TMI Blog2019 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners that without determining the penalty, the respondent was not entitled to resort to criminal prosecution of the petitioners under section 276B also cannot be accepted for the reason that the petitioners/ accused have not disputed their liability. The question of determining the liability and consequent imposition of penalty would arise only in the case of dispute with regard to the liability to remit the deducted tax. In the instant case, the facts alleged in the complaint clearly indicate that the amount was credited subsequent to the survey. As a result, even this defence is not available to the petitioners. Contention urged by the petitioners that the circular/instruction issued by the Department have binding force though needs to be accepted as a principle of law, but in the instant case, none of the parties have placed the said instruction or circular for perusal of this court. No material is available to show that the petitioner No. 1-company has deposited the amount within the extended time. On the other hand, the allegations are to the effect that survey itself was conducted on September 27, 2011. According to prosecution, the amount was deposited subsequent to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed No. 1-company had not paid any interest which is mandatory under section 201(1A) of the Act. The Assessing Officer noticed that even for the financial years 2009-10 and 2010-11, the accused had committed similar default. Hence, on April 8, 2013 an order came to be passed under section 201(1A) quantifying the interest for delayed remittance of tax deducted at source for both the financial years (2009-10 and 2010-11). Since, the explanation given by the accused for delay in remittance of tax deducted at source was not acceptable, the Commissioner of Income-tax (TDS) after giving sufficient opportunity to the accused, passed an order under section 279 of the Act authorizing the complainant-Deputy Commissioner of Income-tax, (TDS) Circle 16(2), H. M. T. Bhavan, Bengaluru, to prosecute the accused for the offence punishable under section 276B read with section 278B of the Act. 3. Heard learned counsel for the petitioners and the learned standing counsel appearing for the respondent. 4. Learned counsel for the petitioners has urged three fold contentions. Firstly, placing reliance on section 201(1A) of the Act, learned counsel would submit that withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entions, learned standing counsel appearing for respondent/complainant would however submit that section 200 of the Act read with rule 30 of the Income-tax Rules, 1962 contemplate deposit of the TDS deducted within the prescribed time limit and failure to deposit would entail the prosecution of the assessee in terms of section 276B of the Act. In the instant case, the petitioners do not dispute the fact that the tax deducted at source was not credited to the complainant-Department within the prescribed period of time. As held by the hon'ble Supreme Court of India in Madhumilan Syntex Ltd. v. Union of India reported in [2007] 290 ITR 199 (SC) ; [2007] 11 SCC 297 ... wherever a company is required to deduct tax at source and to pay it to the account of the Central Government, failure on the part of the company in deducting or in paying such amount is an offence under the Act and has been made punishable. It, therefore, cannot be said that the prosecution against a company or its directors in default of deducting or paying tax is not envisaged by the Act . 8. Further referring to the very same decision relied on by learned counsel for the petitioners in Indo Arya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) who is required to deduct any sum in accordance with the provisions of this Act ; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax : Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139 ; (ii) has taken into account such sum for computing income in such return of income ; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may, apply to the time limit prescribed in sub-section (3). Explanation.-For the purposes of this section, the expression 'accountant' shall have the meaning assigned to it in the Explanation to sub-section (2) of section 288. 13. A bare reading of the aforesaid section makes it clear that without prejudice to any other consequences, which the accused may incur, he is deemed to be an assessee in default in respect of such deduction. Therefore, it follows that in case of failure to deduct or to pay the tax deducted at source, accused may invite penalty consequent upon the adjudication or it may also without prejudice to any other consequences , lead to prosecution of the accused. This view is expounded by the hon'ble Supreme Court in Madhumilan's case referred to supra, wherein while dealing with identical set of facts in para Nos. 47 and 48, the apex court has observed as under (page 215 of 290 ITR) : The next contention that since tax deducted at source had already been deposited to the account of the Central Government, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure. 16. This provision makes it clear that in order to get over the penal consequences that follow on account of non-payment of tax deducted at source, it is open for the accused persons to come clean of the said charge by showing reasonable cause for failure to deposit the said amount. In the light of this provision, contentions urged by the learned counsel for the petitioners cannot be accepted. Since the material placed on record prima facie discloses that the petitioners have deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, the petitioners cannot escape from the rigour of section 276B of the Act. 17. The alternative argument canvassed by the learned counsel for the petitioners that without determining the penalty, the respondent was not entitled to resort to criminal prosecution of the petitioners under section 276B of the Act, also cannot be accepted for the reason that the petitioners/ accused have not disputed their liability. The que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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