Telangana High Court
M/S. S.R.S. Projects vs The Dy. Commissioner Of Income Tax on 2 April, 2024
THE HONOURABLE SMT. JUSTICE K. SUJANA
CRIMINAL PETITION No.11775 of 2023
ORDER:
This Criminal Petition is filed under Section 482 of the Code
of Criminal Procedure, 1973 (for short 'Cr.P.C.') to quash the
proceedings against the petitioners/accused Nos.1 to 5 in
C.C.No.268 of 2017, on the file of the learned Special Judge for
Economic Offences, Hyderabad, registered for the offences
punishable under Section 276 C (2) read with 278 B of the Income
Tax Act, 1961(for short 'the Act').
2. Brief facts of the case are that respondent No.2/de facto
complainant, who is the Deputy Commissioner of Income Tax,
Hyderabad, lodged a complaint against the petitioners/accused
Nos.1to 5 stating that petitioner No.1 i.e., M/s S.R.S. Projects,
represented by its Managing Partner i.e., petitioner No.2, is
running construction business etc., and petitioner Nos.2 to 5 are
the partners of petitioner No.1-Company and they are responsible
for the day to day affairs of the company. On 31.11.2014, the said
company filed original return of income for the Assessment year
2014-15 declaring the total income as Rs.51,70,820/- and the tax
liability as per the return filed by the petitioners was
Rs.18,16,670/-. It is further stated that the petitioners without
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making any payment of tax, filed returns. Thereafter, a show
cause notice was issued by the office of the respondent to
petitioner No.1-Company. Basing on the said complaint,
respondent No.2 filed a charge sheet vide C.C.No.268 of 2017
before the learned Special Judge for Economic Offences,
Hyderabad for the offences punishable under Sections 276 C (2)
read with 278 B of the Act.
3. Heard Sri G. Anil Kiran Kumar, learned counsel appearing on
behalf of the petitioners as well as Ms. Sundari R. Pisupati, learned
Senior Standing Counsel for Income Tax appearing on behalf of the
respondent.
4. Learned counsel for the petitioners submitted that petitioner
No.1 has to pay the entire tax amount of Rs.18,16,670/- in
November 2014. Petitioner No.1 was under the impression that its
auditor has paid the tax amount to the Income Tax Department.
Later, it came to the notice of petitioner No.1 that its auditor did
not pay the said amount. Then, petitioner No.1 paid
Rs.10,00,000/- and sought time for payment of remaining amount.
In the meantime, the office of respondent initiated assessment
proceedings and directed petitioner No.1 to pay a sum of
Rs.28,51,270/- by way of assessment order dated 30.11.2016 and
the same was also paid on 30.10.2018. Learned counsel further
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submitted that it is the mistake of the auditor of the company and
there was no willful evasion of tax by petitioner No.1-Company.
Hence, prayed the Court to quash the proceedings against the
petitioners.
5. In support of his submissions, learned counsel for the
petitioners relied on the Judgment of Madras High Court in
M/s. Bejan Singh Eye Hospital Pvt. Ltd vs. Income Tax
Department 1, wherein it is held in paragraph No.5, as follows:
"5. The issue is no longer res integra. The learned counsel
appearing for the petitioner drew my attention to the decision
made by the Hon'ble Karnataka High Court in Crl.P.No.4891 of
2014, dated 14.06.2019. The Hon'ble Karnataka High Court in
the aforesaid decision held as follows:
"In the instant case, the only circumstance relied
on by the respondent in support of the charge
levelled against the petitioenrs is that, even though
accused filed the returns, yet, it failed to pay the
self-assessment tax along with the returns. The
circumstance even if accepted as true, the same does
not constitute the offence under Section 276C(2) of
the Act. The act of filing the returns by itself cannot
be construed as an attempt to evade tax, rather the
submission of the returns would suggest that
petitioner No.1 had voluntarily declared his intention
to pay tax. The act of submitting returns is not
connected with the evasion of tax. It is only an act
which is closely connected with the intended crime,
that can be construed as an act in attempt of the
intended offence. In the backdrop of this legal
principle, the Hon'ble Supreme Court in the case of
Prem Dass vs. Income Tax Officer cited supra, has
held that a positive act on the part of the accused is
required to be established to bring home the charge
against the accused for the offence under Section
276 C (2) of the Act."
Crl.O.P.(MD)No.13383 of 2019 decided on 12.03.2020
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6. On the other hand, learned Senior Standing Counsel for
Income Tax submitted that without paying the tax the petitioners
filed returns and he relied upon Section 278 E of the Act, which
provides for a statutory presumption of the culpable state and
contended that it is for the petitioners to establish in defence that
they did not have the culpable state in causing the delay in filing
the returns and paying the tax, that it can be done only in the
course of trial and cannot be decided in a petition filed under
Section 482 Cr.P.C. Therefore, he prays for dismissal of the
criminal petition.
7. Having regard to the rival submissions made by both the
learned counsel and having gone through the material available on
record, it is to be noted that the prime allegation against the
petitioners is that without paying the tax they filed returns, as
such, the office of the respondent has initiated assessment
proceedings and directed petitioner No.1 to pay a sum of
Rs.28,51,270/-. Learned counsel for the petitioners has submitted
that it is the mistake of auditors and they are under the
impression that they paid the tax amount, as such, they filed the
returns. When it came to the notice of the petitioners, they paid the
entire amount as alleged by respondent No.2. Therefore, there is
no intention to evade the tax.
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8. As per the principle laid down by the Madras High Court in
M/s. Bejan Singh Eye Hospital Pvt. Ltd (Supra), a positive act on
the part of the accused is required to be established to bring home
the charge against the accused for the offence punishable under
Section 276 C (2) of the Act.
9. In view of the observation in the above Judgment, in the case
on hand also the petitioner has already paid returns without
paying the tax. When it comes to the notice of the petitioner, he
filed tax along with interest. Since the petitioners have cleared the
dues along with interest and as there is no intention to evade the
tax it cannot be presumed that culpable mental state, as such, the
proceedings against the petitioners are liable to be quashed.
10. Accordingly, the Criminal Petition is allowed and the
proceedings against the petitioners/accused Nos.1 to 5 in
C.C.No.268 of 2017 on the file of theSpecial Judge for Economic
Offences, Hyderabad are hereby quashed.
Miscellaneous applications, if any pending, shall also stand
closed.
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K. SUJANA, J
Date: 02.04.2024
SAI
