Delayed Tax Payment Does Not Amount to Evasion: Punjab and Haryana High Court Quashes Complaint Against

In a significant ruling, the Punjab and Haryana High Court has quashed a complaint and subsequent proceedings against M/S Hansa Metallics Limited and its directors, emphasizing that a delayed payment of tax, accompanied by interest, does not constitute tax evasion.

Justice Jasjit Singh Bedi, presiding over the matter, observed, "The only question that remains is as to whether delayed payment along with the interest could be termed as evasion of tax for which the complaint in question has been filed." The Court answered this in the negative, providing relief to the petitioners who were facing prosecution under Sections 276C and 278B of the Income Tax Act, 1961.

The case, CRM-M-43841-2018, revolved around a complaint filed against the company and its directors for the alleged evasion of tax in the Assessment Year 2012-13. While the company admitted to a delay in tax payment, it argued that the amount, along with the due interest, was eventually paid and that this did not amount to willful evasion of tax.

In his ruling, Justice Bedi referred to various precedents, including the Karnataka High Court's judgment in Confident Projects (India) (P.) Ltd. Versus Income Tax Department and the Madras High Court's decision in S.P. Velayutham's case. These judgments collectively underscored the principle that the delay in tax payment, when followed by eventual payment and interest, does not equate to evasion.

"Delayed payment of Income Tax would not amount to evasion of tax, so long as there is payment of tax," Justice Bedi quoted from a precedent, reiterating this position in the Court's decision.

Date of Decision: 22.01.2024

M/S HANSA METALLICS LIMITED & OTHERS VS DEPUTY COMMISSIONER OF INCOME TAX