The High Court of Jharkhand has quashed criminal proceedings against a tractor trader and franchisee of Mahindra and Mahindra, in a case related to alleged tax evasion. The proceedings were initiated under Sections 276(C)(2) and 277 of the Income Tax Act, 1961.
The Income Tax Department had prosecuted Singh, alleging that although he filed his income tax returns for the assessment year 2011-12, he failed to pay the declared tax liability. Despite the tax being eventually paid with interest in 2016, the department pursued criminal charges, leading to the present legal battle.
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The petitioner’s representative, Advocate N.K. Pasari, argued that the delay in tax payment did not constitute a willful attempt to evade taxes, and cited a recent judgement in a similar case (Pralay Pal vs. State of Jharkhand). The defence asserted that the prosecution lacked merit as the tax was eventually paid and there was no mens rea (criminal intent) involved.
The Income Tax Department, represented by Jr. S.C. Anurag Vijay, maintained that the delay justified the criminal proceedings. However, the court found no grounds to sustain the prosecution.
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Justice Sanjay Kumar Dwivedi, presiding over the case, observed that the tax had been deposited, albeit late, with the appropriate interest as per Section 240(A) of the Income Tax Act. The court noted that no further proceedings for tax recovery or penalties were pending against Singh.
Thus, the high court held that the penalty provisions were not applicable in this case, and consequently, the criminal proceedings could not be justified. The court quashed the proceedings, providing relief to Singh from the charges against him.
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