March 2010
Offences and Prosecution: Wilful attempt to evade tax: S. 276C of I. T. Act, 1961: A. Y. 1983-84: Disallowance of payment by company to proprietary concern of director: Reduction of disallowance by Tribunal: Reasonableness of payment disputed question of
By K. B. Bhujle | Advocate
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Reported
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57 Offences and Prosecution: Wilful attempt to evade tax: S.
276C of I. T. Act, 1961: A. Y. 1983-84: Disallowance of payment by company to
proprietary concern of director: Reduction of disallowance by Tribunal:
Reasonableness of payment disputed question of fact: No deliberate intent to
evade tax: S. 276C not applicable
[K. K. Mohta Vs. Asst. CIT; 320 ITR 387 (Del)]
In the A. Y. 1983-84 the assessee company had claimed
deduction of an expenditure of Rs. 29,46,422/- being the amount paid to HSP
towards the work of annealing and pickling of steel slabs at the rate of Rs.
2,500/- per metric tonne. HSP was a proprietary concern of one of the directors
of the company. The Assessing Officer allowed the expenditure at the rate of Rs.
500/- per metric tonne as reasonable. The Tribunal increased the allowance to
Rs. 1,250/- per metric tonne. A complaint was filed by the Asst. Commissioner
u/s. 276C(1) of the Income-tax Act, 1961, on the basis of the disallowance made
by the Assessing Officer. Charge was directed to be framed against the
petitioner (the managing director) and the company for offence u/s. 276C(1) of
the Act. The petitioner filed a revision petition before the trial court. The
revision petition was dismissed on the ground of maintainability.
The petitioner, therefore, filed a petition u/s. 482 of the
Code of Criminal Procedure, 1973 before the Delhi High Court for quashing the
proceedings. The High Court allowed the petition and held as under:
“i) The power of High Court u/s. 482 of the Code of
Criminal Procedure, 1973, is intended to ensure that there is no miscarriage
of justice. The High Court may exercise its jurisdiction u/s. 482 of the Code
in a given case even where a revision petition against an order on charge has
already been dismissed by the trial court. The scope of interference by the
Court in such cases u/s. 482 would depend on the facts of a particular case.
In other words, the merits of the case would necessarily have to be examined
in order to determine if interference u/s. 482 is warranted.
ii) If the issue whether the amount paid by the company to
HSP was reasonable or not admitted of more than one point of view, as was
evident from the orders of the Assessing Officer and the Tribunal, then
certainly the essential ingredients of section 276C(1) of the Act of a
deliberate intent on the part of the company to evade the payment of
income-tax could not be said to exist in the present case.”
