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2024 (6) TMI 690 - HC - Income TaxOffences punishable u/s 276 C (2) r/w sec 278 B - Criminal Procedure for Economic Offences - petitioners without making any payment of tax, filed returns - Petitioners has submitted that it is the mistake of auditors and they are under the impression that they paid the tax amount, as such, they filed the returns. When it came to the notice of the petitioners, they paid the entire amount as alleged by respondent No. 2. Therefore, there is no intention to evade the tax. HELD THAT - As per the principle laid down in M/s. Bejan Singh Eye Hospital Pvt. Ltd 2020 (11) TMI 316 - MADRAS HIGH COURT a positive act on the part of the accused is required to be established to bring home the charge against the accused for the offence punishable u/s 276 C (2) of the Act. In the case on hand also the petitioner has already paid returns without paying the tax. When it comes to the notice of the petitioner, he filed tax along with interest. Since the petitioners have cleared the dues along with interest and as there is no intention to evade the tax it cannot be presumed that culpable mental state, as such, the proceedings against the petitioners are liable to be quashed. Criminal Petition is allowed and the proceedings against the petitioners/accused Nos. 1 to 5 on the file of the Special Judge for Economic Offences, Hyderabad are hereby quashed.
Issues:
Quashing of proceedings under Section 482 of Cr.P.C. for offences under Income Tax Act - Willful evasion of tax by filing returns without payment - Statutory presumption under Section 278 E of the Act. Analysis: The judgment by the Telangana High Court, delivered by Honourable Smt. Justice K. Sujana, pertains to a Criminal Petition filed under Section 482 of the Code of Criminal Procedure seeking to quash proceedings against the petitioners/accused Nos. 1 to 5 in C.C. No. 268 of 2017. The case involves allegations of offences punishable under Section 276 C (2) read with 278 B of the Income Tax Act, 1961. The complaint was lodged by the Deputy Commissioner of Income Tax, Hyderabad, stating that the petitioners, involved in a construction business, filed returns without paying the tax liability, leading to the initiation of assessment proceedings and a charge sheet being filed. The petitioners contended that the failure to pay tax was due to their auditor's mistake and not a willful attempt to evade tax. They argued that they rectified the situation by paying the outstanding tax amount along with interest once they became aware of the issue. The defense relied on a judgment of the Madras High Court, emphasizing the need for a positive act on the part of the accused to establish the offence under Section 276 C (2) of the Act. The Senior Standing Counsel for Income Tax argued that the petitioners' act of filing returns without paying tax invoked a statutory presumption of a culpable state under Section 278 E of the Act. It was contended that the issue of culpable state could only be determined during trial and not in a petition under Section 482 of Cr.P.C., advocating for the dismissal of the criminal petition. After considering the submissions from both parties and examining the facts of the case, the Court noted that the petitioners rectified the situation by paying the entire tax liability along with interest once the mistake was realized. Relying on the principle established by the Madras High Court, the Telangana High Court concluded that since there was no intention to evade tax and the dues were cleared promptly upon discovery, the culpable mental state could not be presumed. Consequently, the Court allowed the Criminal Petition and quashed the proceedings against the petitioners/accused Nos. 1 to 5 in C.C. No. 268 of 2017 before the Special Judge for Economic Offences, Hyderabad. In line with the legal principles outlined in the judgment and the specific circumstances of the case, the Court's decision highlights the importance of intent in establishing offences under the Income Tax Act and the significance of rectifying errors promptly to avoid presumptions of culpable mental states.
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