2006 (12) TMI 78 - HC - Income Tax

Offence and prosecution - Assessee fail to make the payment of tax deducted at source to the credit of CG within the prescribed time - HC held that nature of offence was continuing and for such no notice necessary and no time limit for launching prosecution

Summary

Issues:
Challenge to judgment discharging accused under Income Tax Act for non-payment of tax deducted at source, delay in filing complaint, necessity of notice before prosecution, application of Section 468 of Cr. P.C., relevance of prior notice in criminal prosecution, seriousness of continuing offence, compounding of offence under Income Tax Act.

Analysis:
1. Challenge to Discharge of Accused: The petitioner challenged the judgment discharging accused No.1 to 4 under sections 276-B and 278-B of the Income Tax Act for non-payment of tax deducted at source. The accused contended that the amount was paid after being notified, and the delay in filing the complaint was 10 years. The trial court discharged the accused citing the delay and lack of notice before prosecution.

2. Application of Section 468 of Cr. P.C.: The petitioner argued that the delay in filing the complaint was not relevant as the punishment prescribed under section 276-B was up to seven years, exempting it from the limitation period under Section 468 of the Criminal Procedure Code. The Additional Chief Metropolitan Magistrate's decision based on the delay was deemed erroneous.

3. Necessity of Notice Before Prosecution: The court clarified that there is no legal requirement for notice to be given to the accused before launching prosecution under the Income Tax Act. The judgment in C.B. Gautam v. Union of India, which emphasized notice before imposing civil liability, was deemed inapplicable to criminal prosecutions under sections 276-B and 278-B of the Income Tax Act.

4. Seriousness of Continuing Offence: The court highlighted the seriousness of the offence, noting that the accused failed to promptly deposit the tax deducted at source, treating it as a continuing offence. The delay in payment was minimal, and the nature of the offence warranted prosecution without the necessity of prior notice.

5. Compounding of Offence: The court emphasized that the accused could apply for compounding the offence under section 279(1) of the Income Tax Act. The Commissioner is obligated to consider such applications on their merits and decide in accordance with the law.

6. Decision: The court allowed the criminal applications, setting aside the discharge order and remanding the matter back to the Additional Chief Metropolitan Magistrate to prosecute the respondents in accordance with the law. The criminal revision application was allowed in the stated terms.