Abdul Khader Mohammed Farook Vs DCIT (Madras High Court)
The Madras High Court dismissed a quash petition filed by an assessee facing prosecution under Section 276C(2) of the Income Tax Act, 1961 for alleged wilful attempt to evade payment of tax. The prosecution arose from the assessee’s return for Assessment Year 2017-18 filed on 30.03.2018, wherein tax and interest liability of Rs.5,95,616/- was declared but not paid. Subsequently, after assessment proceedings, an assessment order dated 22.12.2019 determined total demand at Rs.1,91,43,523/- including tax and interest, and demand notice under Section 156 was issued. According to the department, no amount was paid even thereafter.
The petitioner argued that prosecution under Section 276C(2) requires a “wilful attempt” to evade payment of tax and mere non-payment or delayed payment of admitted tax liability cannot amount to evasion. It was contended that the petitioner had voluntarily disclosed the entire income and tax liability in the return and there was no allegation of concealment, falsification of accounts, or suppression of transactions. The petitioner also cited ill health, business losses, SARFAESI proceedings, and distress sale of properties as reasons for inability to pay taxes. It was further argued that sanction for prosecution under Section 279(1) was granted mechanically and that presumption under Section 278E regarding culpable mental state could arise only after foundational facts constituting the offence were established. Reliance was placed on earlier judgments holding that mere delay in payment of tax would not automatically attract penal provisions.
