S. 276C : Offences and prosecutions-Wilful attempt to evade tax- Death of managing partner-Failure to pay self assessment tax-Tax and interest was paid before launching of prosecution-Delay of eight years in depositing the tax and interest-Launching of prosecution is quashed. [S. 220, 276(2), 277, 278B, Code of Criminal Procedure, 1973, S. 482]
The appellant is a partnership firm which filed the return of income , however the firm has not deposited the self assessment tax . Before launching of the prosecution the self assessment tax with the interest was paid . The Commissioner launched the prosecution for failure to deposit the self assessment tax . The learned Additional Chief Metropolitan Magistrate, issued process against the applicants for an offence punishable under Section 276C(2) read with Section 278B of the IT Act, 1961. The appellant filed petition before the High Court for quashing the proceedings before the Magistrate court on the ground that there was no wilful attempt to evade the tax and the delay in depositing the self assessment tax was due to death of the managing partner who was looking after the affairs of the firm . Allowing the petition the Court held that on a plain reading the provisions contained in Section 276C(2) do not indicate that mere failure to pay the tax, interest or penalty falls within the dragnet of the said provision. Even otherwise, it is a well settled rule of construction of penal statutes that if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty. It is the conduct of the applicant, after being served with the show cause notice, that assumes significance. Payment of tax due under five days of the service of the show cause notice, underscores the bona fide of the applicants. Thus, the aspect of delay, which was forcefully canvassed on behalf of respondent does not detract materially from the applicants claim. Accordingly the application was allowed and the prosecution was quashed. (CANo.165 of 2023 dt . 5-2-2024 ) (AY. 2010 -11)
Unique Trading Company v. ITO (Bom)( HC) www.itatonline.org
[Coram : Hon’ble Shri Justice N. J. Jamadar]