The assessee is  a co-operative society. The premises of the assessee was subjected to search and seizure under S. 132. Consequent to search, the AO issued a notice under S 153A to file its return of income for the assessment years 2006-07 to 2011-12. Since there was no compliance of the aforesaid notice, the AO issued a show-cause notice calling upon the assessee as to why prosecution for the offence punishable under S. 276CC could not be initiated.

In response to the said show-cause notice, the assessee filed returns of income for the assessment years 2010-11 and 2011-12 and declared the total income of certain amount and the total tax payable at certain amount. But the assessee failed to pay the self-assessment tax along with the return of income under section 140A. Thereafter, the assessee sent a cheque of certain amount towards self-assessment tax due. On the back of the said cheque, it was instructed that ‘cheque to be presented at the time of registration of the property’. In view of this instruction, department did not encash the said cheque. The revenue contended that the assessee had willfully and deliberately made an attempt to create circumstances to enable them to evade payment of tax, a compliant was lodged before the court for economic offences, seeking prosecution of the assessee for the offence punishable under S.276C(2) of the Act. Respondent-department has pointed out that all the payments were made by the petitioners subsequent to the lodging of the compliant and therefore, the said payment do not absolve the petitioner from the rigors of S  276C(2). Even the cheque was issued with a rider not to encash the same. These circumstances, clearly disclose mens rea on the part of the petitioners to evade tax and hence there is no reason to quash the proceedings. The gist of the offence under S. 276C(2) is the wilful 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 respondent in support of the charge levelled against the petitioners is that, even though accused filed the returns, yet, it failed to pay the self-assessment tax along with the returns. This circumstances even if accepted as true, the same does not constitute the offence under section 276C(2). 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. 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 276C(2).

In the case on hand, conduct of the assessee making payments in terms of the returns filed by him, though delayed and made after coercive steps were taken by the department do not lead to the inference that the said 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 petitioners for the alleged offence under section 276C(2). In that view of the matter, the prosecution initiated against the petitioners, is illegal and tantamount to abuse of process of Court and is liable to be quashed. For the aforesaid reasons, petitions are allowed. The proceedings initiated against the petitioners are quashed. It is made clear that this order shall not come in the way of the department taking necessary steps for recovery of tax, if any, due and payable by the petitioners in accordance with law.  (AY. 2006-07 to 2011-12)