As per the complainant, the accused wilfully evaded tax and the entire aggregate amount received in the Assessment Year 2019-20 from sale of the shares was to be treated as revenue of the company, and not as capital.
The Court said that Section 276C (1) of the Income Tax Act, which was invoked in the complaint against Newslaundry, talks of a wilful attempt to evade tax. In this light, it stated,
“Firstly, there was no attempt to evade tax, it is not the case of the complainant that accused no.1 did not disclose the factum of allotment of shares at premium in its accounts or financial statements. It is also not the case of the complainant that there was any wrong entry in the books of accounts, balance sheet and income tax return.”
The Court underlined that the information relied on by the Tax Department was wilfully supplied by the accused, and said that although there may be different points of view on what is to be treated as capital or revenue, it could not be said that the accused had wilfully evaded tax.
“All the information that the complainant is relying upon is supplied by the accused. All the information was disclosed in the books of accounts. There may be different points of view on what is to be treated as an item of revenue and what is to be treated as capital receipt but it does not amount to wilful attempt to evade tax. Even a tax exemption wrongly claimed under a bona fide belief would not make section 276C of the Act applicable to assessee,” the Court said.
It added that if the Department wanted to treat the capital receipts as revenue receipts, it was free to do so and may pass an assessment order making additions to the income of the company for the relevant financial year and issue a notice of demand.