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2022 (5) TMI 118 - HC - Income TaxOffence u/s 276 C (2) - willful evasion of payment of tax or not - malicious prosecution - contention of the Standing Counsel for the Income Tax Department is that, the failure to remit the tax and annexing the proof of payment of tax along with the returns filed on 31/07/2017 is sufficient to deem the assessee, a defaulter - HELD THAT:- In the instant case, admittedly there is no concealment of any source of income or taxable item, inclusion of a circumstance aimed to evade tax or furnishing of inaccurate particulars regarding any assessment or payment of tax. What is involved is only a failure on the part of the petitioner to pay the tax in time, which was later on paid after 4 ½ months along with interest payable. So, it would not fall under the mischief of Section 276 C of the Income Tax Act, which requires an attempt to evade tax and such attempt must be a wilful. If the intention (culpable mental state) of the assessee was to evade tax or attempt to evade tax, they would not have filed the returns in time disclosing the income and the tax liable to be paid. They would not have remitted the tax payable along with interest without waiting for the authorities to make demand or notice for prosecution. Thus, except a delay of 4 ½ months in payment of tax, it is clear that there was no tax evasion or attempt to evade the payment of tax. To invoke the deeming provision, there should be a default in payment of tax in true sense. Nothing can be deemed contrary to the fact borne by record. If such deeming fiction is applied by the authority, is has to be termed as non application of mind over the material records. In the instant case, the Principal Commissioner of Income Tax, who has accorded sanction on 14/03/2019 has not considered the payment of tax with interest by the assessee on 15/02/2018. The proceedings granting sanction to prosecute was contrary to the facts, says, “it is seen from the AIMS that Self- Assessment amount of Rs.6,85,462/- is unpaid”. Further, the Principal Commissioner has conspicuously omitted to record the fact of payment of the tax with interest except to record that, the tax was not paid within the time. On perusing the complaint, this Court finds that, the complaint was filed in the month of July-2019. At paragraph 9 of the complaint, it states that, “The complainant states that the accused has failed to pay the tax liability of Rs.6,85,641/- along with its return of income filed on 31/07/2017. Till date the accused has not paid the above said tax amount due to the Department.” (emphasis added). Thus, the suppression of material facts, intentional suggestion of falsehood and non-application of mind goes to show that, this is a malicious prosecution initiated by the Income Tax authorities by abusing the power. When the malafide is patently manifested, the petitioners need not be forced to undergo the ordeal of trial, which has no legs to stand - Decided in favour of assessee.
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