Point of Law: It is not the case of the Income Tax department that the self assessment tax returns which were filed had an element of concealment on any factual aspects and tried to evade tax, which is liable to paid.

ORDER :

1. This petition is filed to quash the proceedings against the petitioners/A1 to A3 in CC No.37 of 2018 on the file of Special Judge for Economic Offences, Hyderabad.

2. The 1st petitioner filed original return of income tax in the assessment year 2014-15 on 29.11.2014 declaring a total income of Rs.1,03,44,060/-. After claiming a tax credit for TDS of Rs.53,016/, out of the admitted tax liability, as per the return of income, the accused filed return of Rs.38,00,170/-. However, the tax was not paid.

3. It is the case of the respondent that the accused has willfully defaulted in payment of self assessment tax of admitted income as required under Section 140A of the Income Tax Act, 1961 attracting the provisions under Section 276C(2) of the Act, which penalizes such default.

4. The Income Tax Department issued a show-cause notice dated 09.06.2016 which was served on the petitioners/accused. The petitioners replied in writing on 23.06.2016 informing that there was no willful default or malafide intention to evade tax payment, but the same was on account of certain financial difficulties beyond control. Along with reply, a letter along with a copy of self assessment tax challan for Rs.50,55,310/- along with interest was paid and requested the department not to initiate any proceedings.

5. However, according to the department, since the accused with an intention to evade tax filed return without paying self assessment tax, the accused committed an offence under Section 276C(2) r/w 278B of the Income Tax Act. Further there is a presumption of culpable mental state on the part of the accused for such default.

6. Sri S.Ravi, learned Senior Counsel appearing for the Petitioners would submit that there is no evasion of tax. Even according to the department, though the assessed tax was Rs.38,00,170/-, the petitioners paid along with interest an amount of Rs.50,55,310/-. The said conduct itself indicates that there was never any intention or attempt to evade tax payment, for which reason, the penal provision under Income Tax Act is not attracted. 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 Circle-1(1)[Criminal Petition Nos.4891 and 4892 of 2014, dated 14.06.2019] of Karnataka High Court.

7. In the aforesaid judgment, the accused was prosecuted on the ground that though returns were filed, he failed to pay the said tax amount. The Court found that the act of filing returns by itself cannot be construed as an attempt to evade tax rather it would suggest that there was a voluntary declaration to pay the tax.

8. In the case of Prem Dass v. Income Tax Officer [(1999) 5 SCC 241], the Hon’ble Supreme Court held that a positive act on the part of the accused is required to establish a charge under Section 276-C(2).

9. Learned Senior Counsel also relied upon the judgment of this Court in Criminal Petition No.3164 of 2008, dated September, 2015, which was decided on similar lines.

10. The Learned Standing Counsel appearing on behalf of the Income Tax Department submits that whether there was an intention or not to evade tax is subject matter of trial and this Court under Section 482 of Cr.P.C cannot decide the said fact. Further, the judgment relied by the learned Senior Counsel for the petitioners, have no bearing since the facts in present case are distinguishable on facts of the judgments relied by the learned Senior Counsel. He further submits that the Income Tax department has to be given an opportunity to establish its case before the concerned Court and the defence of the petitioners can be taken before the trial Court, as such, petition has to be dismissed.

11. In the present case, the facts are not disputed either by the petitioners or by the department. The 1st petitioner company filed return of Income Tax admitting the tax liability of Rs.38,00,170/-, but failed to make payment. However, on receiving notice dated 09.06.20