Vilas Babanrao Kalokhe Vs PCIT (Central) (Bombay High Court)
Bombay HC order Whether non-payment of self-assessment tax along with return amounts to “willful evasion” so as to attract prosecution under Section 276C(2), or is merely a “failure” not covered by the penal provision
The Bombay High Court, in the case of Vilas Babanrao Kalokhe Vs PCIT (Central), clarified the critical distinction between a mere “failure” to pay self-assessment tax and a “willful attempt to evade payment” of tax under Section 276C(2) of the Income-tax Act, 1961. The court held that non-payment of self-assessment tax along with the return, even though a default, does not automatically constitute willful evasion punishable by criminal prosecution. The High Court quashed the prosecution proceedings, observing that the complaint and process order failed to establish the requisite willful intent (mens rea) on the part of the assessee.
The court emphasized that for a prosecution under Section 276C(2), the deliberate intention to evade tax must be distinctly pleaded and proven, differentiating it from an offense like Section 276B (failure to remit TDS), where intent is not necessary. The subsequent payment of the self-assessment tax by the petitioner, albeit belatedly, was viewed by the court as evidence of an honest intent to meet the tax liability, which negates the inference of a willful attempt to evade. The court also noted that financial difficulty, when pleaded, can constitute a bona fide reason for the delay unless the department provides evidence to prove it false. Consequently, the continuation of the criminal case was deemed an abuse of the process of the court because the foundational ingredient of “willful evasion” was not satisfied, leading to the dismissal of the department’s complaint.
