WATERWAYS SHIPYARD PVT. LTD REP. BY ITS AUTH. SIGNATORY RAMCHANDRA SHIRODKAR AND ANR. vs. THE INCOME-TAX DEPARTMENT REPRESENTED BY THE DEPUTY COMMISIONER OF INCOME-TAX

Heard Mr. Rao for the Petitioners and Ms. Linhares for the Respondent. 2024:BHC-GOA:1618

Rule. Rule made returnable forthwith. The matter is taken up for final disposal at the admission stage with consent of parties.

The Petitioners are seeking reliefs as per prayer clauses (A) and (B) as under: A. This Hon’ble Court be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or anu other Writ, Order or Direction calling for the Records and Proceedings from the Court of Chief Judicial Magistrate at Panaji, Goa in A.O.A. 331/2019 and upon perusing the validity and propriety thereof, be pleased to quash and set aside the Private Complaint being A.O.A. No. 331/2019; B. During the pendency and disposal of the present Petition, this Hon’ble Court be pleased to stay the proceedings before the Court of Chief Judicial Magistrate, Panaji, Goa in Private Complaint being A.O.A. No. 331/2019. 4. The Petitioners filed their income tax returns for the Assessment Year 2013-14 by showing the liability to pay a tax of more than Rs.28 lakhs as self assessment tax. The said returns were considered by the Department and over and above the self assessment tax liability, the Petitioners tax liability was considered as Rs.35,08,430/-. The Petitioners sought time to pay the amount on the grounds that mining activities have been stopped in the State of Goa and there are no business activities.

Subsequently, a show cause notice was issued to the Petitioners by the Department in the year 2016 and thereafter, time was granted to the Petitioners to pay the tax along with the one assessed by the Department in three installments i.e. from July to September 2016. It is admitted that the Petitioners failed to deposit such tax assessed, however, thereafter, the correspondence exchanged between the Petitioners and the Respondent shows that a request was made for extension of time to pay the amount and also for waiver of interest.

Somewhere in the year 2017, the Department obtained authorisation for the purpose of launching prosecution with regard to the self assessment tax of Rs.28,94,550/- together with interest. The Petitioners again sought time to pay the said amount and requested for waiver of interest. Finally, the Petitioners paid the amount of Rs.35,08,430/- which includes the self assessment tax and the tax assessed by the Department in 2018. While depositing such an amount, the Petitioners again requested for waiver of interest, however, there was no response from the Department.

Suddenly, in the year 2019, a criminal complaint under Section 200 of Cr.P.C. for the offence punishable under Section 276C(2) read with Section 278B of the Income Tax Act was launched against the Petitioners. The complaint filed in the year 2019 only refers to the self assessment and the default in paying the tax which is assessed by the Department together with interest and penalty.

Mr. Rao appearing for the Petitioners would submit that in the present peculiar circumstances, there is no question of any wilful default or attempt on the part of the Petitioners to evade the tax liability. He submits that by filing self assessment returns, showing the liability of more than Rs.28 lakhs, the Petitioners showed the willingness to deposit such amount. However, due to the circumstances, a request was made to the Department to grant installments along with the waiver of the interest and penalty.

Mr. Rao would submit that the fact remains that before filing of the complaint, the self assessment tax is already paid together with the tax which is assessed by the Department. Thus, according to him, the authorisation itself is invalid, which failed to consider the aspect of payments made in the year 2017-2018. In payment as well as non-payment of interest and penalty for the Assessment Year 2013-2014. 11. The rival contentions fall for determination.

In Prem Dass (supra), the Apex Court while considering the scope of Section 276 and more particularly on “wilful act”, observed as under:

In the case of Unique Trading Company (supra), the learned Single Judge of this Court in similar circumstances, discussed the provisions of Section 276C including the concept and definition of “wilful act” as well as the word “evade”. While placing reliance upon the decision of the Karnataka High Court in the case of Vyalikaval House Building Co-operative Society Ltd & Others Vs. Deputy Commissioner of Income Tax, (2020) 428 ITR 89 (Karn.), it clearly observed that when the returns including self assessment of the tax are filed, the liability to pay the tax is admitted. However, it does not constitute an offence when such admitted liability is not paid within time, but even paid subsequently. The question of failure to pay the tax by the Assessee, subsequently, and by installments, would not fall under the mischief of Section 276C of the Income Tax Act and it would not be considered as an attempt to evade the tax. It is also observed that there must be a wilful act including mens rea to evade the tax. Thus, the observations of the learned Single Judge in the case of Unique Trading Company (supra) are clearly applicable to the matter in hand.

The correspondence exchanged between the parties, would clearly go to show that the Petitioners filed the self assessment returns showing the tax liability for more than Rs.28 lakhs for the Assessment Year 2013-2014. The correspondence further shows that the Petitioners sought time to pay the assessed tax and that too, by installments. However, it is also a matter of record that such tax was not paid and accordingly, a show cause notice was issued in the year 2016 by the Department. The Petitioners filed a reply to such show cause notice by giving reasons and asking for some installments. The letter dated 29.06.2016 would clearly go to show that the Petitioners requested for three intallments to pay the tax. The reasons for delayed payment are also disclosed therein. Accordingly, a request was also made for the purpose of waiver of interest and penalty.

However, the Respondent sought authorisation for launching of prosecution from the concerned Authority vide letter dated 22.03.2017. After receipt of such authorisation which refers to the self assessment tax of more than Rs.28 lakhs, the Petitioners again addressed a letter dated 25.03.2017 to the Respondent. Subsequently, on 28.03.2018, the Petitioners in installments deposited the self assessed tax along with additional amounts by way of challans, which shows that the first installment was paid on 23.06.2017 and the last installment was paid on 19.03.2018, a total of Rs.35,08,430/-. Similarly, in the same letter, the Petitioners again requested the Respondent to kindly waive the interest and penalty under Section 220(2) of the Income Tax Act for the assessment year 2013-2014. 16. Mr. Rao submits that there is no response to such letter from the Respondent, however, the complaint was filed somewhere on 25.06.2019 on the basis of authorisation obtained in the year 2017. A perusal of the complaint filed under Section 200 of Cr.P.C. would clearly go to show that the averments in the said complaint are based only on the authorisation obtained in the year 2017. There is absolutely no reference with regard to the payments made by the Petitioners in the year 2017-2018 as reflected in the letter dated 28.03.2018. Thus, the payment of the tax liability was deposited by the Petitioners about a year ago, prior to filing of the complaint. There is no whisper of such deposits made by the Petitioners in the entire complaint. The averments in the complaint would go to show that the Petitioners failed to pay the self assessment tax together with interest and penalty. Thus, when the self assessment tax was deposited much prior to the filing of the complaint and intimated to the department vide letter dated 28.03.2018, it was incumbent upon the complainant to obtain a fresh authorisation with regard to the delayed interest and penalty only. Besides, there is no response given to the request made by the Petitioners in the letter dated 28.03.2018 for waiver of interest and penalty. Thus, the authorisation obtained in the year 2017, no longer subsists when the Petitioners paid the self assessment tax during the year 2017- 2018. What remained at the time of filing of the complaint was only interest on delayed payment as well as penalty. Thus, it was necessary for the Department to obtain a fresh authorisation to launch the prosecution only for the purpose of interest and penalty.

The question is whether there is any wilful default in making payment of the assessed tax. Applying the ratio in the case of Unique Trading Company (supra), it is crystal clear that the Petitioners by filing returns, declaring the tax liability and also requesting the Department to grant installments, would certainly show that such attempts cannot be considered as wilful default in making the payment, which is sine qua non for launching prosecution. Even otherwise, the amount was deposited somewhere during the year 2017-2018 whereas the complaint is filed in the year 2019 and that too, without disclosing such payments.

For all the above reasons, the prosecution which has been launched against the Petitioners has to be termed as an abuse of the process of law as no purpose would be served in continuing with such a complaint. The complaint which is launched by the Department, therefore, requires to be quashed and set aside by exercising extraordinary powers under Section 482 of Cr.P.C. The complaint is, therefore, quashed and set aside.

Rule is made absolute in the above terms. BHARAT P. DESHPANDE, J. Signed by: ESHA SAINATH VAIGANKAR Designation: Personal Assistant Date: 28/09/2024 16:17:16