Without wilful evasion of tax, prosecution is a waste of time: Madras HC

Without wilful evasion of tax, prosecution is a waste of time: Madras HC

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Without wilful evasion of tax, prosecution is a waste of time:

Madras HC

Prosecution launching has witnessed sudden rise in the income tax proceeding. Even the Government is acting tough against tax evasions cases.
It may be noted that prosecution U/S 276C is applicable in case there is a wilful attempt to evade any tax, interest or penalty chargeable under the Income Tax Act.
However, there is an important observation by the Madras High Court in a case of prosecution launched by the department.
The case citation is as under:
S.P. Velayutham vs. ACIT
(Crl.O.P.No.:17906 of 2017)
Short overview of the case:
 1. The assessee had shown tax payable of
Rs.2,22,23,010/- and paid tax of Rs.10,000,000/- only as self assessment tax.
 2. So prosecution was launched U/S 276C for wilful evasion of payment of tax.
 3. The assessee had before the HC, explained the circumstances which forced him to delay the payment and also stated that as the immovable property has already attached, he could not mobilise the funds by sale of the property and also mentioned the circumstances which lead to loss in his business.
 Hon Madras HC held as under:
 1. The word employed in the section, “wilful attempt” cannot be imported to mere failure to pay the tax in time.
 2. The mere failure to pay the tax on time without any intention or deliberate attempt to avoid tax in totality or without any mens rea to avoid the payment, the word “wilful attempt” cannot be inferred merely on failure to pay tax in time.
 3. The Assessee was duly making the payment of tax in installments and did not attempt to alienate its property.
4. This conduct shows there was no willful attempt to evade the payment of taxes.
5. Prosecution launched in this case is a mere waste of time.
With this observation, the prosecution proceeding was quashed by the department. This judgement is surely going to help many taxpayers where the similar proceeding is launched by the department.
It may be noted that there are few judgments which have upheld the prosecution proceeding in almost similar cases with different facts. However, the present judgment will be relevant for other cases with different facts of the case.

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