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TMI Blog2015 (10) TMI 2866X X X X Extracts X X X X X X X X Extracts X X X X ..... ax liability of Rs.39,19,606/-. As per the provisions of Section 210 of the Act, the accused Company was required to pay the same amount of tax by way of Advance Tax or in the alternative, the said amount should have been paid by way of Self-Assessment Tax as per the provisions of Section 140A before filing the return of income. But the accused Company filed the return for the Assessment Year 2005-06 without paying the taxes either by way of Advance Tax or by way of Self-Assessment Tax. Notice under Section 156 of the Act was served on the Company but it had not paid the demand even after lapse of a long time, and that, such failure to pay the taxes was wilful. It is also alleged that a penalty opportunity letter was issued to the accused Company on 21-11-2005 and to all its Directors on 30-11-2005 to submit their explanation fixing the dates of hearing as 25-11-2005 and 08-12-2005. The accused Company submitted its explanation on 07-12-2005 wherein it is simply stated that there is only the payment of tax being made with interest after filing the return of income with interest. The accused Company was deliberately filing the returns of income in time without payment of taxes, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of detention of an assessee to civil imprisonment is provided. Therefore, it is submitted that when the returns are filed and tax was paid within the permitted time or if there is any dispute, launching criminal prosecution under Section 276C is onerous without taking recourse to the other provisions of the Act. Therefore, launching of the criminal prosecution is nothing but subjecting the assessee to needless harassment and hence all further proceedings in the calendar case may be quashed. 7. In that view of the matter, what is required to be seen is as to whether the petitioner/assessee has conducted himself in the manner which could fall within the ambit of Section 276C of the Act so as to prosecute him in a criminal Court and whether he can be termed as a person who wilfully attempted to evade any tax, penalty or interest. Section 276C of the Act reads as under:- "Wilful attempt to evade tax, etc. 1. If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the case in hand, the assessee has filed the return declaring his income and also the tax payable by him. Upon processing the return, which is filed under Section 139 of the Act, if there is any defect, the Assessing Officer can call upon the assessee to rectify the defects, if any, noticed. Section 143 of the Act provides for assessment and after computing the same, an intimation shall be sent to the assessee specifying the sum determined to be payable or the amount of refund due to assessee. The penalties imposable, for failure to furnish return, comply with notices, concealment of income etc., is incorporated in Chapter XXI of the Act. Section 271 stipulates that if the Assessing Officer is satisfied that any person has failed to comply with notice, under sub-section (2) of Section 115WD, or under subsection (2) of Section 115WE, or under sub-section (1) of Section 142 or sub-section (2) of Section 143, or fails to comply with a direction issued under sub-section (2A) of Section 142, or has concealed the particulars of his income or furnished inaccurate particulars of such income, can be directed to pay the penalty as contemplated under Section 271 of the Act. Under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te administration of the relevant provisions of the Income Tax Act would go a long way in allaying the apprehensions of the assessees and if that is done in true spirit, no assessee will be in a position to charge the revenue with administering the provisions of the Act with an evil eye and unequal hand." 12. Learned Counsel appearing for the petitioner has relied upon a decision of the Supreme Court reported in K.C.Builders and Anr. V. The Assistant Commissioner of Income Tax . 13. In the case before the Apex Court, the assessee was unsuccessful in his attempts to get the proceedings launched in a criminal Court quashed under the provisions of Sections 397 and 401 Cr.P.C. The trial Court and the High Court rejected the prayer of the assessee and hence the matter went to the Supreme Court. After elaborately referring to the case law on the subject, the Supreme Court made the following observations in paragraph Nos.16, 17, 26, 27, 28, 29 and 34, which have a bearing to the facts of the case in hand and ultimately quashed the criminal case registered against the assessee:- "16. The word "concealment" inherently carried with it the element of mens rea. Therefore, the mere fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its Judgment ignoring the settled law as laid won by this Court that the finding of the appellate Tribunal was conclusive and the prosecution cannot be sustained since the penalty after having been cancelled by the complainant following the appellate Tribunal's order, no offence survives under the Income Tax Act and thus quashing of prosecution is automatic. 27. In the instant case, the penalties levied under Section 271(1) (c) were cancelled by the respondent by giving effect to the order of the Income Tax Appellate Tribunal in I.T.A.Nos.3129-3132. It is settled law that levy, of penalties and prosecution under Section 276C are simultaneous. Hence, once the penalties are cancelled on the ground that there is no concealment, the quashing of prosecution under Section 276C is automatic. 28. In our opinion, the appellants cannot be made to suffer and face the rigorous of criminal trial when the same cannot be sustained in the eyes of law because the entire prosecution in view of a conclusive finding of the Income tax Tribunal that there is no concealment of income becomes devoid of jurisdiction and under Section 254 of the Act, a finding of the Appellate Tribunal supercedes the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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