2010 (7) TMI 405 - HC - Income Tax

Section 276C -Penalty / Prosecution for Wilful attempt to evade tax, etc. Raid was conducted in the premises of the accused/petitioner herein and during the raid, two agreements for construction of a building dated February 4, 1985, were found Both shows the different values but the agreement were same Mere possession of two agreement does not amount to evasion of tax Three complaints were filed by Income Tax authority - The complainant ought to have filed only one complaint against the petitioner On the basis of precedent judgement , it was held that section 276C was not made out

Summary

Issues:
- Allegations under section 276C(1) of the Income-tax Act, 1961 read with section 193 of the Indian Penal Code.
- Application under section 245(i) of the Criminal Procedure Code seeking discharge.
- Interpretation of sections 193 and 276C of the Indian Penal Code and the Income-tax Act.
- Prima facie charge for the offences.
- Multiple complaints for the same offence.
- Disposal delay of petitions seeking discharge.

Analysis:

The petitioner faced complaints under section 276C(1) of the Income-tax Act, 1961, and section 193 of the Indian Penal Code based on allegations of suppressing income through agreements for construction projects. The petitioner sought discharge under section 245(i) of the Criminal Procedure Code, which was denied by the Magistrate, leading to the revision applications. The petitioner argued that section 193 of the Indian Penal Code did not apply as no judicial proceedings were pending, and there was no mala fide intent to evade taxes. The petitioner's counsel contended that possession of agreements did not prove wilful tax evasion, citing relevant court decisions.

The prosecution contended that the petitioner admitted to undervaluing one agreement to evade taxes, indicating a wilful attempt. The court examined the evidence and submissions from both sides. It noted that the petitioner had entered into agreements with differing values to suppress actual costs, leading to the filing of three complaints. The court questioned the necessity of multiple complaints for a single act of agreement preparation, finding it unjustified. The court analyzed the applicability of section 193 of the Indian Penal Code and section 276C of the Income-tax Act to the case.

Regarding section 193 of the Indian Penal Code, the court found that no charge could be framed as no judicial proceedings were pending during the document seizure. However, concerning section 276C of the Income-tax Act, the court referred to the Explanation, emphasizing that possession of documents with false entries constituted a wilful tax evasion attempt. The court distinguished previous cases cited by the petitioner's counsel, stating the specific circumstances of the current case warranted a charge under section 276C.

Ultimately, the court ruled that the first complaint was maintainable, but the proceedings in the other two complaints for the same offence were quashed. The judgment highlighted the unnecessary delay in disposing of petitions seeking discharge, appreciating the prompt action taken by the current Presiding Officer. The detailed analysis of the legal provisions and case facts led to the dismissal of one revision petition and the allowance of the other two, resulting in the quashing of redundant proceedings.

In conclusion, the judgment clarified the application of relevant legal provisions, addressed the procedural issues of multiple complaints, and emphasized the importance of timely disposal of legal petitions for efficient judicial processes.