Prosecution u/s 276C for late deposit of self assessment tax. Late deposit of tax after the expiry of stipulated period would not wipe out the offence
The instant revision petition had been filed before the Additional Sessions Judge (ASJ) against the order passed by Chief Judicial Magistrate, (CJM/Trial Court) against the revisionist issuing charge sheet under Section 276C of the Income Tax Act, 1961. (‘the Act’).
ABCAUS Case Law Citation:
ABCAUS 2300 (2018) (04) AC
Charge under Sections 276C of the Act had been framed against the accused on the basis of complaint filed by Deputy Commissioner, Income Tax.
It was alleged in the complaint that the accused filed his return of income belatedly on 31.3.2013 for the assessment year 2012-13. On perusal of the tax return filed by the accused it was noticed that out of tax payment of Rs. 63,20,007/-, an amount of Rs. 13,29,770/- had been paid on 11.12.2013 which the accused was liable to deposit in the self assessment tax u/s 140A(3) of the Act before filing income tax return on 31.3.2013. However, accused without any reasonable cause failed to deposit the said self assessment tax before the filing of his return of income.
A show cause notice u/s 276C of the Act for launching prosecution for non-payment of self assessment tax was issued to the accused. The accused submitted reply through an Advocate which was duly considered but was not found worthy of any credence.
It was concluded that the accused had willfully and intentionally evaded payment of tax by not depositing the tax in question which he was legally liable before the filing of his return of income on due date, therefore, accused was guilty of commission of an offence u/s 276C of the Act for having made willful and intentional attempt to evade payment of tax, therefore, he was liable for the resultant prosecution for the commission of offence u/s 276C of the Act for the assessment year 2012-13.
The Trial Court after finding prima facie case against the accused u/s 276C of the Act, summoned the accused and charge sheeted him u/s 276C of Income Tax Act which was impugned by the revisionist in the present revision petition.
Before the ASJ it was argued that the impugned order passed by the trial court was suffering from serious infirmities. That the Trial had not properly appreciated the facts and law and wrongly charge sheeted the accused. As per the allegations a demand of Rs. 13,29,770/- was paid over a delay of eight months. However, tax payment of Rs. 63,20,007/- stood paid at the time of filing of the return itself. Whereas the orders granting sanction were passed on 19.3.2014. apparently when the Commissioner of Income Tax applied its mind for the purposes of sanction, the demand of tax penalty and interest stood already cleared. As per section 276C of Income Tax only such persons are liable for prosecution who have willfully evaded the tax penalty or interest. Whereas the sanction orders did not disclose that on the day of granting of sanction there was any default or willful evasion by the accused.
It was contended that the orders was liable to be set aside as the prosecution under Section 276C can be launched only after a valid and legal section granted by the Commissioner of Income Tax under 279 of the Act after completion of the assessment under Section 143(3) of the Income Tax Act. In order to prosecute any person under Section 276C of the Act, there is legally required a sanction for prosecution under Section of 279 of the Act. Without a legal and valid sanction no person can be prosecuted. In order to prosecute any person under Section 276C of the Act there must be regular assessment as defined under Section 2(4) of the Act and assessment is required to be made under sub-Section 3 of Section 143 or 144.
It was argued that prosecution sanction was given on the basis of the processing sheet under Section 143(1) which was a draft order. The Commissioner of Income Tax was legally entitled to apply his mind under Section 279(1) of the Act only after the assessment had been completed under Section 143(3) of the Act. There was not even an iota of evidence or word in the sanction order that the accused ever willfully evaded the liability. Thus sanction was granted merely on the ground that there was a balance outstanding. It was not the case of the department that the accused ever willfully evaded the liability. The sanction orders were passed mechanically by simply looking at the fact that there is a balance outstanding against the revisionist without there being any assessment orders under Section 143(3) of the Act.
Therefore, it was prayed that the order passed by CMM and charge sheet of even date may be set aside having been framed on illegal orders granting sanction for prosecution as the Trial court had failed to exercise jurisdiction vested in it. As such the order of Trial Court was wrong and illegal, the same may be set aside and revision may be allowed.
The learned ASJ opined that admittedly there was late deposit of tax and late deposit of tax by the accused after the expiry of stipulated period would not wipe out the offence which was clearly made out. In case of default the appropriate action can be taken by the Department.
He placed Reliance on the law laid down by Hon’ble Supreme Court which in the case of Madhumilan Syntex Ltd. held that once a statute requires to pay tax and stipulates period within which such payment is to be made, the payment must be made within that period. If the payment is not made within that period, there is default and an appropriate action can be taken under the Act.
Accordingly, the learned ASJ upheld the order of the Trial court and the revision was dismissed.
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