Madras HC quashes Prosecution underneath Earnings Tax Act


No - Willful - Evasion of Tax - Madras HC - Prosecution - Income Tax Act - taxscan

The Madras Excessive Courtroom has quashed the prosecution initiated by the revenue tax division underneath part 276C(2) of the Earnings Tax Act, 1961 by holding that there isn’t any willful evasion of tax.

Part 276C (2) of the Earnings Tax Act, 1961 supplies that if an individual willfully makes an attempt to evade the cost of any tax, penalty or curiosity underneath the Act, he shall be punishable with imprisonment for a time period not lower than three months however which can lengthen to 2 years.

The Petitioner/Assessee S.P. Velayutham filed his revenue tax return displaying his tax legal responsibility however didn’t pay the complete quantity of self-assessment tax. An Evaluation Order was handed by the authorities confirming his taxable revenue. Thereafter, an order for attachment of immovable property was handed by the revenue tax division and a show-cause discover was issued to the Assessee as to why prosecution underneath Part 276C (2) of the Earnings Tax Act shouldn’t be initiated in opposition to him for not paying your entire tax due as per his revenue tax return.

The Assessee submitted that your entire quantity of tax was not paid by him as a result of loss in enterprise and that after the attachment of immovable property he couldn’t mobilise funds.

Justice N. Sathish Kumar noticed that to prosecute an individual there should be a willful try on the a part of the assessee to evade cost of any tax, penalty, or curiosity.

“The reason to the above part makes it very clear that the evasion by means of any false entry or assertion within the books of account or different doc or omission to make an entry within the books of accounts or different paperwork or another circumstances which can have the impact of enabling the assessee to evade tax or penalty or curiosity chargeable or imposable underneath this Act or the cost thereof. Although clarification is inclusive it’s not the case of the Division that the assessee has made any false entry within the statements or paperwork or omitted to make any such entry within the books of account or different paperwork or acted in another method to keep away from cost of tax. It isn’t the case of the Division that the assessee has made an try and alienate the property with a view to defeat the cost and so on.”

The Courtroom disagreed with the observations of the Telangana Excessive Courtroom within the case of M/s. Konark Fridge vs. Dy. Commissioner of Earnings Tax held that provision 140A on the failure of cost won’t make the assessee a willful defaulter.

Quashing the proceedings, the Courtroom noticed that “Taking the general truth and the character of the criticism, this Courtroom is of the view that the prosecution, on this case, is nothing however shear waste of time and there was no intention or willful try made by the Assessee to evade the cost of tax. Solely he expressed his incapability and mere failure to pay a portion of the tax can’t be construed to imply that he has willfully tried to evade the cost of tax.”

S.P. Velayutham vs The Assistant Commissioner of Earnings Tax Non Company Circle

CITATION: 2022 TAXSCAN (HC) 235

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