Case Law Details
Valecha Investments Pvt. Ltd Vs ITO (Bombay High Court)
HC held that mere default in payment of tax, unless such default arises out of circumstances which has the effect of assessee defeating payment, the expression ‘willful attempt’ cannot be imported to mean failure to pay tax. It is also held in paragraph 10 that mere default in payment of tax “in time”, the willful attempt to evade tax cannot be imported to prosecute an assessee.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Arguable questions are raised, hence, Rule.
2. The complaint against the petitioners is in substance alleges that the assessee/accused had failed to pay self-assessment tax. It is also averred that in spite of the liability being admitted by the assessee, he has not made payment of tax.
3. Learned advocate for the petitioners relied on the judgment of the Apex Court in the case of Prem Dass v. Income Tax Officer reported in (1999) 5 SCC 241 and Madras High Court order in Criminal O.P. No.17906 of 2017 delivered on 28th January 2022 (P. Velayutham v. The Assistant Commissioner of Income Tax) to urge that the expression ‘evade’ in section 276© needs to be interpreted in the light of the explanation to the said section. According to him, it is not the case of the department that the petitioner had made any false entry in the statement or document or omitted to make such entry in the books of account or other document or acted in any other manner to evade the tax. According to him, mere default in payment of tax without anything more would not justify filing prosecution against the petitioner.
4. Per contra, learned advocate for the department submitted that section 2176(C)(i) punishes evasion of tax but under subsection (ii) evasion of payment of tax has been made offence and since the petitioner has evaded payment of tax, the ingredients of the offence alleged against the petitioner are made out.
5. Having considered prima facie the submission on behalf of both the parties, in the light of view rendered by the High Court of Madras wherein it has taken a view that mere default in payment of tax, unless such default arises out of circumstances which has the effect of assessee defeating payment, the expression ‘willful attempt’ cannot be imported to mean failure to pay tax. It is also held in paragraph 10 that mere default in payment of tax “in time”, the willful attempt to evade tax cannot be imported to prosecute an assessee.
6. In view of the aforesaid judgments, the petitioner has made out a case for grant of interim relief.
7. There shall be interim relief in terms of prayer clause (d), which reads thus:
“(d) Pending the hearing and final disposal of the present Petition, the Hon’ble Court may be pleased to stay all further proceedings concerning C.C. No.36/SW/2018 qua the Petitioners pending on the files of the Additional Chief Metropolitan Magistrate, 38th Court, at Ballard Pier, Mumbai”
