2024 (1) TMI 160 - HC - Income Tax

Offence u/s 276C(1) - as in the bank account maintained by the petitioner, there was unusual credit of large amount through RTGS and funds were debited for investment in the stock market - CIT(A) while deleting the penalty held that, The Commissioner of Income Tax, Appeal held in the appeal No.16/10060/2019-20, the petitioner was under bonafide belief that there was no tax liability to be discharged by him on account of his residential status as NRE accounts and the TDS made by the bank. HELD THAT - The petitioner is now aged about 77 years. Admittedly, he is a Non Resident Indian. He is maintaining an account with his banker in India. The penalty was deleted by the CIT(A) since the intention to conceal income by furnishing inaccurate particulars is not established. Therefore, the assessment officer was directed to delete the penalty imposed on the petitioner. Therefore, once the penalty on the petitioner was deleted, the prosecution initiated by the respondent cannot be sustained. Further, it is true that already the petitioner filed a petition to quash the impugned proceedings and the same was dismissed by this Court 2020 (11) TMI 228 - MADRAS HIGH COURT order dated 28.10.2020. However in the case on hand, in view of the subsequent development by the appellate order passed by the Commissioner of Income Tax, this Court is inclined to entertain this petition. Considering the subsequent development, in order to meet the ends of justice, the continuation of prosecution cannot be possible and it is liable to be quashed.

Summary

Issues involved:
The petition to quash proceedings in EOCC.No.401 of 2018 under Section 276C(1) of Income Tax Act, 1961.

Summary:

Issue 1: Alleged Tax Evasion
The respondent alleged that the petitioner failed to disclose capital gains from share transactions, resulting in short term capital gain of Rs. 52.13 crores, evading tax under Section 276C(1) of the Income Tax Act, 1961. The petitioner argued that as a Non Resident Indian, the bank had the responsibility to deduct tax at source correctly, and discrepancies were due to the bank deducting a lower amount. The Commissioner of Income Tax concluded that there was no evidence of wilful tax evasion, leading to the petitioner's appeal for quashment of proceedings.

Issue 2: Abuse of Process of Court
The respondent contended that the present quash petition was an abuse of the court process, citing a Supreme Court ruling that successive petitions under Section 482 Cr.P.C. should not be allowed to stall proceedings. Despite a previous dismissal of a quash petition, the petitioner filed the current petition based on subsequent developments, including the Commissioner of Income Tax's order favoring the petitioner.

Conclusion:
The Court acknowledged the previous dismissal of a quash petition but considered the subsequent developments, including the petitioner's age, Non Resident Indian status, and the Commissioner of Income Tax's findings. Given the circumstances and to ensure justice, the Court quashed the proceedings in EOCC.No.401 of 2018, allowing the criminal original petition.