TMI Blog2022 (5) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The un-controverted facts of the case is that, M/s.AMK Solutions Pvt Limited is an Income Tax Assessee having PAN No:AAHCA2131L. For the Assessment Year 2017-2018 they have filed self assessment return on 31/10/2017 declaring the income and tax payable. However, the tax admitted to be payable not remitted by the assessee along with the returns, which is the requirement of the law under Section 140 A of Income Tax Act, 1961. The assessee, after a delay of 4 months, has remitted a sum of Rs.6,85,462/- towards the tax and interest payable. While so, the sanction to prosecute issued by the Principal Commissioner of Income Tax-1, Chennai and based on the sanction to prosecute, complaint filed on 28/07/2019. 4. The Learned Counsel for the petitioners submitted that, to attract offence under section 276 C (2) of the Income Tax Act, two ingredients are required. They are (i). culpable mental state to evade Tax and (ii) Attempt to evade tax. In the case of the petitioners, they never had the intention to evade tax. In fact, they have disclosed their income and tax payable while filing the returns. Due to financial constraints and other reasons they were not able to pay the tax along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To buttress his submissions, the Learned Counsel for the Respondent-Income Tax Department relied upon the following judgments: 1. Prakash Nath Khanna -vs- Commissioner of Income Tax reported in (2004) 135 Taxman 327 (SC) . 2. Madhumilan Syntex Limited Others -vs- Union of India another reported in (2007) 11 SCC 297 . 3. Sasi Enterprises -vs- Assistant Commissioner of Income Tax reported in (2014) 5 SCC 139 . 4. M/s.Neeharika Infrastructure Pvt Ltd -vs- State of Maharashtra and another reported in (2021) SCC Online SC 315 . 5. Arun Arya -vs- Income Tax Officer in CRMC.No.205 of 2015. 6. Mrs.Sujatha Venkateshwara -vs- The Assistant Commissioner of Income Tax in Crl.R.C.No.615 of 2011. 7. Shri.Raman Krishna Kumar -vs- Deputy Commissioner of Income Tax in Crl.O.P.No.25561 of 2016. 8. Oriental Enterprises others -vs- The Assistant Commissioner of Income Tax in Crl.O.P.No.26330 of 2017. 8. Section 140-A, which speaks about payment of tax under Self Assessment Scheme reads as below:- 140A. (1) Where any tax is payable on the basis of any return required to be furnished under section 115WD or section 115WH o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced by the advance tax, paid, if any. (1B) For the purposes of sub-section (1), interest payable under section 234B shall be computed on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid falls short of the assessed tax. Explanation.-For the purposes of this sub-section, assessed tax means the tax on the total income as declared in the return as reduced by the amount of,- (i) tax deducted or collected at source, in accordance with the provisions of Chapter XVII, on any income which is subject to such deduction or collection and which is taken into account in computing such total income; [(ia) any relief of tax claimed under section 89;] (ii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India; (iii) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and (iv) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD. (2) After a regular assessment under section 115WE or section 115W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof. 10. The 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. Being a defaulter, the presumption of culpable mental state is against them. Therefore they has to prove their innocence during the trial and cannot short circuit the judicial process by invoking Section 482 of Cr.P.C. 11. Whereas, the Learned Counsel for the petitioner submits that, on payment of tax, there is no scope to invoke the deeming provision and proceed with prosecution. Neither on the date of according sanction nor on the date of filing the compliant, factually there was no arrears of tax or default in payment of tax or any evasion of tax to deem the assessee, a defaulter. When on facts there is no tax payable on the date of according sanction, this case squarely falls under the category of malafide prosecution an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 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. 14. 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 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. 15. Yet another argument advanced by the Special Public Prosecutor for the respondent-Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 19. 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). 20. 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. 21. For the said reasons, the petitions to quash the E.O.C.C.No.132 of 2019 on the file of Additional Chief Metropolitan Magistrate, Egmore, is allowed. Accordingly, these Crimin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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