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

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 06.03.2020CORAM: THE HONOURABLE MR.JUSTICE G.K.ILANTHIRAIYAN CRL.O.P.No.31909 of 2019 andCrl.M.P.Nos.17511 & 17512 of 2019 Shri Kewalchand Kothari... Petitioner/accused Vs. 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.575of 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 casesO R D E R This petition has been filed challenging the criminalproceedings in E.O.C.No.575 of 2017 on the file of theAdditional Chief Metropolitan Magistrate(Economic Offences),Egmore, Chennai. 2.The respondent filed private complaint for theoffences under Section 276 (c ) (2) of the Income Tax Act,1961 alleging that the petitioner is an assessee on the fileof the Deputy Commissioner of Income Tax, Central Circle,Chennai. A search has been conducted under Section 132 ofIncome Tax Act on 18.12.2012 and during the search, thepetitioner disclosed undisclosed income of Rs.10,00,00,000/-for the assessment year 2013-2014. Further, it was noticedthat the accused did not file his return of income for theassessment year 2013-2014 as required under Section 139 (1) ofthe Income Act. He ought to have filed return of income on orbefore 05.08.2013. But he belatedly filed his return ofincome for the assessment year 2013-2014 only on 31.01.2014https://hcservices.ecourts.gov.in/hcservices/admitting his entire income of Rs.10,17,53,890/- Thus, it is the act of the willful failure on the part of the petitionerfor non payment of huge tax liability, and he committedoffence under Section 276(c ) (2) of the Income Tax Act and assuch the respondent issued show cause notice on 17.07.2017.Even then, the accused has not paid the huge tax liability atthe time of filing the return of income. Thus, he hascommitted offence under Section 276 (c ) (2) of the Income TaxAct and lodged the complaint. 3.The learned counsel for the petitioner contendedthat when the petitioner filed his return of income and paidthe entire demand made by the respondent, he is not liable tobe punished 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 thelast date for filing the returns for the financial year 2012-2013 was on or before 05.08.2013. The respondent did not handover the book of accounts seized from the petitioner ill05.08.2013. Therefore, there is three months delay in paymentof income tax and the petitioner filed return of income on31.01.2014. Thereafter, it was returned on 31.03.2015directing the petitioner to pay a sum of Rs.4,08,04,345/-.Thereafter, the petitioner paid tax as demanded by therespondent on 13.03.2018, for which the respondent also issueda letter on 24.03.2018 acknowledging the receipt of tax. It isrelevant to extract the provision under Section 276 (c ) (2)of the Income Tax Act, 1995 as follows: 5.On perusal of the documents, it is seen that thelast date for filing the returns for the financial year 2012-2013 was on or before 05.08.2013. The respondent did not handover the book of accounts seized from the petitioner ill05.08.2013. Therefore, there is three months delay in paymentof income tax and the petitioner filed return of income on31.01.2014. Thereafter, it was returned on 31.03.2015directing the petitioner to pay a sum of Rs.4,08,04,345/-.Thereafter, the petitioner paid tax as demanded by therespondent on 13.03.2018, for which the respondent also issueda letter on 24.03.2018 acknowledging the receipt of tax. It isrelevant to extract the provision under Section 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,penalty or interest under this Act, he shall,without prejudice to any penalty that may beimposable on him under any other provision of thisAct, be punishable with rigorous imprisonment fora term which shall not be less than three monthsbut which may extend to three years and shall, inthe discretion of the court, also be liable tofine. Explanation – For the purpose of thissection, a wilful attempt to evade any tax,penalty or interest chargeable or imposable underthis 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 entryor statement in such books of accounts orother documents; or(iii)wilfully omits or causes to be omitted any https://hcservices.ecourts.gov.in/hcservices/ relevant entry or statement in such books ofaccount or other documents; or (iv) causes any other circumstance to existwhich will have the effect of enabling suchperson to evade any tax, penalty or interestchargeable or imposable under this Act or thepayment thereof” 6.From the reading of the above provision to punishthe accused, there must be wilful attempt to evade payment oftax, he must be in possession of the book with false entries,the person should have made false entries in the book ofaccounts and omitting any entry in the statement of accounts.The petitioner voluntarily disclosed the undisclosed income tothe respondent on the inspection conducted under Section 132of the Income tax Act, 1961 on 18.12.2012. Therefore, thereis no intention from the petitioner for willful evading ofpayment of tax. Admittedly, the respondent on the inspectiondated 18.12.2012, had seized the relevant book of accounts andas such the petitioner could not able to file the return ofincome on or before 05.08.2013. Therefore, the petitioner hadno wilful intention to evade tax as alleged by the respondent. 7.That apart, the petitioner had paid the entire taxamount on 13.03.2018 and the respondent had also acknowledgedthe same by the acknowledgment dated 24.03.2018. Therefore,the offence under Section 276 (c ) (2) of the Income Tax Actis not at all attracted as against the petitioner herein, andthe entire criminal proceedings pending against the petitioneris nothing but clear abuse of process of law. As such itcannot be sustained as against the petitioner and it is liableto be quashed. 8.In view of the above discussion, this criminaloriginal petition is allowed. Accordingly, the entireproceedings in E.O.C.No.575 of 2017 on the file of AdditionalChief Metropolitan Magistrate(Economic Offences), Egmore,Chennai is quashed. Consequently, connected miscellaneouspetitions are closed. Sd/-Assistant Registrar //True copy// Sub Assistant Registrar To 8.In view of the above discussion, this criminaloriginal petition is allowed. Accordingly, the entireproceedings in E.O.C.No.575 of 2017 on the file of AdditionalChief Metropolitan Magistrate(Economic Offences), Egmore,Chennai is quashed. Consequently, connected miscellaneouspetitions are closed. Sd/-Assistant Registrar //True copy// Sub Assistant Registrar To 1. 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 Central Circle-1(1), Room No.320, 3[rd] Floor, Investigation Wing, No.46, M.G.Road, Chennai-34 2. The Public Prosecutor, High Court, Madras. High Court, Madras. 3. The Additional Chief Metropolitan Magistrate,(Economic Offences), Egmore, Chennai.(Economic Offences), Egmore, Chennai. CRL.O.P.No.31909 of 2019ar(C0)mst (29/05/2020)