- 1 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 IN THE HIGH COURT OF KARNATAKA, AT DHARWAD DATED THIS THE 2ND DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY CRIMINAL PETITION NO. 102435 OF 2024 (482(CR.PC)/528(BNSS)) BETWEEN: KUBENDRA DAVALAJI KALAL, AGE. 79 YEARS, OCC. BUSINESS, C/O. HOTEL SUJATHA DELUXE PEG BAR, HOSPETH GALLI, GOKAK-591 307. … PETITIONER (BY SRI. PRASHANT F. GOUDAR, SRI. ASHRITH S. PATIL AND SMT. ADITI O, GOUDAR, ADVOCATES) AND: THE INCOME TAX DEPARTMENT, REP. BY ITS INCOME TAX OFFICER, SHRI ANGAD KUMAR, AGE. 46 YEARS, INCOME TAX OFFICER, WARD-1, GOKAK-591 307. … RESPONDENT (BY SRI. THIRUMALESH AND SMT. ROOPA R.A., ADVOCATES) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 OF CR.P.C., PRAYING TO QUASH THE PRIVATE COMPLAINT FILED AGAINST THE PETITIONER/ACCUSED NO.1 UNDER SECTION 200 OF CR.P.C. AND ENTIRE PROCEEDING IN C.C. NO.*689/2015 FOR THE OFFENCES PUNISHABLE UNDER SECTIONS 276C(2) AND 277 OF THE INCOME TAX ACT, 1961, PENDING BEFORE THE PRINCIPAL JMFC, GOKAK. THIS PETITION, COMING ON FOR ADMISSION THIS DAY, ORDER WAS MADE THEREIN AS UNDER: *Corrected vide Court Order dated 19.09.2025. Sd/- (SVSJ) RAKESH S HARIHAR Digitally signed by RAKESH S HARIHAR Location: HIGH COURT OF KARNATAKA DHARWAD BENCH - 2 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 ORAL ORDER (PER: THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY) 1. Petitioner is before this Court under Section 482 of Cr.PC with a prayer to quash the entire proceedings in C.C.No.*689/2015 pending before the Court of Prl. JMFC, Gokak, registered for the offences punishable under Section 276C(2) & 277 of the Income Tax Act, 1961 (for short, ‘the Act’), arising out of the private complaint filed by the respondent. 2. Heard the learned Counsel for the parties. 3. Petitioner who is a businessman had filed returns of his income for the assessment year 2008-09 claiming a total income of Rs.4,49,300/- and the tax liability payable was Rs.87,990/-. On verification, the respondent had found the self-assessment tax paid on behalf of the petitioner-assessee was only Rs.7,990/- as against Rs.87,990/-. On perusal of the relevant document, it was found that extra digit ‘8’ was incorporated before digit ‘7’ in the challan, and there was a material alteration in the challan which was submitted along with the income tax returns of the assessee. Therefore, a show cause notice was issued to the *Corrected vide Court Order dated 19.09.2025. Sd/- (SVSJ) - 3 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 petitioner as well as the Chartered Accountant and the staff of the Chartered Accountant. Petitioner had offered his explanation to the said show cause notice and had requested to drop the proposed action against him. However, the competent authority after obtaining necessary sanction order as provided under Section 279 of the Act, had filed a private complaint against the petitioner and three others. Petitioner is arrayed as accused no.1 in the private complaint and his Chartered Accountant is arrayed as accused no.2. The staff of accused no.2 are arrayed as accused nos.3 & 4, respectively, in the private complaint. The learned Magistrate after taking cognizance of the alleged offences, had issued summons against the accused and it is under these circumstances, the petitioner is before this Court. 4. Learned Counsel for the petitioner submits that petitioner is an assessee who has diligently paid the income tax to the Department. Even according to the complaint averments, petitioner had paid the entire amount of Rs.87,990/- to the Chartered Accountant for the purpose of paying his income tax for the assessment year 2008-09. However, the Chartered Accountant and his staff had played the mischief with an - 4 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 intention to make unlawful gain. They had deposited only a sum of Rs.7,990/- towards income tax on behalf of the assessee and in the challan they have added an additional digit so as to show that income tax of Rs.87,990/- was paid on behalf of the petitioner. He submits that accused nos.2 to 4 in their statement recorded under Section 131 of the Act, have admitted about the receipt of entire amount of Rs.87,990/- from the petitioner towards payment of his income tax liability for the assessment year 2008-09. They have also admitted about the alleged fraud committed by them by altering the bank challan. He submits that petitioner at no point of time had any intention to wilfully attempt to evade tax or to file a false statement in verification. He submits that after the show cause notice was served on the petitioner, he had paid his tax liability in entirety immediately. For the mistake committed by the Chartered Accountant and his staff, the petitioner cannot be prosecuted. He submits that petitioner is not the beneficiary of the alleged fraud, and therefore, no mala fides can be attributed against him. He, accordingly prays to allow the petition. - 5 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 5. Per contra, learned Counsel for the respondent has opposed the prayer made in the petition. He submits that petitioner has colluded with his Chartered Accountant and has committed the alleged fraud. He is a signatory to his income tax returns which was submitted along with the bank challan to the Department. He submits that allegations found in the complaint clearly attracts the offences punishable under Sections 276C(2) & 277 of the Act against the petitioner. Petitioner, who claims to be a diligent assessee, has not taken any action against his Chartered Accountant, and on the other hand, he has continued his services. He has placed reliance on Section 278E of the Act and submits that there is a presumption against the petitioner, and therefore, it is for him to rebut the same before the Trial Court, failing which he is liable to be prosecuted for the alleged offences. Accordingly, he prays to dismiss the petition. 6. Sections 276C & 277 of the Act, reads as under: “276C Wilful attempt to evade tax, etc.- (1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable, or under reports his income, under this Act, he shall, without prejudice to any penalty that may be - 6 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 imposable on him under any other provision of this Act, be punishable ,- (i) in a case where the amount sought to be evaded or tax on under-reported income exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and shall, in the discretion of the court, also be liable to fine. Explanation.- For the purpose of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person- (i) has in his possession or control any books of account or other documents (being - 7 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof. 277. Failure to furnish returns of income.- If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable,- (i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds twenty-five hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six - 8 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to two years and with fine.” 7. Section 276(C)(2) of the Act would get attracted only if the person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under the Act, and Section 277 of the Act would get attracted, if a person makes a statement in any verification under this Act or under the Rule, knowing or believing the same would be false or does not believe the same to be true. 8. In the case on hand, petitioner who is an assessee had declared his total income for the assessment year 2008-09 at Rs.4,49,300/- and his tax liability was at Rs.87,990/-. Income tax returns on behalf of the petitioner was submitted by his Chartered Accountant (accused no.2) on 19.01.2009. It is not in dispute that petitioner is a signatory to the statement of income submitted on his behalf by his Chartered Accountant. It appears that along with the statement of income, the bank challan for - 9 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 having paid the income tax was also enclosed. On verification, it was found that a sum of Rs.7,990/- was paid towards income tax on behalf of the petitioner and in the bank challan, digit ‘8’ was incorporated before digit ‘7’, and it was shown that as if a sum of Rs.87,990/- was paid on behalf of the petitioner towards his tax liability. 9. During the course of inquiry, after the aforesaid discrepancy was discovered in the tax returns filed on behalf of the petitioner, the statement of accused nos.2 to 4 under Section 131 of the Act was recorded on 03.03.2015 & 10.03.2015 by the Income Tax Officer, W1, Gokak. In the statement of accused nos.2 to 4, they had admitted of having received the entire amount of Rs.87,990/- from the petitioner towards payment of his tax liability for the assessment year 2008-09 well in advance and after receipt of the same, at the instructions of accused no.2, his staff had deposited only a sum of Rs.7,990/- towards the tax liability of the petitioner and in the bank challan, the figure was altered by the staff of accused no.2, and thereafter the challan was enclosed along with the statement of income filed on behalf of the petitioner. Therefore, it is very clear that - 10 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 the petitioner had diligently paid a sum of Rs.87,990/- as tax liability to his Chartered Accountant and at the instructions of the Chartered Accountant (accused No.2) and his staff viz., accused nos.3 & 4 committed the fraud with an intention to make unlawful gain. 10. So far as the petitioner is concerned, he is not the beneficiary of the alleged fraud. In addition to the same, after the show cause notice was issued to the petitioner on 10.02.2015, he had once again diligently paid his tax liability. Therefore, it cannot be said that the petitioner had any intention to commit fraud and/or that he had wilfully attempted to evade tax, and therefore, the offence punishable under Section 276C(2) of the Act does not get attracted against the petitioner. 11. For the purpose of Section 277 of the Act, the person making a statement in any verification should know or believe that the said statement is false or does not believe to be true. In the case on hand, since undisputedly the petitioner had paid his tax liability of Rs.87,990/- to the Chartered Accountant, much prior to his income tax returns being filed by his Chartered Accountant, it cannot be said that the petitioner had any reason - 11 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 to believe or to know that the statement made in his income tax returns by his Chartered Accountant was false or untrue. Therefore, even the offence punishable under Section 277 of the Act does not get attracted against the petitioner. 12. In the case of the RAFIQ & ANR. VS. MUNSHILAL & ANR.41, the Hon’ble Supreme Court in a case where the appeal was dismissed for the default of the advocate, has observed that the party should not suffer for the inaction, deliberate omission, or misdemeanour of his agent and a innocent party cannot be made to suffer merely because his chosen advocate had defaulted. This principle has been made applicable by the High Court of Calcutta in the case of JAYSHREE BHARDWAH VS. DY. COMMISSIONER OF REVENUE W.B. STATE TAX & ORS.2, wherein the Chartered Accountant of an assessee had cheated his client and was absconding. 13. For the purpose of raising a presumption against the accused, the foundational facts should be found in the allegations made against him. In the case on hand, such foundational fact is 1 AIR 1981 SC 1400 2 W.P.A. No.1504 of 2023, DD: 07.08.2023 - 12 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 prima facie absent, and therefore, the presumption of a culpable mental state cannot be raised against the petitioner. For the mistake committed or for the fraud played by accused nos.2 to 4, the petitioner who is a diligent assessee cannot be prosecuted and if the impugned proceeding is allowed to continue as against the petitioner, the same would amount to abuse of process of law. 14. Under the circumstances, I am of the opinion that the prayer made by the petitioner in this petition needs to be granted in order to secure the ends of justice. Accordingly, the following: ORDER (i) The Criminal Petition is allowed. (ii) The entire proceedings in C.C.No.*689/2015 pending before the Court of Prl. JMFC, Gokak, registered for the offences punishable under Section 276C(2) & 277 of the Income Tax Act, 1961, is quashed as against the petitioner herein is concerned. *Corrected vide Court Order dated 19.09.2025. Sd/- (SVSJ) - 13 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 (iii) Pending applications, if any, do not survive for consideration and are accordingly disposed of. Sd/- (S.VISHWAJITH SHETTY) JUDGE KK & VNP / CT:BCK LIST NO.: 1 SL NO.: 42.1 - 14 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 IN THE HIGH COURT OF KARNATAKA AT DHARWAD [KUBENDRA DAVALAJI KALAL VS. THE INCOME TAX DEPARTMENT] 19.09.2025 (VIDEO CONFERENCING / PHYSICAL HEARING) CORAM: HON'BLE MR JUSTICE S.VISHWAJITH SHETTY ORAL ORDER ON I.A.NO.1/2025 Learned counsel for the petitioner submits that the correct number of the case is C.C.No.689/2015 and inadvertently it is mentioned as C.C.No.869/2015 in the prayer column of the petition. He therefore prays to permit him to carry out necessary corrections in the prayer column of the petition. Learned counsel for the respondent fairly does not oppose the prayer made in the application. Considering the submissions and also having regard to the averments found in the memorandum of facts filed in support of the application, the prayer in the application to permit the petitioner to amend the prayer column of the petition by correcting the case number is allowed. - 15 - HC-KAR NC: 2025:KHC-D:11234 CRL.P No. 102435 of 2024 Learned counsel for the petitioner is permitted to carry out necessary amendment in the prayer column of the petition by correcting the case number as C.C.No.689/2015 instead of C.C.No.869/2015. Registry is thereafter directed to issue a fresh certified copy of the order passed in this petition by incorporating necessary corrections. Sd/- ( S.VISHWAJITH SHETTY) JUDGE kgk List No.: 1 Sl No.: 33