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2022 (2) TMI 50 - HC - Income TaxOffence u/s 276C(2) - Default in payment of tax and payment of the tax in instalment - proof of mens rea - immovable property was attached and attachment is still continued - HELD THAT:- Mere failure to pay the tax in time without any intention or deliberate attempt to avoid tax in totality or without any mens rea to avoid the payment, the word employed “wilful attempt” cannot be inferred merely on failure to pay tax in time. If the intention of the assessee to evade the payment of tax was present from the very inception, he would not have made further payments. The statements filed by the Department would also indicate that he was continuously paying the taxes from the year 2017 by instalments and he has paid the tax from 2016 till 10.11.2021 around 40 instalments he paid about ₹ 1,95,76,736/-. His conduct itself shows that there was no wilful attempt to evade the payment of tax and payment of the tax in instalment in fact clearly probabalise his reply given to the show cause notice which has not taken note of the Revenue. It is also relevant to note that for non-payment of tax the attachment order also passed on the immovable property of the assessee in the year 2016 itself. The authorities have attached the property till now keeping silent without making any recovery proceedings as contemplated under Sections 222, 223 and 226 of the Act. It is also relevant to note that as per Sub-Clause 4 Section 220 of the Act, ff the tax is not paid within the time limited under sub- section (1) or extended under sub- section (3), as the case may be, the assessee shall be deemed to be in default. The word “Wilful”is also not included the above legal fiction. Having attached the property the department has not made any attempt to recover all the taxes. Therefore, when the immovable property was attached and attachment is still continued, it is common knowledge that liquidating the asset is very difficult. Therefore, explanation offered by the assessee in this case for failure to pay the amount is very reasonable. The conduct of making payment of tax to the tune of ₹ 1,95,00,000/- is also clearly show that he never had an intention to defeat the provision of law by evading the payment of tax. As long as there is no deliberate Act or willful act on the part of the accused to evade the payment of tax, mere failure to pay the tax will not constitute the offence under Section 276C(2). This Court is of the view that the prosecution in this case is nothing but shear waste of time and there was no intention or willful attempt made by the Assessee to evade the payment of tax. Only he expressed his inability and mere failure to pay a portion of the tax cannot be construed to mean that he has wilfully attempted to evade the payment of tax. Proceedings on the file of the learned Additional Chief Metropolitan Magistrate (Economic Offences)-II, Egmore at Allikulam, Chennai, is quashed.
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