THE HONOURABLE SMT. JUSTICE K. SUJANA

COMMON ORDER

Since these Criminal Petitions are challenging the proceedings in C.C.No.2 of 2017, they are analogously heard together and being disposed of by this common order.

2. Criminal Petition No.7532 of 2024: This Criminal Petition is filed by the petitioner/accused No.3 to quash the proceedings against him in C.C.No.2 of 2017 pending on the file of the Court of Special Judge for Economic Offences at Hyderabad.

3. Criminal Petition No.7541 of 2024: This Criminal Petition is filed by the petitioners/accused Nos.1 and 2 to quash the proceedings against them in C.C.No.2 of 2017 pending on the file of the Court of Special Judge for Economic Offences at Hyderabad.

4. Criminal Petition No.7542 of 2024: This Criminal Petition is filed by the petitioner/accused No.4 to quash the proceedings against him in C.C.No.2 of 2017 pending on the file of the Court of Special Judge for Economic Offences at Hyderabad.

5. For the purpose of disposal of these Criminal Petitions, the facts in C.C.No.2 of 2017 are taken into consideration.

6. Accused Nos.2 to 4 are directors of M/s.Sudha Prabhakar Complex Private Limited/accused No.1(hereinafter referred as ‘the company’)and the company running hotel business in the name and style of Hotel Suprabha. On 17.11.2024, the company filed its original return of income for the A.Y. 2014-15 for total income of Rs.37,60,960/- with tax liability of Rs.13,35,296/- and at time of filing income tax returns, the company paid Rs.11,472/- by way of TDS of the admitted tax and Rs.13,23,820/- is declared as amount payable. On 24.06.2017, respondent No.2 got show cause notice under Section 276(2) read with 279(1) of the Income Tax Act, 1961 (for short ‘the Act’) issued to the company for default of evading payment tax amount of Rs.13,23,820/-. On 02.01.2017 respondent No.2 filed complaint against the accused before the Special Judge for Economic Offences, Hyderabad (for short ‘the trial Court’) upon receiving authorization sanction order dated 14.10.2016 from the Principal Commissioner of Income Tax, Hyderabad, under Section 279(1) of the Act.

7. Heard Sri P. Vikram, learned senior counsel on behalf of Sri N.Jeevan Reddy, Sri Manasvi Redddy, Sri Abhinay Reddy, learned counsels appearing for the accused and Sri S.Ganesh, learned Assistant Public Prosecutor for respondent No.1-State as well as Sri Vijhay K Punna, learned Standing Counsel for respondent No.2-Income Tax.

8. Learned counsel for the accused submitted that that the company has not paid the tax while filing income tax returns due to its financial difficulties. Except that there is no mens rea in not paying the tax within the stipulated time. He further submitted that the company has not committed any willful act to evade the tax.In this regard, he placed reliance on the judgment of the Bombay High Court in the case of Unique Trading Company and others v. Income Tax Officer¹and the judgment of the Karnataka High Court in the case of Vyalikaval House Building Co-operative Society Limited v. Income tax Department² and prayed this Court to allow these Criminal Petitions by quashing the proceedings against the accused.

9. On the other hand, learned Standing Counsel for respondent No.2-Income Tax submitted that the company failed to pay the tax while filing returns for the A.Y. 2014-15. He further submitted that the company paid only Rs.11,472/- by way of TDS and remaining Rs.13,23,820/- was left unpaid on

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2024 SCC OnLineBom 417 2019 SCC OnLineKar 3566 the day filing of returns. Hence, he prayed this Court to dismiss these Criminal Petitions.

10. In view of the rival submissions made by both the parties, this Court has perused the material available on record. The only allegation levelled against the accused is that the company has willfully defaulted in payment of tax for A.Y. 2014- 15 on admitted income as required under Section 140(A) of the Act attracting the provision of Section 276(C)(2) of the Act. It is pertinent to note that