IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.02.2024 CORAM:

THE HON'BLE MRS.JUSTICE T.V.THAMILSELVI CRL.OP No. 20973 of 2022 &

Crl. MP.No. 13695 of 2022

1 S.DURAISAMY

2 D.PREM

3 AADITH D.VIKRAM ...petitioner Vs.

1 THE DEPUTY COMMISSIONER INCO ME TAX CIRCLE 1 INCOME TAX OFFICE AADAMS PLAZA NO. 121 60 FEET ROAD TIRUPUR 641602.

...Respondent PRAYER : This petition has been filed under Section 482 of Cr.P.C, to call for the records in C.C.No.741 of 2017 pending on the file of the Judicial Magistrate No.I Tiruppur and quash the same with all further and consequential proceedings against the Petitioners herein.

For Petitioners: Mr.P.V.Balasubramanian Senior counsel.

For R1 : Mr. V.Vijayakumar, Special Public Prosecutor.

ORDER

The petitioner herein filed this petition to call for the records in C.C.No.741 of 2017 pending on the file of the Judicial Magistrate No.I Tiruppur and quash the same with all further and consequential proceedings against the Petitioners herein. 2. The brief facts of the case:

M/s Classic Spinning Mills Private Limited (in short ''Mill")

engaged in the business of manufacture and sale of yarns. The directors of the said company are D.Prem, Shri Aadith Vikram and Shri S.Duraisamy. The said Mill has filed return of income for the assessment year 2011-12 on 29.03.2013 declaring chargeable to tax of Rs.11,02,500/- and deemed income under Section 115JB of Rs. 1,07,62,740/-. As per the return, the accused had an aggregate liability of Rs.27,58,070/-, including tax and interest. As against the aggregate tax liability, the accused had prepaid taxes amounting to Rs.11,62,173/-. The return of income for the assessment year 2011-12 in the case of the accused was processed by centralized processing centre (CPC), Bengaluru on 03.09.2013 under section 143(1) of the IT Act, 1961, raising a total tax demand of Rs.17,79,100/-. Thereby, the accused had willfully evaded payment of self-assessment tax payable under Section 140A of the Income Tax Act, 1961. Thus, the offence punishable under Section

276C(2) has been committed by the accused. Hence, the case.

3. The learned counsel for the petitioner submits that due to the adverse circumstances beyond the control of the petitioners and challenging market conditions the profitability of the Mill began to suffer. Due to the above factors, the ''Mill'' began to lose money and continue to run below breakeven. Thereafter, the operations of the Mill was temporarily halt due to the persistent strain on liquidity. Faced with significant losses, Mill was unable to satisfy its statutory obligations and loan repayment obligations on time as planned, although always willing and being ready to honor it. Subsequently, Mill defaulted on its payment commitments towards the Financial Creditor due to circumstances beyond its control, and the account was classified as a Non performing asset on 31.07.2014. The core of all complications was that all their efforts to revive the company were shattered when, one of the creditor Aegan Industries Private limited filed a petition in CP No. 234 of 2015 for winding up the Mill before this Court and the said petition was admitted on 15.01.2017/06.04.2017 and an official liquidator was appointed to take over the Mill affairs. The production unit and other assets that were pledged as security to the Financial Creditor were taken over by the Financial Creditor, who also sent out attachment notices and the affairs of the company was also taken over by the official liquidator. Hence, Mill was constrained from disbursing any payments let alone the statutory payments. Since, the petitioner's business was shut down, they were unable to make any payments towards any liability. Therefore, the there is no wilful or deliberate default in payment of tax. Hence, he prays to allow this petition.

4. The learned counsel for the respondent submits that as part of business transaction the petitioner is bound to pay the tax but the petitioner wilfully defaulted in payment of tax. Hence,