Bombay High Court Ruling on Self-Assessment Tax Delay

Bombay High Court Ruling on Self-Assessment Tax Delay

 Vilas Babanrao Kalokhe vs. PCIT (Central)

Issue: Whether the mere delay in paying self-assessment tax, required under Section 140A of the Income-tax Act, automatically constitutes a “willful attempt to evade tax” punishable by criminal prosecution under Section 276C(2) of the Income-tax Act, 1961.

Facts:

• The petitioner (assessee) filed his Income Tax Return (ITR) for the Assessment Year (AY) 2022-23 on November 5, 2022.
• The return showed a significant self-assessed tax liability (approx. ₹94.22 lakh), which the assessee failed to pay along with the return, as required by Section 140A.
• The entire tax amount, along with applicable interest, was subsequently paid on January 16, 2023.
• The Income Tax Department initiated criminal prosecution against the assessee under Section 276C(2) for willful evasion of tax.

Decision:

The Bombay High Court (Justice S. M. Modak) quashed the criminal prosecution initiated by the Income Tax Department. The Court held that the essential ingredient for the offense under Section 276C(2)—specifically the “willful attempt to evade”—was absent.

Key TakeDowns:

• Delay is Not Evasion: The Court established a clear distinction between a “failure” or “delay” in payment and a “willful attempt to evade” tax. Criminal prosecution requires the establishment of deliberate intent (mens rea) to evade, which was not proven.
• Subsequent Payment Nullifies Intent: The subsequent payment of the full tax liability, including interest, demonstrated a bona fide intention to meet the statutory requirement, thereby negating the inference of a “willful attempt” to evade.
• High Standard for Prosecution: Section 276C(2) is a serious penal provision, and prosecution under it cannot be automatically launched merely due to a delay in compliance. The department must distinctly plead and prove the element of intentional evasion.