Shammem Majeed Vs State of Kerala (Kerala High Court)
Prosecution for Tax Evasion Maintainable Despite Filing Revised Returns u/s 153A – Kerala HC Refuses to Quash Proceedings u/s 276C(1) & 277
The petitioner, a medical practitioner operating a proprietary medical store, challenged criminal prosecution initiated by the Income Tax Department for alleged offences u/s 276C(1) (wilful attempt to evade tax) & 277 (false statement in verification) of the Income-tax Act. The prosecution arose after a search u/s 132 in 2013 which revealed suppression of income. Pursuant to notices u/s 153A, the assessee filed revised returns declaring higher income than originally disclosed.
The assessee contended that once returns were filed u/s 153A, they must be treated as returns filed u/s 139 and therefore there could be no allegation of concealment or false statement. It was also argued that the alleged conduct would only amount to “under-reporting or misreporting of income” introduced later by Finance Act 2016 and not wilful tax evasion.
The Kerala High Court rejected these arguments and held that the complaints clearly alleged deliberate and conscious tax evasion detected during search proceedings. The Court observed that even the revised returns filed u/s 153A contained incorrect disclosures and the income was further enhanced in assessment and penalty proceedings, demonstrating concealment. Therefore, the deeming fiction of treating 153A returns as returns u/s 139 does not automatically absolve the assessee from criminal liability for earlier false statements or wilful evasion.
Accordingly, the Court held that no ground existed to invoke inherent powers u/s 482 CrPC to quash the prosecution. The criminal complaints for offences u/s 276C(1) and 277 were allowed to proceed and all petitions were dismissed.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
