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2015 (11) TMI 933 - ANDHRA PRADESH HIGH COURT

2015 (11) TMI 933 - ANDHRA PRADESH HIGH COURT - TMI - Prosecution proceedings - Concealment of income or postponement of the tax due - penalties levied under Section 271(1)(c) - assessee willfully evaded the payment of the tax as per the provisions of the Act and committed offence punishable under Section 276(C)(2) of the Act, with deliberate default in not clearing tax dues that too, even after received of notice under Section 221(1) of the Act - petition filed under Section 482 of the Code of .....

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vidence placed before it. It further held that it is the settled law that levy of penalties and prosecution under Section 276C are simultaneous and once penalties are cancelled on that ground there is no concealment, the prosecution for concealment is liable to be quashed automatically and thereby held the prosecution will not survive and is liable to be quashed thereby the High Court held committed an error.

Here, it is not the case of the accused/petitioner that penalty proceedings .....

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ion for the factual matrix referred (supra).

In fact, it is though not mentioned in the original quash petition about the trial Court's order, after hearing both sides as a private warrant procedure framed charges against the accused and the accused was examined, in the course of hearing it is filed as additional material. On perusal of the charges framed by the trial Court also it nowhere requires any interference from what is referred supra.

Having regard to the above the .....

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NO. 6862 OF 2015 - Dated:- 15-9-2015 - DR. B. SIVA SANKARA RAO, J. For The Appellant : P. Nagaraj For The Respondent : B. Narasimha Sarma ORDER This petition is filed under Section 482 of the Code of Criminal Procedure (for short, 'the CrPC') by the Petitioner-Accused to quash the proceedings in C.C.No.103 of 2014 on the file of the learned Special Judge for Economic offences, Hyderabad, taken cognizance for the offences punishable under Sections under Section 276© (2) of the Income .....

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nd is that the petitioner filed E-return for the assessment year 2012-13 of dated 30.09.2012 (Section 139-D makes provision for filing of E-return from the Rules provided by the Board). It is self-declaring return of Income of ₹ 2,10,26,628.00(Section 140-A provides for self-assessment whereunder income tax is payable on the basis of return required to be furnished under Section 115 (wd) or (wh) or 139 or 142 or 148 or 153-A or 158-B, 158-C as the case may be. After taking into account the .....

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nishing return or any default or delay in payment of advance tax, before furnishing return and the return shall be accompanied by proof of payment of such tax and interest. As per the Explanation II of Section 141-A(i), where the amount paid by the assessee under the sub-section falls short of the aggregate of the tax interest as aforesaid, the amount so paid shall be first adjusted towards the interest payable and the balance towards the tax payable. As per the sub-section 2 of 141-A after regu .....

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o be an assessee in default, in respect of the tax or interest or both remaining unpaid and all the provisions of the Act shall apply accordingly. 3. It is pursuant to the provision for the income declared of ₹ 2,10,26,628.00 the tax and interest shown payable in the return was ₹ 68,28,133/- and there was TDS of ₹ 10,12,293/- that was the only payment as per the E-return supra and the assessee later paid ₹ 2 lakhs on 31.12.2015 and even therefrom the balance tax payable i .....

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ny such application even the CPC intimated under Section 143(1) by determining net amount payable ₹ 63,19,840/- including interest under Section 234 B and C. In fact, 2 lakhs if deducted out of ₹ 58,15,840/- the amount will be with little variance and he could have been applied under Section 154 of the Act, to arrive a correct figure. The accused-assessee failed to pay the admitted tax, as such notice under Section 221(1) of the Act, was issued to him on 10.02.2014 by the complainant .....

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as soon as the amounts received from the Government. 4. Pursuant to which the accused-assessee was summoned under Section 131 of the Act and after his appearance, statement was recorded on 28.02.2014 regarding pending tax dues, that too, he received 14.25crores in the financial year 2011-12 for the work done to the Government and his statement in this regard was he received but undisputedly utilized for business expenditure with intent to pay the tax after receiving the balance dues from the Go .....

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ra-10 onwards pursuant to the above that the assessee, having received more than 14.25crores for the works done though shown or claimed some balance still due for the works done, he has shown profit of 2,10,26,628/- for the assessment year-2012-13 (financial year 2011-12) he should have planned to pay the advance tax which he did not and at least with the return of self-assessment that not even paid though required to be as per Section 140(A) of the Act and the non-payment even after issuance of .....

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int that this is the roose for the past two years as explanation receiving from him without payment even received substantial amount of contract bills and it is manifested that he willfully evaded the payment of the tax as per the provisions of the Act and committed offence punishable under Section 276(C)(2) of the Act, with deliberate default in not clearing tax dues that too, even after received of notice under Section 221(1) of the Act. It is averred that as per Section 278(e) of the Act, the .....

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d prosecution proceedings taken cognizance against the accused by the learned Judge, are that there is no deliberate or intentional or willful attempt of concealment of income or postponement of the tax due, that there is no loss to the revenue and the ingredients of the offence under Section 276 of the Act not made out any offence and there is no notice of demand as required under Section 156 of the Act issued to him and there is efficacious alternative remedy under Section 226 of the Act by ot .....

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o be in default by the assessee, in addition to the amount of arrears and interest however the penalty shall not exceed the amount of tax in arrears and before levying any such penalty, assessee shall be given a reasonable opportunity of being heard to show if the default was for the good and sufficient reasons, in such a case, no penalty shall be levied. Once show cause notice issued even before levy of penalty tax paid that will not absolve liability for penalty to be imposed. Thus, Section 22 .....

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f the accused as to any notice contemplated by Section 156 is required to be given before launching prosecution. As referred supra, a reading of Sections 220 and 221 deals with penalty and not prosecution. It is only before imposing penalty, a notice under Section 221 and 156 of the Act that are required to be given. For better appreciation, it is just to reproduce section 156 which deals with notice of demand. It reads when any tax, interest, penalty, fine or any other sum is payable in consequ .....

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templated is for the tax etc., payable in consequence of any order passed under the Act. Here, the case on hand it is self-assessment by e-filing showing the tax paid and tax due and even after the CPC, Bangalore intimated under Section 143(1), there is no application made under Section 154 to the CPC. In fact, the intimation was also sent under Section 143(1) determining the amount payable including the interest as per document No.4 referred in the complaint. Section 156 proviso speaks the sum .....

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f the Act, as one of the contentions is that there are other modes for recovery and the prosecution cannot sustain. As per Section 226 read with 222 of the Act, for the assessee in default or deemed to be in default in making payment of tax, the Tax Recovering Officer may draw a statement in prescribed form specifying arrears due and shall proceed to recover by mentioning the modes with reference to the rules laid down in the II schedule either by attachment from the sale of movable and immovabl .....

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or other modes if the assessee is in receipt of any chargeable under the Head of salaries may require person paying sum to deduct from the payment subject to exemption under Section 60 of the Code of Civil Procedure and where money is due to the asseessee requiring person who falls due to pay and recover or otherwise applied to the Court in whose custody money belongs to the assessee for payment out of the same or otherwise if authorized by any order of recovery as arrears of tax due by distrain .....

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ision of this Act, be punishable, - (i) in a case where the amount sought to be evaded exceeds 75[twenty-five] hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to 76[two] years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the paymen .....

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or the payment thereof shall include a case where any person - (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; .....

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be chargeable or imposable under the Act and he shall be punishable. 11. The saving provision of without prejudice to any penalty that to be imposable, the prosecution when sustainable, the modes of recovery is to the tax, interest and penalty for the non-payment that is not the only recourse for nothing to say without exhausting, prosecution won't survive. The only point is left to be answered from the contentions raised by the learned counsel for the quash-petitioner/accused is whether the .....

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financial year 2011-12) of more than 14.25crores received out of the total works the value even not before the Court and shown of it a profit of ₹ 2,10,260.628 for which the tax payable of ₹ 68,28,133/- and the TDS deduction only of ₹ 10,12,293/- on his own showing by 30.09.2012 after e-return declaration of him and the subsequent payment only ₹ 2,00,000/-(rupees two lakhs only) on 31.12.2010 even taken when received more than 14 crores and payable only 68lakhs and odd fo .....

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in that prosecution. Therefore, once the Court shall presume, the burden is on the accused under the reverse onus clause to prove it by preponderance of probabilities while facing the trial as part of his defence to rebut the presumption but he cannot pretend that there is no culpable much less willful non-payment or willful evading of the tax and interest and penalty. 13. Now coming to the accusation he places reliance of K.C. Builders (supra) entire reading of the judgment where the prosecuti .....

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ibunal for the assessment years 1983-84, 1986-87 but the Tribunal found additions were on the basis of settlement between the assessees and the Department and represents voluntary offer made by the assessee and by applying principle of law laid down in Sir Shadilal Sugar and General Mills Limited v. the CIT Delhi (1987) 168 ITR 705 the Apex Court held that there was no concealment of income by the assessee and accordingly the penalties were cancelled and allowed the appeals. Thereupon, the appel .....

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of prosecution. Giving effect to the order in ITAT's order in ITA Nos.3129-3132, the penalties levied under Section 271(1)© of the Act, were cancelled by the Department. In the meantime the Revenue Department filed application under Section 256(1) of the Act for reference of the question of law which had arisen from the order of the ITAT and the same was rejected. Thereupon, the appellant-assessee preferred a Criminal Revision before the Hon'ble High Court for setting aside the orde .....

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rt should have given due regard to the order of the ITAT from the erroneous definition of the order was not exhibited though it was passed subsequently for its earlier marking does not arise. It is in the factual background by formulating 5 questions by the Apex Court viz: (a) Whether penalty imposed under Section 271(1)© of the Income Tax Act and prosecution under Section 276C of the Act, are simultaneous? (b) Whether the criminal prosecution gets quashed automatically when the Income Tax .....

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nant following the Income Tax Appellate Tribunal's Order no offence survives under the Income Tax Act, and thus the quashing of the prosecution is automatic? (d) Whether the finding of the Income Tax Appellate Tribunal is binding upon the Criminal Court in view of the fact that the Chief Commissioner and the Assessing Officer who initiated the prosecution under Section 276C(1) had no right to overrule the order of the Income Tax Appellate Tribunal. More so when the Income Tax Officer' gi .....

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