I filed my return but could not pay the self-assessment tax with it. I paid it a couple of months later. They have prosecuted me under s.276C(2). Can that stand?
On these facts, no. The Bombay High Court quashed the complaint and the order issuing process, holding that s.276C(2) punishes a wilful attempt to evade payment of tax and not a mere failure to pay, and that the averments in the complaint fell short of any inference of wilfulness where the assessee had pleaded financial difficulty and had in fact paid the tax with interest.
Decided by the High Court (S.M. Modak J) on 2025-10-16, reported as 2025:BHC-AS:45535; Criminal Writ Petition No. 3840 of 2025 (Bombay High Court, Criminal Appellate Jurisdiction); reserved 5 August 2025. It bears on section 276C(2), section 140A, section 278E, section 276B, section 279(1) of the Income Tax Act 1961, in Prosecution, Demand, Recovery & Stay and Evidence & Burden of Proof matters.
This is the limb the department now uses against people who have simply not paid, and this is the decision that says non-payment alone is not the offence. Two things in it do the heavy lifting. First, the Court drew the textual contrast the department resists: s.276B says 'failure', s.276C says 'wilful attempt to evade', and the difference is deliberate — under s.276B the omission to credit deducted tax is itself the offence without any element of wilfulness, whereas s.276C requires more. Second, and more valuable at the issue-of-process stage, the Court held that s.278E does not do the department's work for it at the threshold: the presumption of a culpable mental state arises only once the ingredients of the offence are made out, so it cannot be used to supply the wilfulness that the complaint fails to allege. The limits are real. The Court did not say that non-payment can never be an offence; it said the complaint must plead facts from which wilfulness can be inferred, and that where the assessee pleads financial difficulty the department 'ought to have pleaded that these financial difficulties are not real financial difficulty but just an excuse'. Payment before the complaint, with interest, plainly weighed. This is a single-judge decision under Article 227; a reader should also be aware that the library already carries S.P. Velayutham on s.276C(2).
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee carried on a stone-crushing business through the partnership firm Shree Ambika Stone Crusher and manufactured precast cement pipes through Kalokhe Pipes & Prodcast Industries. For assessment year 2022-23 he filed his return on 5 November 2022 showing total income of Rs 2,17,10,710 and an income-tax liability of Rs 94,22,300. The tax was required to be paid before furnishing the return under s.140A. It was not paid on 5 November 2022; Rs 95,89,000 was paid on 16 January 2023. The return was processed under s.143(1) on 15 December 2023 determining a liability of Rs 1,05,04,470 and a demand notice issued. The Assessing Officer proposed prosecution under s.276C(2) on 26 July 2024, endorsed by the Principal Commissioner (Central), Pune on 29 July 2024. The Principal Commissioner issued a show-cause notice on 12 August 2024; the assessee replied through the e-filing portal on 16 August 2024, informing the department of financial problems within the organisation and difficulty in paying the tax, and that he had paid the tax with interest on 16 January 2023 so was no longer in default. The department's position was that no details or credible documentary evidence of the difficulties were furnished, that the assessee had given priority to his business and other commitments over his statutory tax obligations, and that having derived business income of Rs 1,83,30,612 and computed the liability himself he had used revenue receipts for purposes other than income-tax dues, having also been liable to pay advance tax in four instalments. Sanction under s.279(1) was granted on 18 September 2024. A complaint was filed before the JMFC, Pune (Summary Criminal Case No. 149497 of 2024) and the Magistrate issued process on 5 December 2024. That order was challenged under Article 227.
The writ petition was allowed. The order of issuance of process dated 5 December 2024 passed by the JMFC, Court No. 9, Pune was quashed and set aside and the complaint was quashed and dismissed. It could not be inferred that the assessee had committed a wilful default in paying the tax along with the return; the averments in the complaint fell short of drawing an inference of wilfulness, and continuing the prosecution would be an abuse of the process of the Court (paras 20, 21 and the Order).
The Court held that a provision laying down punishment must be interpreted strictly (para 13). Section 276C is titled 'wilful attempt to evade tax' and its two sub-sections operate in different fields: sub-section (1) does not carry the words 'payment of tax' and contemplates evasion of tax including in the submission of the return, whereas sub-section (2), which adds the words 'payment of tax', makes non-payment of tax punishable (para 13). Accepting that the case therefore fell under sub-section (2) (para 14), the Court held that the word 'failure' is absent from s.276C, that there is a difference between 'failure' and 'evasion', and that the evasion must further be wilful (para 16). It contrasted s.276B, where the failure to credit tax already deducted from another person's income is itself an offence without any addition of wilfulness, and reasoned that the legislature had cautiously used 'wilful evasion' in s.276C, which indicates that there may be genuine cases of not paying tax by the due date even though the return is submitted, and such cases fall outside s.276C (para 16). The Court followed the single-judge decision of the same Court in Unique Trading Co., which had quashed a prosecution under s.276C(2) for want of the ingredients, and which had observed that under s.276B and s.276BB it is the mere failure to credit tax already collected or deducted that entails punishment, whereas s.276 professes to punish a wilful attempt to evade payment (paras 17 and 18). The authorities relied on for the Revenue — including Kashiram, Madhumilan Syntex, Sultan Enterprises and Nayan Jayantilal Balu — were held inapplicable because their core revolved around TDS under s.276B whereas this case concerned self-assessment tax under s.276C (para 19). On s.278E the Court held that the department ought to have pleaded that the financial difficulties were not real but an excuse, that the burden of proof can shift at a later stage, and that the presumption of culpability arises only when the ingredients are satisfied at the outset; it was also constrained by the fact that the tax had been paid on 16 January 2023 (para 21).
The burden of proof can be shifted at a later stage. The presumption of culpableness comes at a later stage only when the ingredients are satisfied at the beginning.
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Handle my notice → Ask a CA on WhatsAppOn these facts, no. The Bombay High Court quashed the complaint and the order issuing process, holding that s.276C(2) punishes a wilful attempt to evade payment of tax and not a mere failure to pay, and that the averments in the complaint fell short of any inference of wilfulness where the assessee had pleaded financial difficulty and had in fact paid the tax with interest. This was decided by the High Court (S.M. Modak J) and bears on section 276C(2), section 140A, section 278E, section 276B, section 279(1) of the Income Tax Act 1961. It is reported as 2025:BHC-AS:45535; Criminal Writ Petition No. 3840 of 2025 (Bombay High Court, Criminal Appellate Jurisdiction); reserved 5 August 2025. This is the limb the department now uses against people who have simply not paid, and this is the decision that says non-payment alone is not the offence. Two things in it do the heavy lifting. First, the Court drew the textual contrast the department resists: s.276B says 'failure', s.276C says 'wilful attempt to evade', and the difference is deliberate — under s.276B the omission to credit deducted tax is itself the offence without any element of wilfulness, whereas s.276C requires more. Second, and more valuable at the issue-of-process stage, the Court held that s.278E does not do the department's work for it at the threshold: the presumption of a culpable mental state arises only once the ingredients of the offence are made out, so it cannot be used to supply the wilfulness that the complaint fails to allege. The limits are real. The Court did not say that non-payment can never be an offence; it said the complaint must plead facts from which wilfulness can be inferred, and that where the assessee pleads financial difficulty the department 'ought to have pleaded that these financial difficulties are not real financial difficulty but just an excuse'. Payment before the complaint, with interest, plainly weighed. This is a single-judge decision under Article 227; a reader should also be aware that the library already carries S.P. Velayutham on s.276C(2). If it applies to you, the first step is this: Check the complaint word by word for any averment of an act of evasion — secreting or transferring assets, diverting receipts, false entries — as distinct from the bare fact of non-payment. If there is none, that is the ground.
The assessee carried on a stone-crushing business through the partnership firm Shree Ambika Stone Crusher and manufactured precast cement pipes through Kalokhe Pipes & Prodcast Industries. For assessment year 2022-23 he filed his return on 5 November 2022 showing total income of Rs 2,17,10,710 and an income-tax liability of Rs 94,22,300. The tax was required to be paid before furnishing the return under s.140A. It was not paid on 5 November 2022; Rs 95,89,000 was paid on 16 January 2023. The return was processed under s.143(1) on 15 December 2023 determining a liability of Rs 1,05,04,470 and a demand notice issued. The Assessing Officer proposed prosecution under s.276C(2) on 26 July 2024, endorsed by the Principal Commissioner (Central), Pune on 29 July 2024. The Principal Commissioner issued a show-cause notice on 12 August 2024; the assessee replied through the e-filing portal on 16 August 2024, informing the department of financial problems within the organisation and difficulty in paying the tax, and that he had paid the tax with interest on 16 January 2023 so was no longer in default. The department's position was that no details or credible documentary evidence of the difficulties were furnished, that the assessee had given priority to his business and other commitments over his statutory tax obligations, and that having derived business income of Rs 1,83,30,612 and computed the liability himself he had used revenue receipts for purposes other than income-tax dues, having also been liable to pay advance tax in four instalments. Sanction under s.279(1) was granted on 18 September 2024. A complaint was filed before the JMFC, Pune (Summary Criminal Case No. 149497 of 2024) and the Magistrate issued process on 5 December 2024. That order was challenged under Article 227. The matter was decided on 2025-10-16 by the High Court (S.M. Modak J). On those facts the High Court held as follows. The writ petition was allowed. The order of issuance of process dated 5 December 2024 passed by the JMFC, Court No. 9, Pune was quashed and set aside and the complaint was quashed and dismissed. It could not be inferred that the assessee had committed a wilful default in paying the tax along with the return; the averments in the complaint fell short of drawing an inference of wilfulness, and continuing the prosecution would be an abuse of the process of the Court (paras 20, 21 and the Order).
The Court held that a provision laying down punishment must be interpreted strictly (para 13). Section 276C is titled 'wilful attempt to evade tax' and its two sub-sections operate in different fields: sub-section (1) does not carry the words 'payment of tax' and contemplates evasion of tax including in the submission of the return, whereas sub-section (2), which adds the words 'payment of tax', makes non-payment of tax punishable (para 13). Accepting that the case therefore fell under sub-section (2) (para 14), the Court held that the word 'failure' is absent from s.276C, that there is a difference between 'failure' and 'evasion', and that the evasion must further be wilful (para 16). It contrasted s.276B, where the failure to credit tax already deducted from another person's income is itself an offence without any addition of wilfulness, and reasoned that the legislature had cautiously used 'wilful evasion' in s.276C, which indicates that there may be genuine cases of not paying tax by the due date even though the return is submitted, and such cases fall outside s.276C (para 16). The Court followed the single-judge decision of the same Court in Unique Trading Co., which had quashed a prosecution under s.276C(2) for want of the ingredients, and which had observed that under s.276B and s.276BB it is the mere failure to credit tax already collected or deducted that entails punishment, whereas s.276 professes to punish a wilful attempt to evade payment (paras 17 and 18). The authorities relied on for the Revenue — including Kashiram, Madhumilan Syntex, Sultan Enterprises and Nayan Jayantilal Balu — were held inapplicable because their core revolved around TDS under s.276B whereas this case concerned self-assessment tax under s.276C (para 19). On s.278E the Court held that the department ought to have pleaded that the financial difficulties were not real but an excuse, that the burden of proof can shift at a later stage, and that the presumption of culpability arises only when the ingredients are satisfied at the outset; it was also constrained by the fact that the tax had been paid on 16 January 2023 (para 21). In the words reproduced by the source cited on this page: "The burden of proof can be shifted at a later stage. The presumption of culpableness comes at a later stage only when the ingredients are satisfied at the beginning." The decision followed or applied Unique Trading Co. v. Income-tax Officer [2024] 159 taxmann.com 216 (Bombay) — followed; Kashiram v. Income-tax Officer [1977] 107 ITR 825 (AP) — cited for the Revenue, not applied; M/s. Madhumilan Syntex Ltd. & Anr v. Union of India & Anr, Appeal (Crl.) 1377 of 1999 — cited for the Revenue, distinguished as a TDS case; ITO v. Sultan Enterprises (2003) 127 Taxmann 514 — cited for the Revenue, distinguished; Nayan Jayantilal Balu v. Union of India & Ors, Criminal Writ Petition No. 2698 of 2021, decided 7 December 2021 — cited for the Revenue, distinguished.
It was decided by the High Court on 2025-10-16 and is reported as 2025:BHC-AS:45535; Criminal Writ Petition No. 3840 of 2025 (Bombay High Court, Criminal Appellate Jurisdiction); reserved 5 August 2025. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 276C(2), section 140A, section 278E, section 276B, section 279(1), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed. The order of issuance of process dated 5 December 2024 passed by the JMFC, Court No. 9, Pune was quashed and set aside and the complaint was quashed and dismissed. It could not be inferred that the assessee had committed a wilful default in paying the tax along with the return; the averments in the complaint fell short of drawing an inference of wilfulness, and continuing the prosecution would be an abuse of the process of the Court (paras 20, 21 and the Order). It arises in Prosecution, Demand, Recovery & Stay and Evidence & Burden of Proof matters, on section 276C(2), section 140A, section 278E, section 276B, section 279(1) of the Income Tax Act 1961, and was decided by S.M. Modak J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Put the payment on record with dates and the interest paid, and place the chronology before the Court: date of return, date the tax fell due, date paid, date of the sanction proposal, date of sanction, date process was issued. Answer the s.278E point in advance: the presumption operates only once the ingredients are satisfied, not to create them, and the burden shifts only at a later stage. If financial difficulty is the explanation, file it with documents in reply to the s.279(1) show-cause notice, before sanction — the Court noted the department's complaint that no credible documentary evidence had been given. Do not rely on s.276B or TDS authorities either way: the Court held the case law on 276B stands on a different footing and the precedents cited from that line were non-binding here. Consider a parallel compounding application; under the 17 October 2024 guidelines it may be filed at any time, including after prosecution is launched.
Validity check could not be completed. Validity check could not be completed — I did not search for any special leave petition against this order or for later High Court decisions considering it. It is a single-judge decision of the Bombay High Court under Article 227 and turns on the sufficiency of the averments in the particular complaint. The library already carries S.P. Velayutham v. ACIT on s.276C(2); a reader should compare the two. The reasoning that s.278E cannot be used at the threshold to supply an ingredient the complaint does not plead is the part most likely to be contested, since the Revenue's standard position, drawn from Sasi Enterprises, is that rebuttal is a matter for trial. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Para 21 of the report reads 'The assessee has pleaded about financial difficulties. This can be considered as evasion.' Read in context — the surrounding sentences say the department ought to have pleaded that the difficulties were not real, that the burden shifts later, and that the case is not fit for prosecution — this is plainly a slip for the opposite sense (that the plea can be considered as an explanation, or cannot be considered as evasion). The key_quote has been taken from the two sentences that follow it, which are unambiguous. The report also contains several evident typographical errors ('intensionally', 'gfound', 'abused of process of Court') and an inconsistency in the case number: para 5 gives the Summary Criminal Case number as 'No. 149 497/2024' while the operative order gives 'No. 149497 of 2024'. The cause title on indiankanoon reads 'Criminal Writ Petition No. 3840 of 2025' while the running header of the PDF reads 'Wp-3840-2025'; an earlier order in the same matter dated 21 July 2025 is captioned 'Writ Petition No. 3840 of 2025'. Two earlier orders in the same petition (21 July 2025 and 5 August 2025) are listing orders only. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed. The order of issuance of process dated 5 December 2024 passed by the JMFC, Court No. 9, Pune was quashed and set aside and the complaint was quashed and dismissed. It could not be inferred that the assessee had committed a wilful default in paying the tax along with the return; the averments in the complaint fell short of drawing an inference of wilfulness, and continuing the prosecution would be an abuse of the process of the Court (paras 20, 21 and the Order).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
You deducted the TDS but paid it late. Is penalty under s.271C leviable?
I paid the TDS with interest before sanction and no penalty was ever levied. Can they prosecute?
You have now paid the TDS. Does that end the prosecution under s.276B?