Bombay HC Quashes Tax Evasion Case Against Abu Jani, Sandeep Khosla; Says Delayed Payment Not Wilful Evasion

Mumbai, September 12, 2026: The Bombay High Court has quashed criminal proceedings against fashion designers Abu Jani and Sandeep Khosla and their company, holding that merely delaying payment of tax does not amount to a “wilful attempt” to evade tax unless there is a deliberate act showing an intention to avoid payment.

Justice RR Bhonsale, on Friday, said that Section 276C(2) of the Income Tax Act requires a conscious and positive act with the intention to evade tax. “A mere non-payment of the tax or a delayed payment cannot be included” within the ambit of the provision, the court held.

Petition Against Tax Complaint

The court was hearing a petition filed by Abu Jani Sandeep Khosla Designers Pvt Ltd and its directors, challenging a criminal complaint filed by the Income Tax Department and the February 2020 order of the Additional Chief Metropolitan Magistrate, Ballard Pier, issuing process against them.

The department had alleged that the company failed to pay self-assessment tax of Rs 5.27 lakh for the 2017-18 assessment year. It claimed the company had not paid the tax despite being required to do so and alleged that the directors, who controlled the company’s affairs, were responsible for the alleged attempt to evade tax.

However, the company paid the entire tax amount on October 19, 2018, just three days after receiving a show-cause notice from the department. The interest of Rs 1 lakh was subsequently paid on March 1, 2020.

Arguments Before The Court

The designers’ advocate, Shivani Shinde, argued that the payment, though delayed, demonstrated that there was no intention to evade tax. The petitioners also contended that the complaint did not point to any positive or overt act showing wilful evasion.

Advocates PC Chotary and Sangita Choure, representing the Income Tax Department, opposed the plea, saying the company had several opportunities to pay the tax but did so only after the show-cause notice. It argued that the conduct indicated an attempt to evade payment and that the issue should be decided by the trial court.

HC Quashes Criminal Proceedings

Disagreeing, the HC noted that the tax was paid within three days of the notice and held that the delayed payment, in the circumstances, could not be termed wilful evasion. “Mere failure to pay or delayed payment cannot be equated to wilful evasion of tax,” Justice Bhonsale said.

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Holding that continuation of the prosecution would amount to a “manifest abuse of the process of law”, the court quashed the complaint and all consequential criminal proceedings against the petitioners.

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