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2023 (9) TMI 70 - HC - Income TaxProsecution proceedings for TDS default - Economic Offence - complainant was posted as Deputy Commissioner (TDS) filed the complaint in his official capacity of the alleged offence committed u/s 276B r.w.s. 278B of Income Tax Act, 1961 and the petitioner’s firm had deducted TDS for the financial year 2015-16, Assessment year 2016-17 but failed to deposit the same with the department as per the provision of the Income Tax Act - petitioner is partner of the firm and he has also been made accused in the complaint in accordance with section 248B and as alleged has wilfully and deliberately not deposited TDS - HELD THAT:- As the Court finds that there is no denial that the commencement of the operation of the petitioner company is with effect from January, 2016 and when the notice was received by the petitioner, the petitioner has filed reply disclosing that the TDS amount along with interest has already been deposited on 11.5.2016 itself whereas sanction order was passed on 14.02.2018 and the prosecution was launched on 13.04.2018 i.e. after much delay of depositing the said TDS amount along with the interest. It is not a case that the prosecution was filed earlier and thereafter the T.D.S amount was deposited. No penalty proceeding initiated against the petitioner - Court finds that the amount of the TDS along with the interest has already been deposited and after lapse of time the said case was registered and the Court further finds that the assessee has succeeded in proving that there is full and sufficient reasons for his failure before the authority under the Act by way of filing the said reply wherein he has intimated that this amount in question has already been deposited along with the interest and no penalty proceeding is initiated against the petitioner and in the case in hand as the amount has been deposited along with the interest and as such, there was no occasion to proceed against the petitioner under section 276(B) of the Income Tax Act. It is well settled that penalty should serve as a deterrent. In the case in hand, the petitioner has already been deposited the TDS amount along with the interest. In the case of K.C. Builders and Another [2004 (1) TMI 7 - SUPREME COURT] the criminal case was held to be not survived in view of the fact that the penalty is struck down and in the case in hand even the penalty proceeding has not been initiated against the petitioner. How the amount is deposited and when sanction and prosecution have been initiated which has already been discussed hereinabove. The Court finds that in such a situation to allow the present proceeding to continue further will amount to abuse of process of law. Accordingly, the entire criminal proceeding including the order taking cognizance dated 02.05.2018 arising out of Economic Offence Complaint Case No. 17 of 2018, pending in the court of learned Special Court, Economic Offence, Ranchi is quashed.
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