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TMI Blog2015 (9) TMI 1740X X X X Extracts X X X X X X X X Extracts X X X X ..... payment, and hence he is treated as a defaulter. On 08-03-2004, the return of the income was processed and tax payable was determined at Rs.4,78,913/-. This amount was collected by the department from the Income-tax refund due to Smt. Parneet Kaur Bagga on 08-11-2005 after obtaining written consent from her. This case was converted into scrutiny and assessment proceedings were completed on 27-01-2006 raising additional demand of Rs.70,647/-. The petitioner has failed to pay the demand inspite of receiving notices It is further alleged that the Commissioner of Income-Tax (C) vide letter dated 17-10-2006 granted time to the assessee to pay instalments of Rs.10,00,000/- each by 5th November, 2006 and 5th December, 2006 in respect of demand outstanding in Bagga Group of Cases. 3. It is further alleged that though the assessee was having sufficient resources to make payment of demand, the assessee has not paid and attempted to evade payment of tax. Therefore, a notice under Section 276(C)(2) was issued giving three days time for reply. That the assessee gave a reply on 13-04-2007 denying his liability. It is clear that the assessee is deliberately with an intention to evade payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution is nothing but subjecting the assessee to needless harassment and hence all further proceedings in the calendar case may be quashed. 7. In that view of the matter, what is required to be seen is as to whether the petitioner/assessee has conducted himself in the manner which could fall within the ambit of Section 276C of the Act so as to prosecute him in a criminal Court and whether he can be termed as a person who wilfully attempted to evade any tax, penalty or interest. Section 276C of the Act reads as under:- "Wilful attempt to evade tax, etc. (1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable 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 - (i) in a case where the amount sought to be evaded exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for 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 two years and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same, an intimation shall be sent to the assessee specifying the sum determined to be payable or the amount of refund due to assessee. The penalties imposable, for failure to furnish return, comply with notices, concealment of income etc., is incorporated in Chapter XXI of the Act. Section 271 stipulates that if the Assessing Officer is satisfied that any person has failed to comply with notice, under sub-section (2) of Section 115WD, or under sub-section (2) of Section 115WE, or under sub-section (1) of Section 142 or sub-section (2) of Section 143, or fails to comply with a direction issued under sub-section (2A) of Section 142, or has concealed the particulars of his income or furnished inaccurate particulars of such income, can be directed to pay the penalty as contemplated under Section 271 of the Act. Under the same Chapter, there is Section 276C which provides for criminal prosecution. When Section 271 of the Act takes care of an assessee who has failed to comply with the demand notice, or has concealed the particulars of his income or furnished inaccurate particulars of income, Section 276C deals with a person who wilfully attempts in any manner whatsoever to evade any t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner has relied upon a decision of the Supreme Court reported in K.C.Builders and Anr. V. The Assistant Commissioner of Income Tax [(2004) 2 SCC 731] 13. In the case before the Apex Court, the assessee was unsuccessful in his attempts to get the proceedings launched in a criminal Court quashed under the provisions of Sections 397 and 401 Cr.P.C. The trial Court and the High Court rejected the prayer of the assessee and hence the matter went to the Supreme Court. After elaborately referring to the case law on the subject, the Supreme Court made the following observations in paragraph Nos.16, 17, 26, 27, 28, 29 and 34, which have a bearing to the facts of the case in hand and ultimately quashed the criminal case registered against the assessee:- "16. The word "concealment" inherently carried with it the element of mens rea. Therefore, the mere fact that some figure or some particulars have been disclosed by itself, even if takes out the case from the purview of non-disclosure, it cannot by itself take out the case from the purview of furnishing inaccurate particulars. Mere omission from the return of an item of receipt does neither amount to concealment nor deliberate furnishing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secution is automatic. 27. In the instant case, the penalties levied under Section 271(1)(c) were cancelled by the respondent by giving effect to the order of the Income Tax Appellate Tribunal in I.T.A.Nos.3129-3132. It is settled law that levy, of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic. 28. In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive 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 supercedes the order of the Assessing Officer under Section 143(3) more so when the Assessing Officer cancelled the penalty levied. 29. In our view, once the finding of concealment and subsequent levy of penalties under Section 271(1)(c) of the Act has been struck down by the Tribunal, the Assessing Officer has no other alternative except to correct h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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