The Madras High Court refused to quash prosecution for the Compounding of offense under Section 276C(1) of Income Tax Act.
The respondent authority lodged a complaint for the offense under Section 276C(1) of the Income Tax Act, 1961, alleging that during the course of the inquiry by the investigation wing it was noticed that in the bank account maintained by the petitioner, there was unusual credit of large amount through RTGS and funds were debited for investment in the stock market.
The petitioner had entered into 165 share transactions during the financial year 2007-08 and filed his return of income for the assessment year 2008-09 declared taxable income of Rs.3,10,226. However, the petitioner has not disclosed any capital gain in the return of income filed for the financial year 2007-08 relevant to the assessment year 2008-09.
The petitioner entered into 165 share transactions to the tune of Rs.155.20 crores and short term capital gain arising from the said transactions is Rs.52.13 crores. Though the tax has been deducted, it was not fully deducted and the petitioner did not disclose in his return of income under the head Capital Gain and paid the tax. Thus, the petitioner failed to show the same in his return of income and attempted to evade payment of tax.
Only after deduction by the income tax department, the petitioner had share transactions during the relevant financial year and accepted the same. Therefore, the petitioner committed the offense punishable under Section 276C(1) of the Income Tax Act, 1961.
The petitioner contended that the Assessing Officer completed the assessment proceedings where the total demand was reworked at Rs.40,36,84,241 and the new amount payable was determined at Rs.4,21,31,164.
After adjusting the TDS amount the tax liability and penalty stood at Rs.1,45,23,900/- and Rs.4,56,94,344/- respectively, by the assessment order. Thus it is established that there was a concealment of income with a view to evade the payment of taxes.
The single-judge bench of Justice G.K. Ilanthirayan held that the adjudication proceedings and the criminal prosecution can be launched simultaneously and the decision in adjudication proceeding is not necessary before initiating criminal prosecution.
The court said that it is not inclined to quash the proceedings in E.O.C.C.No.401 of 2018 on the file of the Court of the Additional Chief Metropolitan Magistrate, Economic Offences-II, Egmore, Chennai. The petitioner is at liberty to raise all the grounds before the trial Court.
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