“It is saddening to note that tax evasion has been mushrooming in our State / Country day- by-day, which is purely illegal and such evasion includes hiding of true income and portrayal of false income, not reporting cash flow, etc”
In a recent judgment a Division Bench of the Madras High Court expressed its grief in the mushrooming of tax evasion cases in the country and held that Tax Evasion attracts criminal liability.
The petitioner, Tirupur SreeAnnapoornawas into hotel business for several years and for the assessmentyear 1995-1996, a total taxable sales turnover of Rs 52.4 lakh was shown in respect of Tirupur SreeAnnapoornaand in respect of SreeAnnapoorna Sweetsas per the provisions of Section 30) of the TNCST Act. The petitioner filed anappeal before the tribunal which ruled in favour of the tax authorities. Thepetitioner then filed the present appeal.
The turnover and return filed by the petitioner was disputed by the Assessing Authority, stating that there were no documents produced to justify that both Tirupur SreeAnnapoorna Hotel and SreeAnnapoorna Sweets are un-associated establishment, having no interconnection with the business activities of each other and therefore, determined the total and taxable turnover
The Bench comprising Justice S Vaidyanathan and Justice C Saravanan observed that if the contention of the petitioner that Tirupur SreeAnnapoorna Hotel and SreeAnnapoorna Sweets are independent entities is accepted, then the term “sister concern” will become diluted and all the firms will adopt the same tactics of creation of one or more sister concerns under one umbrella with different names and claim the benefit of tax. In that event, it will defeat the real intention of the legislature.
The Bench also expressed its pain by noting that “The companies / firms / entities, which evade payment of tax are liable to be punished under criminal charges with substantial penalties. It is pertinent to state that taxes are the main sources of income for the Government to concentrate on the welfare of the people and the monies can be invested in various development projects.”
The Court concluded by quoting the famous words of Abraham Lincoln that “”You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time”.
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