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M/s Kudos Chemie Ltd. Versus Assistant Commissioner of Income Tax (TDS) , Chandigarh

2015 (5) TMI 589 - PUNJAB & HARYANA HIGH COURT

Prosecution proceedings under section 276B - tax deducted by the petitioner of an amount of ₹ 1.04 crores had been deposited by it into the Central Government Account after the due date prescribed under the Income Tax Act, 1961 - Held that:- Sub section (1) of Section 279 provides that a person shall not be proceeded against for an offence under section 276B “except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority”. Thus, if there is no .....

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provides that any offence under the Chapter, which includes one under section 276B, may be compounded by the Chief Commissioner or a Director General “before or after institution of proceedings”. The authority to compound the offence before institution of the proceedings makes it abundantly clear that it is left to the discretion of the authorities concerned whether or not to institute prosecution proceedings in respect of an offence under section 276B of the Act. If the offence is compounded b .....

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eged failure referred to in section 276B of the Act. It would also be open to the petitioner to apply to have the offence, if any, compounded. If the application is accepted, there would be no question of instituting prosecution against the petitioner.These are issues, however, which must in the first instance be decided by the authorities under the Act. Interference with the show cause notice at this stage is not warranted - Decided in favour of assessee. - Civil Writ Petition No. 26441 of 2014 .....

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been deposited by it into the Central Government Account after the due date prescribed under the Income Tax Act, 1961 (for short the Act ). The petitioner was called upon to show cause why prosecution proceedings under section 276B of the Act be not launched against it. 3. We see no reason to interfere at this stage. The petitioner ought to reply to the notice. There are several issues which would require consideration while adjudicating the notice. The respondent would have to consider various .....

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t in every case of default in complying with the provisions relating to the requirement of deduction of tax at source that a prosecution is liable to be launched. A view to the contrary is unsustainable. 4. Sections 276B and 279(1)(2) of the Income Tax Act, 1961 read as under:- [276-B. Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B.-If a person fails to pay to the credit of the Central Government,- (a) the tax deducted at source by him as required by or unde .....

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275-B], Section 276, Section 276-A, Section 276- B, Section 276-BB, Section 276-C, Section 276-CC, Section 276-D, Section 277 [, Section 277-A] or Section 278 except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority: Provided that the Chief Commissioner or, as the case may be, Director-General may issue such instructions or directions to the aforesaid income tax authorities as he may deem fit for institution of proceedings under this subsection .....

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missioner or Commissioner (Appeals) or the appropriate authority . Thus, if there is no sanction from the Commissioner or Commissioner (Appeals) or the appropriate authority, a person cannot be proceeded against for an offence under section 276B. This indicates that launching a prosecution is not mandatory. Sub section (1) clearly contemplates cases where prosecution may not be launched though there is a failure as contemplated by section 276B. 6. Under the Proviso to section 279, the Chief Comm .....

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tions for institution of the proceedings under sub section (1). This also establishes that launching a prosecution is not mandatory in every case of failure provided in Section 276B. 7. That it is not mandatory to launch prosecution proceedings is clearer still from sub section (2) of Section 279 of the Act which provides that any offence under the Chapter, which includes one under section 276B, may be compounded by the Chief Commissioner or a Director General before or after institution of proc .....

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