TMI Blog2018 (8) TMI 2074X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed in the revised return which is filed on 03.03.2015. But, the Income Tax Officer did not accept it. However, the Commissioner of Appeals passed an order which is extracted in the earlier paragraphs and aggrieved by the Warranty Service Charges (WSC) appeal is pending before the Tribunal. Till date, the petitioners did not pay the tax due to the revenue and having filed revised return admitting the tax liability it can be certainly held to be wilful evasion of tax, as it is a conscious, deliberate and calculated act of the petitioners in failing to pay the tax directly, adhering to Section 140-A of the Income Tax Act, prima facie. When the petitioners prima facie committed an offence under Section 276(C)(2) of the Act, the proceedings at this stage, more particularly, when major part of trial is completed in C.C.No.200 of 2016 on the file of Special Judge for Economic Offences at Hyderabad, the same cannot be quashed. Since, powers of this Court are limited and power under Section 482 Cr.P.C has to be exercised only in exceptional circumstances only to give effect to the orders passed by the Court and to prevent abuse of process of the Court or to meet the ends of justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2014-15 on 12.12.2014 declaring an income of ₹ 1,22,49,090/-. Thereafter, the first petitioner/company filed a revised return of income for the said assessment year 2014-15 declaring a total income of ₹ 68,49,092/- and has failed to pay self assessment tax of ₹ 24,04,150/- on the income admitted by the first petitioner/A-1/company. According to Section 140-A of the Act, (1) Where a return has been furnished under Section 139 and the tax payable on the basis of that return as reduced by any tax already paid under any provision of this Act exceeds five hundred rupees, the assessee shall pay the tax so payable within thirty days of furnishing the return. Instead of complying with Section 140-A of the Act, the accused have wilfully defaulted in payment of self-assessment tax on admitted income, as required under section 140-A of the Act, attracting the provisions of Section 276-C(2) of the Act, which stipulates that any wilful attempt in any manner whatsoever to evade the payment of any tax, penalty or interest under the Act constitutes an offence under the Act. Further, a show cause notice dated 08.06.2016 was issued to the first petitioner/A-1/company and sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quash the proceedings against these petitioners. It is also alleged that, when the Commissioner of Income Tax (Appeals)-8, Hyderabad, decided the appeal in favour of these petitioners partly and paid an amount of ₹ 4,91,000/-, as a pre-condition to entertain an appeal by the Commissioner of Income Tax (Appeals)-8, Hyderabad, the respondent cannot prosecute these petitioners for the offences referred supra. It is also further brought to the notice of this Court that an appeal against the order passed by the Commissioner of Income Tax (Appeals)-8, Hyderabad is preferred before the Income Tax Appellate Tribunal and it is pending for adjudication. It is urged that, when the proceedings are pending before the concerned authorities as per statute, proceedings against these petitioners for the offence punishable under Sections 276-C(2), 278-B of the Act is a serious illegality and requested this Court to quash the proceedings against these petitioners. During hearing, learned counsel for the petitioners reiterated the allegations made in the complaint, while placing reliance on the judgment of the Supreme Court in K.C. Builders and another v. Assistant Commissioner of Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entitled to contend that the Commissioner of Income Tax (Appeals)-8, Hyderabad allowed the appeal in part. Learned counsel for the respondent drawn the attention of this Court to certain paragraphs in the order dated 22.02.2018 passed by the Commissioner of Income Tax (Appeals)-8, Hyderabad, wherein, in paragraph 11 it was observed that, as regards the depreciation claimed in the revised return, the AO is directed to verify the same from the return of income for the AY 2013-14 and allow accordingly, regarding bank interest statement, the AO may verify the claim of the appellant with the documents evidences filed and allow accordingly. With regard to electricity charges also the AO may verify the bills and allow accordingly. As regards (Warranty Service Charges) WSC, since the appellant could not furnish the bills/invoices for the said claim of expenditure, the claim made in the original return of ₹ 9,56,120/- is disallowed and the issue of allowing additional claim of ₹ 9,64,615/- does not arise. Therefore, as such the Commissioner of Income Tax (Appeals)-8, Hyderabad, did not allow the appeal in toto, but still it is subject to the verification by the Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code. (3) Where the allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused. (4) Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non- cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code. (5) Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused. (6) Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f complying with the mandatory requirement under Section 140-A of the Act, the petitioners just filed revised return and maintained silence till show cause notices were issued on 08.06.2016 and 15.06.2016 and scrutiny proceedings were taken up. In reply to the show cause notices dated 24.06.2016 by the first petitioner and 30.06.2016 by the petitioners 2 3, they admitted about filing of return for the year 2014-2015 on 12.12.2014, wherein, admitted total income of ₹ 1,22,49,090/- with a tax liability of ₹ 46,16,190/-, so also filing of revised return for ₹ 68,49,092/- with tax liability of ₹ 24,04,150/-. Against the show cause notices the petitioners contended that the company is facing acute financial crunch and steep downtrend in the manufacturing industry and also various economical ups and downs, happening in the market and that, loan account of the company was classified as non-performing asset (NPA) since 30.06.2013, thereby proceedings under SARFAESI Act were initiated and that there was no wilful attempt to evade any tax penalty to attract offences punishable under Sections 276-C(2), 278-B of the Act. The petitioners stated in the reply to show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other v. Assistant Commissioner of Income Tax (referred supra), wherein, the Apex Court by relying on the judgment of G.L. Dodwamoa v. ITO 1995 Supp (2) SCC 724, held in paragraph 22 as follows: In the case of G.L. Didwania Anr. Vs. Income Tax Officer Anr., the prosecution was levelled against the assessee for making false statement. The Assessing Authority held that the assessee had intentionally concealed his income derived from `Y' company which belonged to him, initiating prosecution against him. The appellant filed the appeal against the assessment order and the Tribunal set aside the assessment holding that there was no material to hold that `Y' company belonged to the assessee. The assessee thereupon filed a petition before the Magistrate to drop the criminal proceedings and the application before the High Court under Section 482 to quash the criminal proceedings which were dismissed. On appeal, this Court held that the whole question was whether the appellant made a false statement regarding the income which according to the assessing authority had escaped assessment and so far as this issue was concerned, the finding of the appellate Tribunal was conclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Income Tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supersedes the order of the assessing officer under Section 143(3) more so when the assessing officer cancelled the penalty levied. Thus, when the Tribunal has set-aside the order of concealment and penalties, there is no concealment in the eye of law and therefore, the prosecution cannot proceed with the complainant and further proceedings will be illegal and without jurisdiction. Turning to the present facts of the case, the principle laid down in the above judgment has no application, for the reason that the Appellate Commissioner did not allow any of the claims, but directed the Assessment Officer to verify certain claims, while disallowing Warranty Service Charges (WSC), in proceedings ITA No.0252/CIT(A)-8/Hyd/2016-17. Similarly, learned counsel for the petitioners also placed reliance on the judgment of Delhi High Court in K.K. Mohta v. The Assistant Commissioner of Income Tax [2010] 320 ITR 387 (Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taking the second contention first, the Legislature has used different connotations on sub-sections (1) and (2). Subsection (1) refers to wilful attempt in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under the Act while sub-section (2) refers to wilful attempt in any manner whatsoever to evade the payment of any tax, penalty or interest under the Act. Therefore, it clearly appears that, as the words chargeable or imposable being absent in sub-section (2), the clear meaning could be payment of any tax, penalty or interest and that too, which is determined. Therefore, sub-section (1) contemplates evasion before charging or imposing tax, penalty or interest. Reading sub-section (2) it becomes very clear that it refers to the cases of tax evasion after charging or imposition, that is evasion after completion of assessment comes within the purview of the sub-section. As observed by the Kerala High Court in G. Viswanathan's case [1987] 167 ITR 103, sub-section (2) is so clear that at any rate it takes in the cases of tax evasion of tax, penalty or interest after assessments were made. Therefore, in view of the clear position, the submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not arise. Undisputedly, the petitioners filed return disclosing total income of ₹ 1,22,49,090/- initially by filing a return and later filed revised return on 03.03.2015 disclosing the total income @ ₹ 68,49,092/-, admitted tax liability of ₹ 24,04,150/-. It is the obligation of the petitioners to pay the admitted tax liability and annex the challans to the return in terms of Section 140-A of the Act. But, the petitioners did not pay the tax due, as admitted by them till a show cause notice was issued to them, taking up scrutiny proceedings, finding that these petitioners evaded payment of wilful. Therefore, failure to pay tax in compliance of Section 140-A of the Act till date, in view of admitted tax liability would amount to wilful evasion of tax or not is a question. The word Tax Evasion is not defined anywhere. But, Tax evasion is one of the most common economic crimes and has been present since the introduction of tax. People don't like paying taxes, and they pursue many avenues to reduce their payment, some styles are legal and others are illegal. There are numerous definitions of tax evasion but all of them don t go out of some common points. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. Till date, the petitioners did not pay the tax due to the revenue and having filed revised return admitting the tax liability of ₹ 24 lakhs, it can be certainly held to be wilful evasion of tax, as it is a conscious, deliberate and calculated act of the petitioners in failing to pay the tax directly, adhering to Section 140-A of the Income Tax Act, prima facie. When the petitioners prima facie committed an offence under Section 276(C)(2) of the Act, the proceedings at this stage, more particularly, when major part of trial is completed in C.C.No.200 of 2016 on the file of Special Judge for Economic Offences at Hyderabad, the same cannot be quashed. Since, powers of this Court are limited and power under Section 482 Cr.P.C has to be exercised only in exceptional circumstances only to give effect to the orders passed by the Court and to prevent abuse of process of the Court or to meet the ends of justice. In view of the guidelines laid down by the Apex Court in Bhajan Lal s case (referred supra), if the facts on its face value are accepted, it constitutes an offence, prima facie if proved. The Court cannot interfere, except when the Court comes to a conclusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under Sections 276-C(2), 278-B of the Act. At the end, learned counsel for the petitioners contended that, when the appeal is pending before the Income Tax Appellate Tribunal, the proceedings in criminal case cannot be continued and the Court shall grant stay of all further proceedings in C.C.No.200 of 2016 on the file of Special Judge for Economic Offences at Hyderabad, till disposal of the appeal and placed reliance on M/s Cubex Tubings Limited and others v. The Assistant Commissioner, Legal Customs (referred supra). In the facts of the above judgment, there was a dispute with regard to payment of service tax and criminal prosecution was launched against the petitioners therein and this Court by placing reliance judgment of Apex Court rendered in Commissioner of Income Tax, Mumbai v. Bhupen Champak Lal Dalal AIR 2001 SC 1096 , judgment of this Court rendered in Prabhava Organics P.Ltd. v. Deputy Commissioner of Income Tax 2007 (2) ALD (Crl.) 254 and judgment of the High Court of Patna rendered in Choubey Sugandith Tambaku Company through Chhedi Lal Sharma v. The Union of India 2013 (288) ELT 342 (Pat.) , judgment of Apex Court rendered in P.Jayappan v. S.K.Perumal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
