1 IN THE HIGH COURT OF JUDICATURE AT PATNA Cr.Misc. No.36697 of 2007 SUSHIL KUAMR SABOO Versus STATE OF BIHAR & ANR For the petitioner: Mr.Ramesh Prasad Singh, Adv. For the Union of India: Mr. Harshvardahn Prasad, Sr.S.C.,I.T.Deptt. For the State : Mr. N.K.Prasad, Advocate. ----------- 10 3.12.2009 Heard the learned counsel for the parties. The petitioner has prayed for quashing the order dated 30.3.2006 passed by the Presiding Officer, Special Court, Economics Offences, Patna in Complaint Case No.336 C of 2006 whereby cognizance has been taken for the offence under Section 276 © (2) of the Income Tax Act, which relates to willful evasion of tax. The provision of Section 276 ( C ) (2) states that if a person willfully attempts in any manner whatsoever to deviate the payment of any tax, penalty or interest under the Act, he would be criminally prosecuted, apart from penalty etc. The petitioner submits that he has paid the entire tax and in any view of the matter there was never any willful evasion of the tax. Learned counsel submits that it would appear from the record that petitioner filed return for the assessment year 2003 – 04 on 30.03.2004 showing total income of Rs.17,35,400/- in which tax with interest has been calculated Rs.2,30,124/-. However, on processing of the return under Section 143(1) of I.T. Act it transpires tax liabilities was fixed at Rs.8,67,035/- and same was served on 15.04.2005. Further more, notice for penalty under section 221(1) of I.T. Act, dated 10.8.2005 was served on him on 11.8.2005. In 2 response to the notice the assessee applied for rectification under Section 154 of the I.TAct Subsequently the demand was rectified at Rs.4,80,253/-. Notice under section 154 of the Act was served for payment of the rectified amount by 21.11.2005, which was not done. Thereafter the Assisstant Commissioner, Circle-6, vide notice dated 10.1.2006 show caused as to why he be not prosecuted under section 276(2) of I.Tax Act. The explanation if any was to be submitted by 20.1.2006. The petitioner on 13.1.2006 filed a representation wherein he stated that he has not wilfully evaded any tax. Nonetheless he would pay the dues shortly along with the interest. However, he prayed for some more time to pay the amount. The petitioner a day before filing of representation had already deposited a sum of Rs.50,000/- on 12.01.2006, and thereafter he paid a sum of Rs.4472/- on 22.02.2006, Rs.45,000/- on 16.2.2006, Rs.30,000/- on 12.5.2006/- Rs.25,000/- on 08.11.2006, Rs.1,00,000/- on 15.12.2006, Rs.1,85,781/- on 16.12.2006 and Rs.40,724/- on 18.12.2006 total a sum of Rs.5,20,977/-. On these basis learned counsel submits that soon after notice dated 10.1.2006 under section276 ( C ) (2) the petitioner made part payment of Rs.50000/- on 12.1.06. Even before expiry period of 20.1.2006 in aforesaid notice dated 10.1.2006 he filed a petition on 13.1.2006 for extension of time. The petitioner had already deposited part of tax dues with undertaking to pay the same at its earliest even before order dated 30.3.06 taking 3 cognizance. Counsel for the Inocome Tax states that recovery proceeding and criminal proceeding are two separate matters. He further submits that proceeding under section 276( C ) (2) of the Income Tax Act is a judicial proceeding. In support of his submission learned counsel has relied upon a decision reported in 1973 ITR (95) in case of Gulab Chand vs. Commissioner of Income Tax, New Delhi. However, he does not refute the submission that prosecution under section 276 (2) would be applicable in case of wilfull evasion of the tax. Heard the counsel for the parties. It would appear from Annexure-3 that a notice for imposing prosecution under section 276 ( C ) (2) of the Income Tax Act was issued on the petitioner on 10.1.2006 for wilfull attempt to evade payment of tax for the assessment year 2003-2004. By the aforesaid notice, the petitioner was show caused why the prosecution under section 276 ( C ) (2) of the I.T.Act be not imposed upon him, for which explanation was to be submitted latest by 20.1.2006. The notice further states that in case of non-compliance it will be assumed that the assessee had not to say anything against the alleged charge. It manifest from Annexure-4 that the assessee on 13.1.06 prayed for some more time to pay the entire amount on account of lack of financial incapacity. He had deposited Rs.50,000/- even prior to the application dated 13.1.06 praying for time to deposit the entire amount. He had deposited a good sum 4 even before passing of the impugned order dated 30.3.2006. The assessee deposited further a sum of Rs.45,000/- and Rs.4472/- on 6.2.2006 and 22.2.06 apart from Rs.50,000/- on 12.1.2006. It would appear from the order dated 9.1.2007 passed by Deputy Commissioner of Income tax, Circle, Patna, that petitioner had deposited entire amount with interest and thus it is doubtful whether the petitioner has willfully evaded the payment of tax. The Tax court in the case of I.T.D. vrs. Chiranji Lal Punjab and Haryana State reported in 2002 ITR (254) 181 held that if prosecution under section 276 ( C ) (2) of I.T. Act would not succeed, if there is no evidence on record to show that the assessee had enough resources to pay the amount and he willfully evaded to pay tax. In the instant case it would appear that assessee had filed an application within time for some more time to pay the due amount on account of financial crunches. Thus, I am of the view that there has been no willful evasion on the part of the assessee to evade the payment of tax. As such I quash the impugned order dated 30.3.2006 passed by the Presiding Officer, Special Judge, Economic Offences, Patna, in Complaint Case No.336 ( C )/2006. Anilkrsinha (Samarendra Pratap Singh, J.)