Limited v.The Income Tax Department, Central Circte-1(1)fCriminalPetition Nos.4891 and 4892 of 2014, dated 14.06.20191 ofKarnataka High Court. 7. In the aforesaid judgment, the accused was prosecuted on theground that though returns were filed, he failed to pay the said taxamount. The Court found that the act of filing returns by itselfcannot be constmed as an attempt to evade tax rather it wouldsuggest that there u,as a voluntary declaration to pay the tax. 8. In the case of Prem Dass v. Income Tax Officer 5[(1999) Supreme Court Cases 24i], the Hon'Lrle Supreme Court held that apositive act on the part of the accused is required to establish acharge under Section 276-C(2l..positive act on the part of the accused is required to establish acharge under Section 276-C(2l.. 9. Learned Senior Counsel also relied upon the [judgment ]of thisCourt in Criminal Petition No.3i64 of 2008, dated September,2015, which r,r,as decided on similar lines. I I 7. In the aforesaid judgment, the accused was prosecuted on theground that though returns were filed, he failed to pay the said taxamount. The Court found that the act of filing returns by itselfcannot be constmed as an attempt to evade tax rather it wouldsuggest that there u,as a voluntary declaration to pay the tax. 8. In the case of Prem Dass v. Income Tax Officer 5[(1999) Supreme Court Cases 24i], the Hon'Lrle Supreme Court held that apositive act on the part of the accused is required to establish acharge under Section 276-C(2l..positive act on the part of the accused is required to establish acharge under Section 276-C(2l.. 9. Learned Senior Counsel also relied upon the [judgment ]of thisCourt in Criminal Petition No.3i64 of 2008, dated September,2015, which r,r,as decided on similar lines. I I 10. Tire Leanred Standing Counsel appearing on behalf of theIncome Tax Department submits that whether there vras anintention or nol to evade tax is subject matter of trial and this Courtunder Section 182 of Cr.P.C cannot decide the said fact. Further,the judgment relied by the leamed Senior Counsel for thepetitioners, have no bearing since the facts in present case aredistinguishabh on facts of the [judgments ]relied by the learnedSenior Counsr:l. He further submits that the Income Ta,xdepartment has to be given an opportunity to establish its casebelore the conr:erned Court and the defence of the petitioners canbe taken before the trial Court,AS such, petition has to bedismissed. 1 1. In the prt:sent case, the facts are not disputed either by thepetitioners or lty the department. The 1"t petitioner company filedreturn of Inco:rne Tax admitting the tax liability of Rs.38,00,17O1-,but failed to rnake pa5rment. However, on receiving notice dated09.06.2076,llal reply, the petitioners enclosed a challan lor anamount of Rs.iiO,55,31O/- (Rs. 12,55,14O l- excess towards interest ald other charges) towards tax. The present prosecutionwasiaunched on 01.03.2018. 12. Section 276C of Income Tax Act is extracted hereunder: "276C. [2 ]Wilful attempt to evade tax, etc. (!) If a person wilfully attempts in any manner whatsoever to evade any tax,pena-lty or interest chargeable or imposable under this Act, he shall, withoutprejudice to any penalty that may be imposable on him under any otherprovision of this Act, be punishable,-{!) [in ][a ][case ][where ][the ][amount ][sought ][to ][be ][evaded exceeds ][one hundred]thousand rupees, with rigorous imprisonment for a term which shall not beless than six montlls but which may extend to seven years and with fine;{!!l [in ][any ][other ][case, ][with ][rigorous imprisonment for ][a ][term ][which ][shall ][not]be less than three monttrs but which may extend to three years and withhne. (!.) If a person wilfully attempts in any manner whatsoever to cvade thepa).rnent of any tax, penalty or interest under this Act, he shall, withoutprejudice to any penalty that may be irnposable on him under any otherprovision of this Act, be punishabie with rigorous imprisonment for a termrvhich shall not be less than three months but which may extend to ttlreeyears and shall, in the discretion of the court, also be liable to fine.Explanation.- For the purposes of this section, a wilful attempt to evade anytiu, penalry or interest chargeable or imposable under this Act or theyears and shall, in the discretion of the court, also be liable to fine.Explanation.- For the purposes of this section, a wilful attempt to evade anytiu, penalry or interest chargeable or imposable under this Act or thepayment thereof shall include a case where any person-person- any person-person-(!) has in his possession or control any books of account or otherdocuments (being books of account or other documents relevant to anyproceeding under this Act) containing a false entr5r or statement; or[!) [makes ][or ][causes ][to ][be ][made ][any ][false ][entry or ][statement ][in ][such ][books]of account or other documents; or any person-person-(!) has in his possession or control any books of account or otherdocuments (being books of account or other documents relevant to anyproceeding under this Act) containing a false entr5r or statement; or[!) [makes ][or ][causes ][to ][be ][made ][any ][false ][entry or ][statement ][in ][such ][books]of account or other documents; or {!UI [wilfully ][omits or ][causes ][to ][be ][omitted ][any ][relevant ][entry or ][statement ][in]such books of account or other documents; or {!yl [causes ][any other ][circumstance ][to ][exist which ][will ][have ][the ][effect of]enabling such person to evade any tax, penalty or interest chargeable orimposable under this Act or the pa).ment thereof.l" 13. From the present facts, it has to be ascertained whetherrequisite mens rea was p{eggnt to infer a willful attempt at evadingtax. Unless a person with dishone^st intention tries to conceal facts i II arrd consequet)tly atternpts at evading the tax, which he is liable [to]pay are the rer;uisite ingredients to prosecute person under Section276C of the Inr:ome Tax Act. 14. It is not the case of the Income Tax department that the selfassessment tax returns which v,'ere filed had an element ofconcea-lment on any factual aspects and tried to evade tax, which isliable to paid. ['Ihere ]is no dispute regarding the claims made by thepetitioners in their income tax returns. 15. Having r€:,leived the notice, the petitioners have paid additionalamount of Rsi.L2,55,14Ol- towards interest and other charges,apart from th,:. asSessed tax. It rt as stated that due to hnancialdifliculties beyond control, the amount could not be paid in time. 16. As alreaCy discussed, this is not a case wherein falsedeclaration is rnade or that the department has found that there isa deliberate attempt to evade tax by suppressing materialinformation. Vlhether there is willful delay or not are discerniblefrom the facts of the case. 17. The conduct of the petitioners itself would indicate that it wasa case of delayed pa5rment of tax or deferred payment. The tax alongwith interest and penalty was accepted by the department withoutany resewations. Such delay in the payment wiil not amount towillful attempt to evade tax. Cogent reasons are given stating thattax could not be paid due to hnancial difficulties. It cannot beinferred from the facts of the present case that any attempt wasdeliberately made to evade the tax payment. For the said reasons,the continuation of the proceedings against the petitioners 'nouldarr abuse of process of the Court. It is a I'it case wherein this Courthas to exercise its inherent powers under Section 482 of Cr.P.C toquash the proceedings against the petitioners. 18. Accordingly the proceedings against the petitioners in CCNo.37 of 2018 on the file of Special Judge lor Economic Offences,Hyderabad are hereby quashed and the Criminal Petition is allowed. HIGH COUR'T DATED: 04,,1112022 zr,- [.}\]\'t-)1g [?[?1] ORDERCRL.P.No.51110 of 2019 ALLOW!NG [-THE ]CRIMINAL PETITION0 I