Case Details: Vilas Babanrao Kalokhe vs. Principal Commissioner of Income-tax (Central) - [2025] 179 taxmann.com 617 (Bombay)
Judiciary and Counsel Details
- S.M. Modak, J.
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Rohan Deshpande, Vihit Shah & Alisha Pinto, Advs. for the Petitioner.
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Ashok Kotangle, Vishnu Chaudhari, Nikitesh Kotangale, Narendra Bhagat, Ms Neha Pende, Advs. & Ms S.E. Phad, APP for the Respondent.
Facts of the Case
The assessee was engaged in the business of stone crushing and manufacturing precast cement pipes. He filed his income tax return for the assessment year 2022-23 on 05-11-2022. The Assessing Officer (AO) observed that the assessee had not paid the self-assessment tax along with the return, as required under section 140A. The tax was paid belatedly on 16-01-2023. AO initiated prosecution under section 276C(2) for a willful attempt to evade the payment of tax. The Principal Commissioner granted sanction for prosecution.
High Court Held
Aggrieved by the order, the assessee filed a writ petition with the Bombay High Court. The High Court held that there was no dispute that the assessee failed to deposit the self-assessment tax either before or along with the return. The return was submitted, but the failure was to pay tax by the due date. Section 276C is titled ‘willful attempt to evade tax etc.’. While it is true that there are two sub-sections, they operate in different fields. Both sub-sections prescribe different punishments. What is common is a ‘willful attempt by a person,’ but there remains a difference.
The difference lies in the wording of those sub-sections, which also consider different contingencies and lead to different outcomes. For instance, sub-section (1) addresses a punishable contingency such as ‘evasion of tax etc.’, but does not include the phrase ‘payment of tax’. In contrast, sub-section (2) includes the phrase ‘payment of tax etc.’. Therefore, sub-section (1) addresses evasion of tax, including submitting a return, while sub-section (2) pertains only to the ‘non-payment of tax’.
As the title of section 276C indicates, the word ‘failure’ is absent. There is a difference between ‘failure’ and ‘evasion’. Furthermore, the evasion should not only be simple evasion, but it should be willful evasion. It indicates there may be cases wherein there is a genuine case for not paying tax on or before the due date, even though the return is submitted.
The assessee has cited financial difficulties. This could be considered evasion. The department ought to have argued that these financial difficulties are not genuine but merely an excuse. The burden of proof can be shifted later. The presumption of culpability arises only when the necessary ingredients are satisfied at the outset. In this case, it cannot be inferred that the assessee committed a willful default in paying the tax along with the return, as tax was paid on 16-1-2023. Therefore, the impugned prosecution was to be quashed.
List of Cases Reviewed
- Unique Trading Co. v. ITO [2024] 159 taxmann.com 216/298 Taxman 176/467 ITR 682 (Bombay) (para 18) – followed.
- Kashiram v. ITO [1977] 107 ITR 825 (Andhra Pradesh)
- Madhumilan Syntex Ltd. v. Union of India [2007] 160 Taxman 71 (SC)/[2007] 290 ITR 199 (SC)
- Nayan Jayantilal Balu v. Union of India & Ors. [Writ Petition No. 2698 of 2021, dated 7-12-2021]
- ITO v. Sultan Enterprises [2002] 256 ITR 185/[2003] 127 Taxman 514 (Bombay) (para 19) – distinguished.
List of Cases Referred to
- Unique Trading Co. v. ITO [2024] 159 taxmann.com 216/298 Taxman 176/467 ITR 682 (Bombay) (para 8)
- Kashiram v. ITO [1977] 107 ITR 825 (Andhra Pradesh) (para 9)
- Madhumilan Syntex Ltd. v. Union of India [2007] 160 Taxman 71 (SC)/[2007] 290 ITR 199 (SC) (para 9)
- Nayan Jayantilal Balu v. Union of India & Ors. [Writ Petition No. 2698 of 2021, dated 7-12-2021] (para 9)
- ITO v. Sultan Enterprises [2002] 256 ITR 185/[2003] 127 Taxman 514 (Bombay) (para 9).
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