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2014 (9) TMI 583 - HC - Income TaxFailure to deduct TDS – Offence u/s 194A – Complaint u/s 482 Cr.P.C read with section 276B of IT Act – petitioner argued that the complaint was filed under Section 276-B, which provision has been amended after 01.04.1989 and only failure to pay tax deducted at source has been made offence. - Held that:- Petitioner S.C. Kumar was appointed as a nominee Director in M/s Sukhna Paper Mills Limited by the Industrial Finance Corporation of India - There is also nothing in the complaint to show that the present petitioner was responsible for managing day-to-day affairs of that company - a person appointed as a Director on behalf of the corporation will not be liable to incur any obligation or liability. Amendment to section 194A - retrospective or prospective - Held that:- Section 194A has been amended to provide that the tax will be deducted at source on accrual of interest in the end of the accounting year or at the time of crediting to the account of payee or at the time of payment, whichever is earlier and it further states that it was done with a view to prevent postponement of liability relating to such deduction of tax at source. Thus the explanatory note itself reveals that there was a lacuna or loop hole in the unamended provisions of Section 194A which enabled the concerned person to postpone the liability relating to such deduction of tax at source and thus dwindling the tax collection. - there is absolutely no doubt that Explanation to subsection (1) of Section 194A has created a fresh penal liability and it cannot be said to be a simple Explanation of the existing provisions of this section. If that is so, then this Explanation cannot have retrospective operation. Scope of section 276B – Held that:- The perusal of amended Section shows that now mere failure to deduct tax is no longer offence under Section 276-B of the Income Tax Act. The Hon'ble Supreme Court also in M/s General Finance Company vs. Assistant Commissioner of Income Tax, [2002 (9) TMI 3 - SUPREME Court] while examining the provisions of Section 269SS concluded that even if the offence was committed at the time of filing of the complaint, the same could not be continued after the omission of the provision. - after the omission of the provision of failure to deduct tax at source, the trial cannot be continued against the petitioners. - Decided in favour of assessee.
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