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2018 (12) TMI 995 - HC - Income Tax


Issues:
Prosecution under Section 276C(2) of the Income Tax Act, 1961 for non-payment of determined tax amount.

Analysis:
The case involved a criminal revision seeking to set aside an order passed by the Additional Chief Metropolitan Magistrate, Chennai, in a prosecution initiated by the Income Tax Department against the accused under Section 276C(2) of the Income Tax Act, 1961. The prosecution alleged that the accused willfully attempted to evade tax payment for the assessment year 1998-1999. The accused filed an appeal before the Commissioner of Income Tax (Appeals) and later before the Income Tax Appellate Tribunal, challenging the tax determination. The Income Tax Appellate Tribunal remanded the matter back to the Commissioner of Income Tax (Appeals), resulting in a significant reduction in the determined tax amount from ?14,84,199 to ?1,10,402. The accused argued that the prosecution was based on outdated tax information and that subsequent proceedings had substantially reduced the tax liability.

The prosecution contended that despite the reduction in the tax amount, the accused could not be discharged from prosecution as the tax was due when the proceedings were initiated. The Public Prosecutor cited various judgments to support this position. However, the accused had actively participated in the appeal process, presented evidence, and challenged the initial tax assessment. The accused marked relevant orders from the Income Tax Appellate Tribunal and the Commissioner of Income Tax (Appeals) during the trial. The accused's actions indicated a genuine effort to address the tax dispute through legal channels.

The Court referred to legal precedents emphasizing the importance of mens rea in tax evasion cases and the need for willful intent for prosecution under Section 276C of the Income Tax Act. The Court highlighted that the accused's diligent pursuit of appeals and the subsequent reduction in the tax liability undermined the basis of the prosecution. The Court noted that the Income Tax Department was aware of the ongoing appeal process before the final fact-finding body, the Income Tax Appellate Tribunal. Consequently, the Court found that the accused was not willfully evading tax payment but was actively engaging in legal proceedings to address the tax dispute. The Court allowed the Criminal Revision Case, setting aside the trial court's order and discharging the accused from prosecution.

 

 

 

 

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