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.

JUDGMENT

(Prayer: This Criminal Original Petition is filed under Section 482 of Cr.P.C., pleased to call for and quash the complaint in E.O.C.C.No.132 of 2019 on the file of the Additional Chief Metropolitan Magistrate, E.O-1, Egmore, Chennai – 8 and pass orders.

This Criminal Original Petition is filed under Section 482 of Cr.P.C., pleased to call for and quash the complaint in E.O.C.C.No.132 of 2019 on the file of the Additional Chief Metropolitan Magistrate, E.O-1, Egmore, Chennai – 8 and pass orders.)

Common Order

1. The petitioner in Crl.O.P.No.2616 of 2020 is the Director of M/s.AMK Solutions Pvt Limited and the petitioners in Crl.O.P No.2781 of 2020 is the Company and its Directors.

2. Complaint for prosecution filed by the Income Tax Department alleging that, the petitioners have wilfully attempted to evade payment of Income Tax for the Assessment Year 2017-2018 and thereby, committed offence under Section 276 C (2) of the Income Tax Act, 1961. The said complaint has being taken on file by the Learned Additional Chief Metropolitan Magistrate Court in E.O.C.C.132/2019. Stating that, the tax payable by the petitioners for the Assessment Year 2017-18 was paid well before the issuance of show cause notice and same was intimated to the authorities, without applying the mind and not considering the payment of tax with interest, sanction to prosecute granted and the private complaint came to be filed suppressing the factum of payment of tax much prior to sanction to prosecute. Hence, these two petitions are filed to quash the complaint on the ground that, there is a lack of ingredient to prosecute the petitioners under section 276 C (2), besides suppression of fact and non- application of mind.

3. The un-controverted facts of the case is that, M/s.AMK Solutions Pvt Limited is an Income Tax Assessee having PAN No:AAHCA2131L. For the Assessment Year 2017-2018 they have filed self assessment return on 31/10/2017 declaring the income and tax payable. However, the tax admitted to be payable not remitted by the assessee along with the returns, which is the requirement of the law under Section 140 A of Income Tax Act, 1961. The assessee, after a delay of 4 ½ months, has remitted a sum of Rs.6,85,462/- towards the tax and interest payable. While so, the sanction to prosecute issued by the Principal Commissioner of Income Tax-1, Chennai and based on the sanction to prosecute, complaint filed on 28/07/2019.

4. The Learned Counsel for the petitioners submitted that, to attract offence under section 276 C (2) of the Income Tax Act, two ingredients are required. They are (i). culpable mental state to evade Tax and (ii) Attempt to evade tax. In the case of the petitioners, they never had the intention to evade tax. In fact, they have disclosed their income and tax payable while filing the returns. Due to financial constraints and other reasons they were not able to pay the tax along with the returns. Hence, after filing the returns within time disclosing the income and tax payable, the tax payable was remitted later, but much before initiating any proceedings for prosecution. Therefore, there is no evasion of tax or attempt for evasion of tax. In the absence of core necessary ingredients to prosecute, the criminal complaint is filed based on the sanction to prosecute issued by the Principal Commissioner, who has omitted to consider the fact that, the tax payable remitted much prior to issuance of show cause notice. In the complaint suppressing the payment of tax, it is falsely alleged that, the petitioners did not pay the tax in spite of sufficient opportunities given and the petitioners are wilfully evading the payment of tax due to the Income Tax Department.

5. In support of the quash petition, the Learned counsel for the petitioners relied on the following judgments:-

1. Premdass -vs- Income Tax Officer reported in (1999) 5 SCC 241.

2. Sushil Kumar Saboo -vs- State of Bihar reported in (2011) 336 ITR 202 (Patna).

3. Vyalikaval House Bu