Whether the delayed payment of self-assessed tax can accuse the Assessee under section 276C(2)?

Facts of the Case:

• The Assessee has determined the tax liability of INR 2,22,23,010 while filing the return of Income. Out of the said amount, the Assessee has paid INR 1,00,00,000 and filed ITR with outstanding liability which was subsequently paid in installments and out of the total liability INR 7,62,945 is yet to be paid. Meanwhile, the department has initiated proceedings u/s. 276C(2) against the Assessee with the fact that “Assessee is willfully attempting to evade the payment of taxes”.
• In the light of the proceedings, the Assessee defends itself by stating and explaining the facts that there was no intention in any manner to willfully evade the payment of taxes and on the account of liquidity crisis he was unable to mobilize the funds due to which tax amount was not been paid.
• As per contention laid down by department, the Assessee shall be liable to pay tax as per the provisions of Section 140A along with the ITR, failure to which, prosecution under section 276C(2) will be initiated against the Assessee.

Issue:

Whether the delayed payment of self-assessed tax can accuse the Assessee under section 276(C) i.e., willfully attempt to evade the payment of any tax, penalty or interest.

Decision of the Hon’ble High Court:

The court held that held that the prosecution in this case was nothing but shear waste of time and there was no intention or willful attempt made by the Assessee to evade the payment of tax. Accordingly, the Hon’ble High Court quashed the said prosecution.

Basis of Decision:

• To make any prosecution under 276C(2), there must be a willful attempt by the Assessee to evade the payment of any tax, penalty or interest. However, Section 140A(3) does not talk about the “willfully attempt to evade the tax”. Therefore, merely failure to pay the tax in time without any intention does not cover under the scope of said provision.
• Also, the Assessee was duly making the payment of tax liability in the installments and not in the intention to transfer his property which shows that there was no willful attempt to evade the payment of taxes.

Case Law: S.P. Velayutham vs. ACIT, High Court of Madras, Crl.O.P.No. 17906 of 2017

Himanshu Garg, Audit Associate, SW India