Shri Ghilsulal Meghraj Kothari v. The Deputy Commissioner Of Income Tax, Central Circle-1(1), Room

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.03.2020 CORAM: THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN CRL.O.P.No.31910 of 2019 andCrl.M.P.Nos.17513 & 17514 of 2019 Shri Ghilsulal Meghraj Kothari... Petitioner/AccusedVs. The Deputy Commissioner of Income Tax,Central Circle-1(1),Room No.320, 3[rd] Floor, Investigation Wing,No.46, M.G.Road, Chennai-34... Respondent/Complainant PRAYER: Criminal Original Petition filed under Section 482 ofCr.P.C. praying to call for the entire records in E.O.C.No.608of 2017, on the file of Additional Chief MetropolitanMagisterate (Economic Offences), Egmore, Chennai and quash thesame. For Petitioner : Mr.A.Selvendran For Respondent : Mrs.Sheela, Standing Counsel for IT cases This petition has been filed challenging the criminalproceedings in E.O.C.No.608 of 2017 on the file of theAdditional Chief Metropolitan Magistrate(Economic Offences),Egmore, Chennai. 2.The respondent filed private complaint for the offencesunder Section 276 (c ) (2) of the Income Tax Act, 1961 allegingthat the petitioner is an assessee on the file of the DeputyCommissioner of Income Tax, Central Circle, Chennai. A searchhas been conducted under Section 132 of Income Tax Act on18.12.2012 and during the search, the petitioner disclosed https://hcservices.ecourts.gov.in/hcservices/ undisclosed income of Rs.10,00,00,000/- for the assessment year2013-2014. Further, it was noticed that the accused did notfile his return of income for the assessment year 2013-2014 asrequired under Section 139 (1) of the Income Act. He ought tohave filed return of income on or before 05.08.2013. But hebelatedly filed his return of income for the assessment year2013-2014 only on 31.01.2014 admitting his entire income ofRs.10,62,90,030/- Thus, it is the act of the willful failure onthe part of the petitioner for non payment of huge taxliability, and he committed offence under Section 276(c ) (2) ofthe Income Tax Act and as such the respondent issued show causenotice on 16.08.2015. Even then, the accused has not paid thehuge tax liability at the time of filing the return of income.Thus, he has committed offence under Section 276 (c ) (2) of theIncome Tax Act and lodged the complaint. 3.The learned counsel for the petitioner contended thatwhen the petitioner filed his return of income and paid theentire demand made by the respondent, he is not liable to bepunished under Section 276 (c ) (2) of Income Tax Act. 4.Heard, Mr.A.Selvendran, the learned counsel for thepetitioner and Mrs.Sheela, Standing Counsel for IT cases,appearing for the respondent. 5.On perusal of the documents, it is seen that the lastdate for filing the returns for the financial year 2012-2013 wason or before 05.08.2013. The respondent did not hand over thebook of accounts seized from the petitioner ill 05.08.2013.Therefore, there is delay in payment of income tax and thepetitioner filed return of income on 31.01.2014. Thereafter, itwas returned on 31.03.2015 directing the petitioner to pay a sumof Rs.4,30,20,260/-. Thereafter, the petitioner paid tax asdemanded by the respondent on 18.03.2018, for which therespondent also issued a letter on 24.03.2018 acknowledging thereceipt of tax. It is relevant to extract the provision underSection 276 (c ) (2) of the Income Tax Act, 1995 as follows: 5.On perusal of the documents, it is seen that the lastdate for filing the returns for the financial year 2012-2013 wason or before 05.08.2013. The respondent did not hand over thebook of accounts seized from the petitioner ill 05.08.2013.Therefore, there is delay in payment of income tax and thepetitioner filed return of income on 31.01.2014. Thereafter, itwas returned on 31.03.2015 directing the petitioner to pay a sumof Rs.4,30,20,260/-. Thereafter, the petitioner paid tax asdemanded by the respondent on 18.03.2018, for which therespondent also issued a letter on 24.03.2018 acknowledging thereceipt of tax. It is relevant to extract the provision underSection 276 (c ) (2) of the Income Tax Act, 1995 as follows: “If a person wilfully attempts in any mannerwhatsoever to evade the payment of any tax, penaltyor interest under this Act, he shall, withoutprejudice to any penalty that may be imposable on himunder any other provision of this Act, be punishablewith rigorous imprisonment for a term which shall notbe less than three months but which may extend tothree years and shall, in the discretion of thecourt, also be liable to fine. Explanation – For thepurpose of this section, a wilful attempt to evadeany tax, penalty or interest chargeable or imposableunder this Act or the payment thereof shall include acase where any person- (i)has in his possession or control any books ofaccount or other documents (being books ofaccount or other documents relevant to anyproceeding under this Act) containing a falseentry or statement; or(ii) makes or causes to be made any false entry orstatement in such books of accounts or otherdocuments; or(iii)wilfully omits or causes to be omitted anyrelevant entry or statement in such books ofaccount or other documents; or(iv) causes any other circumstance to exist whichwill have the effect of enabling such person toevade any tax, penalty or interest chargeable orimposable under this Act or the payment thereof” 6.From the reading of the above provision to punish theaccused, there must be wilful attempt to evade payment of tax,he must be in possession of the book with false entries, theperson should have made false entries in the book of accountsand omitting any entry in the statement of accounts. Thepetitioner voluntarily disclosed the undisclosed income to therespondent on the inspection conducted under Section 132 of theIncome tax Act, 1961 on 18.12.2012. Therefore, there is nointention from the petitioner for willful evading of payment oftax. Admittedly, the respondent on the inspection dated18.12.2012, had seized the relevant book of accounts and as suchthe petitioner could not able to file the return of income on orbefore 05.08.2013. Therefore, the petitioner had no wilfulintention to evade tax as alleged by the respondent. 7.That apart, the petitioner had paid the entire taxamount on 18.03.2018 and the respondent had also acknowledgedthe same by the acknowledgment dated 24.03.2018. Therefore, theoffence under Section 276 (c ) (2) of the Income Tax Act is notat all attracted as against the petitioner herein, and theentire criminal proceedings pending against the petitioner isnothing but clear abuse of process of law. As such it cannot besustained as against the petitioner and it is liable to bequashed. 8.In view of the above discussion, this criminal originalpetition is allowed. Accordingly, the entire proceedings inE.O.C.No.608 of 2017 on the file of Additional ChiefMetropolitan Magistrate(Economic Offences), Egmore, 7.That apart, the petitioner had paid the entire taxamount on 18.03.2018 and the respondent had also acknowledgedthe same by the acknowledgment dated 24.03.2018. Therefore, theoffence under Section 276 (c ) (2) of the Income Tax Act is notat all attracted as against the petitioner herein, and theentire criminal proceedings pending against the petitioner isnothing but clear abuse of process of law. As such it cannot besustained as against the petitioner and it is liable to bequashed. 8.In view of the above discussion, this criminal originalpetition is allowed. Accordingly, the entire proceedings inE.O.C.No.608 of 2017 on the file of Additional ChiefMetropolitan Magistrate(Economic Offences), Egmore, Chennai is quashed. Consequently, connected miscellaneouspetitions are closed.Sd/- Assistant Registrar //True Copy// Sub Assistant RegistrarlokTo1. The Deputy Commissioner of Income Tax, Central Circle-1(1), Room No.320, 3[rd] Floor, Investigation Wing, No.46, M.G.Road, Chennai-342. The Public Prosecutor, High Court, Madras.CRL.O.P.No.31910 of 2019SR(CO)GS(29/05/2020)