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Issues involved: Quashing of complaints u/s 482 of the Code of Criminal Procedure regarding alleged income tax evasion.
Summary: The petitioner, a cashew exporter, sought to quash complaints filed by the Income-tax Officer for alleged income tax evasion. The petitioner executed gift deeds in 1983 regarding immovable properties in favor of his minor children, which were contested in a civil suit. The Income-tax Recovery Officer attached the petitioner's properties for arrears, leading to the complaints. The complaints were filed u/s 276C(2) of the Income-tax Act, alleging wilful attempt to evade tax. The petitioner argued that the acts amounted to tax avoidance, not evasion, and thus were not punishable. However, the court held that the complaints disclosed the alleged offence u/s 276C(2) and the petitioner must face trial before the magistrate. The court dismissed both criminal miscellaneous cases. The court distinguished between tax avoidance, which is legal, and tax evasion, which is punishable. Section 276C(2) deals with evasion of tax after assessment and quantification, including attempts to evade payment. The Explanation to section 276C enumerates situations constituting wilful attempts to evade tax, penalty, or interest, applicable to sub-section (1) but not sub-section (2). The court emphasized that sub-section (2) covers evasion after assessment, making it clear that the petitioner's actions fell within its scope. The court rejected the petitioner's argument that the acts constituted tax avoidance rather than evasion, emphasizing that the complaints alleged offences under section 276C(2). It was held that the petitioner must face trial to determine the veracity of the allegations, as the inherent powers of the court could not be used as a shortcut to avoid trial proceedings.
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