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IN THE HIGH COURT AT CALCUTTA
JAY SENGUPTA, J.
Deputy Commissioner of Income Tax – Appellant
Versus
Kali Pradip Chowdhuri & Ors. – Respondent
CRR 3198 of 2018 With CRAN 1 of 2018 (Old No. CRAN 3116 of 2018) And CRR 3199 of 2018 With CRAN 1 of 2018 (Old No. CRAN 3117 of 2018)
Decided on : 07-02-2023
INCOME TAX ACT - Section 276C - Wilful attempt to evade tax - Criminal prosecution - Discharge by revisional Court - Whether prima facie case made out - Explanation to Section 276C - Presumption under Section 278E - Applicability.
Fact of the Case:
The assessee, a medical college and hospital, and its directors were discharged by the revisional Court from the charges of wilfully attempting to evade tax under Section 276C of the Income Tax Act, 1961. The Revenue challenged the discharge order by filing revision petitions before the High Court.
Finding of the Court:
1. The delay in filing the revision petitions was condoned considering the bureaucratic red-tapism and the time taken for obtaining approvals and consent from various authorities. 2. The assessee, being a charitable entity, was entitled to exemption under Section 11 of the Act. The donations received by the assessee were corpus donations and were not taxable in its hands. 3. The assessee had filed revised returns within the stipulated time, waiving exemption and paying tax. 4. The statements of two witnesses appearing against the accused were rendered ineffective. 5. The prosecution failed to make out a prima facie case that the opposite parties wilfully tried to evade tax or evade payment of tax.
Issues: 1. Whether the delay in filing the revision petitions should be condoned? 2. Whether a prima facie case was made out against the accused for prosecution under Section 276C of the Income Tax Act, 1961?
Ratio Decidendi: 1. Bureaucratic red-tapism and the time taken for obtaining approvals and consent from various authorities can be considered as grounds for condoning delay in filing revision petitions. 2. A prima facie case for prosecution under Section 276C of the Income Tax Act, 1961 requires something more than what is required for imposing a penalty under Section 271(1)(C) of the Act. There must be some additional material or averment of fact to show that the accused wilfully attempted to evade tax or evade payment of tax. 3. The mere fact that the assessee claimed exemption for corpus donations, which was later waived by filing revised returns, does not amount to wilful attempt to evade tax.
Final Decision: The revision petitions filed by the Revenue were dismissed, upholding the discharge order passed by the revisional Court.
JUDGMENT :
Jay Sengupta, J.:
1. As the two revisional applications are connected ones and involve the same parties and the same questions of law, the same are taken up for hearing together.
In re: CRAN 1 of 2018 in CRR 3198 of 2018 & CRAN 1 of 2018 in CRR 3199 of 2018:
2. The petitioner/Revenue contended that there were delays of about 95 days in filing the revision petitions. It was submitted that there was no deliberate laches on behalf of the Income Tax Authorities in challenging the order dated 09.04.2018. A certified copy was applied and was supplied on the same day. A proposal was submitted with the Pr.CIT, C-1, Kolkata. Then a letter was issued by him to the Ministry of Law and Justice to seek legal opinion in this regard. Thereafter, a letter was issued for necessary approval to the DGIT(Inv.) WB., Sikkim & NER. In the meantime the date for filing a criminal revision expired on 10.07.2018. Then the Ministry of Law and Justice accorded consent to move this Court. Soon thereafter necessary approval was obtained from the DGIT(Inv.) WB., Sikkim & NER. Accordingly, an approval was given by the Pr.CIT, C-1, Kolkata to file revision before this Court. Thereafter, a letter was issued to the Ministry of law requesting to appoint a government counsel. Then, a letter was received from them regarding appointment of government counsel. Conferences were held and a draft was made ready by the learned counsel. The draft was given to the Pr.CIT, C-1, Kolkata for examination. Learned counsel thereafter asked for the details of the dates for filing application for condonation of delay. List of dates regarding the movement of the file was made available to the learned counsel soon thereafter. Some time went for drafting the application for condonation of delay and for vetting out the applications. The applications were made ready for affirmation on 04.10.2018. In fact, the same were affirmed on the next date. The revisional applications involved substantial questions of law and a careful marshalling of facts. Therefore, the applications could be filed only after a delay.
3. Learned Senior Counsel appearing on behalf of the opposite party submitted that a government department or, for that matter, the State was not a preferred litigant. Although the dates are mentioned for movement of files, the time taken for each such movement appeared to be inordinately long and unacceptable. As such, the explanation provided for the delay in filing the applications could not be accepted.
4. It is true that there is some delay in preferring the revisional applications along with the applications for condonation of delay. However, as is required, the petitioner/Revenue has provided even the minute details of the movement of files leading to the passage of time beyond the stipulated one for filing criminal revision.
5. It is alright to term bureaucratic red-tapism as the root cause for delay in governmental work and indeed there is much room for improvements even in the existing circumstances. However, giving approvals and consent and deciding on issues involve taking into consideration not only the questions of legal tenability, but also the practicability and the finances. In any event, our system does suffer from a poor ratio not only in respect of judicial officers, but also as regards public servants.
6. In Collector, Land Acquisition, Anantnag & Ors. vs. Mst Katiji & Ors., (1987) 2 SCC 107, the Hon’ble Apex Court held that the question of condoning delay can be considered liberally in certain cases and quite equally for the State.
7. In view of the above and upon considering the painstacking manner in which the details of the steps taken were explained, I am inclined to allow the applications for condonation of delay.
8. Accordingly, CRAN 1 of 2018 in CRR 3199 of 2018 and CRAN 1 of 2018 in CRR 3198 of 2018 are disposed of.
In Re: CRR 3198 of 2018 and 3199 of 2018:
9. The petitioners in CRR 3198 of 2018 challenged the order dated 09.04.2018 passed by the learned
AI
The main legal point established in the judgment is the requirement of a positive act with a design to evade the liability to pay tax under Section 276C(2) of the Income Tax Act, 1961.
object of launching criminal prosecution for wilful default in complying with the provisions of the Income Tax Act is to prevent evasion of tax
Delayed payment of income tax does not constitute tax evasion under Section 276C of the Income Tax Act, requiring evidence of willful intent to evade tax for prosecution.
The main legal point established is that the failure to remit tax, without evidence of a wilful attempt to evade tax, does not constitute an offence under Section 276 C (2) of the Income Tax Act.
The main legal point established in the judgment is the significance of timely filing of the Return of Income, the consequences of wilful attempt to evade tax, penalty, and interest chargeable, and t....
The main legal point established is that in cases of willful failure to furnish income tax return, the prosecution under section 276CC is not sustainable if the tax has been deposited and there are n....
The main legal point established in the judgment is that once penalties are cancelled due to no concealment of income, the quashing of prosecution under Section 276CC of the Income Tax Act is automat....
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