Will non-remission of tax amount to wilful evasion attract penal provisions?

Last updated: 09 March 2021

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This case explores whether the non-remission of tax amounts to wilful evasion, potentially attracting penal provisions under the Income Tax Act. The Madurai Bench of the Madras High Court considered a petition to quash proceedings against an eye hospital and its directors for alleged offences under Section 276 C(2) of the Act. The court's decision hinges on whether the failure to remit tax was a deliberate act of evasion.

Court :
Madras High Court

Brief :
This criminal original petition has been filed to quashing theproceedings in C.C.No.425 of 2019 on the file of learned AdditionalChief Judicial Magistrate, Madurai. The petitioners are facing trial for the offences under Sections 276 C(2) of the Income Tax Act.

Citation :
Crl.O.P(MD)No.13383 of 2019

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 12.03.2020
CORAM :

THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN

Crl.O.P(MD)No.13383 of 2019
and
Crl.M.P.(MD) Nos.8303 and 8304 of 2019

1.M/s.Bejan Singh Eye Hospital Pvt. Ltd.,
No.313,-C, M.S.Road,
Vettoornimadam,
Nagercoil – 629 003.

2.Dr.S.M.Bejan Singh,
Managing Director,
M/s.Bejan Singh Eye Hospital Pvt. Ltd.,
No.313,-C, M.S.Road,
Vettoornimadam,
Nagercoil – 629 003.

3.Smt.Rooshitha Bejan Singh,
Director,
M/s.Bejan Singh Eye Hospital Pvt. Ltd.,
No.313,-C, M.S.Road,
Vettoornimadam,
Nagercoil – 629 003. ... Petitioners

Vs.

Income Tax Department,
O/o.Principal Commissioner of Income Tax-2,
Madurai,
Rep. By the Assistant Commissioner of Income Tax Circle-I,
Nagercoil. ... Respondent

Prayer: This Criminal Original Petition is filed under Section 482 of Cr.P.C., to call for the records and to quash the case in C.C.No.425 of 2019 on the file of the Additional Chief Judicial Magistrate, Madurai insofar as the petitioners are concerned.

For Petitioners : Mr.Ashok Padmaraj
For Respondent : Mrs.S.Srimathy,
Senior Standing Counsel

O R D E R

This criminal original petition has been filed to quashing theproceedings in C.C.No.425 of 2019 on the file of learned AdditionalChief Judicial Magistrate, Madurai. The petitioners are facing trial for the offences under Sections 276 C(2) of the Income Tax Act.

2.The learned standing counsel appearing for the respondentstrongly opposed the prayer for quashing. A detailed counter affidavithas also been filed.

3.The petitioner's counsel reiterated the contentions set out in the memorandum of grounds.

To know more in details find the attachment file

FAQ :

The main legal question is whether the non-remission of tax can be considered wilful evasion and thus attract penal provisions under the Income Tax Act.

The relevant section is Section 276 C(2) of the Income Tax Act, which deals with offences related to the failure to pay tax.

The petitioners were M/s. Bejan Singh Eye Hospital Pvt. Ltd. and its directors, Dr. S.M. Bejan Singh and Smt. Rooshitha Bejan Singh.

The petitioners prayed for the quashing of the criminal proceedings initiated against them in C.C.No.425 of 2019.

The respondent, the Income Tax Department, strongly opposed the prayer for quashing the proceedings.