Failure to Pay Self-Assessed Income Tax is not 'Willful Attempt to Evade Tax': Bombay HC Quashes Criminal Prosecution [Read Order]

The Bombay High Court, while considering a bunch of petitions, has held that the failure on the part of the assessee to pay self-assessed income tax cannot be treated as “willful attempt to evade tax” and therefore, nullified the criminal prosecution initiated by the income tax department.

The complaint against the petitioners were that the assessee/accused had failed to pay self-assessment tax. It is also averred that in spite of the liability being admitted by the assessee, he has not made payment of tax.

Before the Court, the petitioner, Valecha Investments Pvt. Ltd and others argued that the expression ‘evade’ in section 276 of the Income Tax Act needs to be interpreted in the light of the explanation to the said section. It was contended that it is not the case of the department that the petitioner had made any false entry in the statement or document or omitted to make such entry in the books of account or other document or acted in any other manner to evade the tax. It was, therefore, pleaded that mere default in payment of tax without anything more would not justify filing prosecution against the petitioner.

Granting interim relief to the assessee, Justice Amit Borkar observed that “Having considered prima facie the submission on behalf of both the parties, in the light of view rendered by the High Court of Madras wherein it has taken a view that mere default in payment of tax, unless such default arises out of circumstances which has the effect of assessee defeating payment, the expression ‘willful attempt’ cannot be imported to mean failure to pay tax. It is also held in paragraph 10 that mere default in payment of tax “in time”, the willful attempt to evade tax cannot be imported to prosecute an assessee.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates