Vyalikaval House Building Cooperative Society Ltd Vs DCIT

 Assessee’s petitions allowed: KARNATAKA HIGH COURT

Whether therefore delay in payment of tax cannot be construed as an attempt to evade tax, so as to launch prosecution of the assessees for alleged offence u/s 276C(2) – YES: HC

the gist of the offence u/s 276C(2) of the Act is the willful attempt to evade any tax, penalty or interest chargeable or imposable under the Act. What is made punishable under this Section is an attempt to evade tax penalty or interest and not the actual evasion of tax. Attempt is nowhere defined in the Act or in the Indian Penal Code. In legal echelons attempt is understood as a movement towards the commission of the intended crime. It is doing something in the direction of commission of offence. Viewed in that sense, in order to render the accused guilty of attempt to evade tax it must be shown that he has done some positive act with an intention to evade tax;

 in the instant case, the only circumstance relied on by the Revenue in support of the charge levelled against the assessees is that, even though accused filed the returns, yet, it failed to pay the self-assessment tax along with the returns. This 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 assessee 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;

besides, the conduct of assessee No.1 making payments in terms of the returns filed by him, though delayed and made after coercive steps were taken by the Revenue do not lead to the inference that such payments were made in an attempt to evade tax declared in the returns filed by him. Delayed payments, under the provisions of the Act, may call for imposition of penalty or interest, but by no stretch of imagination, the delay in payment could be construed as an attempt to evade tax so as to entail prosecution of the assessees for the alleged offence under Section 276C(2) of the Act. Therefore, the prosecution initiated against the assessees is illegal and tantamount to abuse of process of Court and is liable to be quashed.

Criminal Petition No.4891 Of 2014

Criminal Petition No.4892 Of 2014