TMI Blog2022 (2) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /accused has suppressed the real income or undisclosed income was unearthed either under inspection or search. The return submitted by the accused was accepted and the assessment order of the year 2013-14 was also confirmed. He has paid part of the tax amount which was accepted by the department. The Assessment Order dated 31.03.2016 also confirmed the income. Thereafter an immovable property of the petitioner was attached on 13.05.2016. It is his further contention that he has paid tax with great difficulty and still he has to pay only ₹ 71 lakhs. In the reply notice he has categorically explained the circumstances which forced him delayed the payment and he has also stated that as the immovable property has already attached, he could not mobilise the funds by sale of the property and he has also expressed the various circumstances which lead to loss in his business. The reply notice has not been considered properly. The complainant has mechanically filed prosecution without applying his mind. It is his contention that mere delayed payment of tax without an intention to evade tax will not constitute offence under Section 276(C)(2) of the Income Tax Act. 3.b. It is also hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar for initiation of prosecution. Hence opposed the petitioner. He has also placed reliance on the following judgments: 1. Madhumilan Syntex Ltd. vs. Union of India and another [(2007)11 SCC 297] 2. Prakash Nath Khanna and Another vs. Commissioner of Income Tax and Another [(2004) 9 SCC 686] 3. Arun Arya Vs.Income Tax Officer [CRMC No. 205/2015, IA No. 01/2015 dated 28.09.2018 High Court of Jammu Kashmir at Jammu] 4. Sujatha Venkateshwaran vs. the Assistant Commissioner of Inocme Tax [Crl.R.C.No.615 of 2011 dated 13.07.2018 Madras High Court] 5. M/s. Konark Refrigerator vs. Dy. Commissioner of Income Tax [M/s. Konark Refrigeration vs. Dy.Commissioner of Income Tax [Crl.Petition No.5964 of 2018] 6. Entire materials perused. The prosecution has been launched for the non payment of tax. It is not in dispute that the assessee has filed Return on 25.11.2003 for the assessment year 2013-14 and revised Return also filed by the Petitioner on 13.03.2014 for the Assessment Year 2013-14. The assessment order dated 13.05.2016 is also confirmed the Return and the tax payable by the Assessee. The prosecution has been mainly launched o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch shall not be less than three months but which may extend to three years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. Explanation.- For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act 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; or ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailure to pay tax the assessee shall be deemed to be a default in respect of tax. The word wilfully attempt to evade the tax is absent in Section 140A(3). If, mere default in payment of tax in time to be construed as a wilful attempt to evade the payment of tax the legislatures would have included the word wilful attempt to evade the tax in Sub-clause 3 of Section 140A which is in fact absent. Therefore, mere default on payment of tax in time the wilful attempt to evade the tax cannot be imported to prosecute. To prosecute the person for penal action, the penal provision has to be strictly construed. Only the circumstances and the conduct of the accused show the wilfull attempt in any manner whatsoever to evade the tax or to evade the payment of any tax, penalty or interest, the prosecution can be launched. 11. The Apex Court in Tamil Nadu Housing Board vs. Collector of Central Excise, Madras and Ors. [1995 Supp(1) SCC 50] while dealing with Section 11A of the Central Excises and Salt Act, 1944, has held that the word evade in the context means defeating the provision of law of paying duty. It is made more stringent by use of the word intent . In other words the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quashed and is hereby quashed. 14. In Union of India (UOI) vs. Jiwal Lal Chironji Lal and Ors. [MANU/ MP/ 0143/2010] The High Court of Madhya Pradesh (Gwalior Bench) has held as follows: 22.From the minute analysis of the aforesaid Judgments of the Supreme Court, it clearly emerges that the conduct of the Assessee acquires importance, in relation to the proceedings of imposition of penalty or prosecution or conviction of the Assessee and whne the Assessee satisfactorily demonstrate that he was having no intention of concealment of Income, either Deliberately or indeliberately, the conviction could not be sustained. In the circumstances of the present case also, it is apparent from the perusal of the record that there was no wilful attempt to evade tax or concealment of income on the part of the Assessee Firm or false statement in verification and therefore, it would not be a case of 'Wilful concealment of Income' or even a case of `furnishing of inaccurate particulars of income` and therefore no fault could be found in the impugned judgment of the Appellate Court. 15. This Court in Sayamull Surana vs. Income Tax Officer [(2019) 306 CTR (Mad) 354] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffence under Section 276C(2) of the Income Tax Act. Hence the crime registered and the further proceedings thereof will not serve any purpose, if it is proceeded further. The same is quashed. 17. In Ganga Devi vs. State of Gujarat [[2021] 437 ITR 323 (Guj)] the High Court of Gujarat at Ahmedabad held as follows: 22.1 What the law requires is the intention to evade payment of taxes then it is not mere failure to pay the tax but must be something more. The assessee must be aware that the tax was leviable and such assessee deliberately avoids paying it. The word 'evade' in the context means defeating the provisions of law of paying tax. 18. Considering the above judgments and the 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffence under Section 276(CC) was sought to be quashed. The plea before the Apex Court in the abvoe case is that as the assessee has already submitted the levy of interest and also penalty he could not be prosecuted under Section 276(CC) for the same default. The same was negatived by the Apex Court. Whereas in this case the prosecution initiated only under Section 276(C)(2) of the Act. Therefore, the above judgment is not applicable to the fact of this case. 22. The judgment relied upon by the Department in Arun Arya Vs.Income Tax Officer [CRMC No. 205/2015, IA No. 01/2015 dated 28.09.2018 High Court of Jammu Kashmir at Jammu] on the basis of the survey conducted by the Income Tax Department under Section 133A of the IT Act, tax was assessed. The above case is also not applicable to the facts of the present case as the above case is arising out of the survey and search which squarely fall within the explanation of Section 277 of the Income Tax Act. 23. In Sujatha Venkateshwaran vs. The Assistant Commissioner of Inocme Tax [Crl.R.C.No.615 of 2011 dated 13.07.2018 Madras High Court] this Court has rejected the revision filed by the Assessee. In this case also the pros ..... X X X X Extracts X X X X X X X X Extracts X X X X
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