High Court directs return of passports to directors accused of tax evasion

High Court directs return of passports to directors accused of tax evasion u/s 276C, 277 of income Tax Act 1961

In a recent judgment, the Hon’ble High Court of Madras has directed return of passports to directors of company accused of offences u/s 276C for willful attempt to evade tax and false statement  in verification u/s 277 of income Tax Act 1961

ABCAUS Case Law Citation:
4333 (2024) (12) abcaus.in HC Madras

In the instant case, the Income Tax Department had filed two complaints before Additional Chief Metropolitan Magistrate (ACMM) for the alleged offences by the directors of the company and company under section 276C(1) for willful attempt to evade tax and false statement  in verification under section 277 read with section 278 and 278B of the Income Tax Act, 1961 (the Act).

Since the accused directors did not appear on summons, Non-Baliable Warrants were issued against them. The Hon’ble High Court granted them anticipatory bail inter alia on the condition that the accused shall surrender their passports. Following direction of the Hon’ble High Court, the accused directors had surrendered his Passport before the Trial Court. The accused made an application before the ACMM to return their passport to travel abroad. It was submitted that the accused were directors of the company and use to visit abroad on regular basis to attend business events with customers/clients in order to expand its business and the accused wanted to visit Germany and China to attend several business meetings and Expo for the business endeavours.

It was submitted that the accused were willing to cooperate with the trial and to delay or protract the proceedings. It was asserted that the accused are a law abiding citizen and apart from the present proceedings, no other proceedings were pending before any other court. It was submitted that the accused/applicant are ready to abide by the conditions if any imposed and undertook to attend the proceedings regularly.

The ACMM allowed the application and ordered return of passport for travel for a specific period to observe if the accused are bonafide in cooperating for further progress of the case and since the case was pending from a long time.

However, the ACMM apart from requiring execution of two bonds with sureties, directed the accused to surrender their passport evidencing the travel itinerary along with copies of tickets before the court.

Not satisfied with the condition imposed for return of the passport the accused director (Petitioner hereinafter) filed a Criminal Revision challenging the orders passed by the ACCM directing to surrender passport after travel.

The petitioner sought for return of their passports on the ground that he had to travel abroad frequently and that they had been appearing before the trial Court regularly. However, the Magistrate after permitting the petitioners to travel had directed the petitioners to return their passports.

Before the Hon’ble High Court the accused submitted that the case against them was pending from 2014; that after their passports were surrendered, they had filed interlocutory applications for return of passports and surrendered it back to the Court after returning from abroad as per their affidavit of undertaking; that they have also been appearing before the trial Court regularly; and therefore, the passports may be returned to them, as it is no longer required to ensure their presence.

The Hon’ble High Court in view of the submissions made by the counsel on either side, opined that the passports can be returned to the petitioners. However, the petitioners shall inform the

Magistrate whenever they travel abroad, mentioning their date of departure and arrival and as to their place of stay. The petitioners shall also appear regularly before the trial Court either in person or through their counsel.

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