Madha Constructions and Properties Private Limited Vs ACIT (Madras High Court)
The Madras High Court considered a petition seeking quashing of a complaint filed against the petitioners for the offence under Section 276(C)(2) of the Income Tax Act, 1961, concerning an alleged wilful default in payment of tax.
The complaint alleged that a tax demand of Rs.4,38,576 was raised on 09.02.2017 and was required to be paid within thirty days. According to the respondent, the petitioners failed to make payment within the stipulated period and ultimately paid the amount only on 11.07.2018, resulting in an alleged wilful default attracting prosecution under Section 276(C)(2).
The petitioner had originally declared total income of Rs.10,74,300 and paid tax accordingly. A notice under Section 143(2) was issued on 23.06.2016, followed by an assessment under Section 143(3) read with Section 153B(1)(b) on 30.12.2016, determining net taxable income at Rs.21,83,087 and tax payable at Rs.29,67,245.
Subsequently, on 09.02.2017, the Assessing Officer passed an order under Section 154, acknowledging that an excess liability had been raised due to a mistake in computation and reassessing the demand at Rs.4,38,576. The petitioners did not pay this revised demand until 11.07.2018.
The petitioners contended that delayed payment could not, by itself, be treated as a wilful default. They submitted that the reason for the delay had been explained and that the tax was paid upon receipt of the show cause notice. The respondent argued that non-payment for more than one year and five months indicated wilfulness and submitted that the question of whether the default was wilful should be determined by the Trial Court, particularly in view of the presumption regarding culpable mental state under Section 278E.
