The assessee, engaged in stone crushing and manufacturing of precast cement pipes, filed the return of income for AY 2022-23 on 05.11.2022. The self-assessment tax payable under Section 140A was not discharged along with the return and was instead paid later on 16.01.2023. On this basis, the Assessing Officer initiated prosecution proceedings under Section 276C(2) on the allegation of willful attempt to evade payment of tax, which was sanctioned by the Principal Commissioner, following which the Magistrate issued process. In the writ petition, the assessee contended absence of willful default, payment of tax with interest, and financial difficulty as the reason for delay.

It was undisputed that the tax ought to have been paid with the return and that the liability under Sections 139 and 140A existed. For deciding quashing, the Court examined the complaint and supporting documents to determine whether continuation of prosecution would amount to misuse of legal process. The Court reaffirmed that penal provisions must be construed strictly—punishment can be imposed only where statutory conditions are satisfied. Section 276C targets a “willful attempt to evade tax,” and the distinction between sub-sections (1) and (2) reflects different contingencies. Sub-section (1) concerns evasion of tax, while sub-section (2) addresses non-payment, but in both cases willfulness is essential. In contrast, Section 276B (relating to failure to deposit TDS) creates liability even without proving intent, highlighting legislative differentiation.

In the present matter, the return was filed, and the lapse related solely to delayed payment of tax. The assessee’s explanation of financial hardship, coupled with subsequent payment on 16.01.2023, did not substantiate a willful attempt to evade. The complaint lacked essential averments demonstrating intent, and the prosecution’s continuation would amount to an abuse of process. Consequently, the case was held fit for quashing.

Held: Absence of willful evasion; prosecution under Section 276C(2) not maintainable; proceedings quashed.
[In favour of assessee] (AY 2022-23) – Vilas Babanrao Kalokhe v. PCIT (Central) [2025]