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Sonali Autos Private Limited Versus The State of Bihar, The Commissioner of Income Tax, TDS Circle, Patna, The Deputy Commissioner of Income Tax, TDS Circle, Patna

2017 (8) TMI 196 - PATNA HIGH COURT

Cognizance of the offence u/s 276B - after lapse of about three years from the date of deposit of due tax and interest - Held that:- Petitioner immediately deposited the amount of tax along with interest in the year 2010 itself. Section 278AA specifically says that no person shall be punished for any failure referred to under the said provisions if the assessee proves that there was reasonable cause for such failure. Reasonable cause would mean a cause which prevents a reasonable man of ordinary .....

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s required under Section 201(1A) of the Act in the year 2010 itself. Instant prosecution has been launched against the petitioner on 14.05.2013 after lapse of about three years from the date of deposit of due tax along with interest by the petitioner under Section 201(1A) of the Act, which is contrary to the instructions bearing F. No.255/339/79-IT (Inv.) dated 28.05.1980 (Annexure-1 to the Counter Affidavit) issued by the CBDT in this regard. - Moreover, Section 278 AA clearly states that n .....

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he petitioner is mere harassment to him and abuse of process of the Court. - Criminal Miscellaneous No. 16498 of 2014 - Dated:- 2-8-2017 - Sanjay Priya , J. For the Petitioner : Mr. Ajay Kumar Rastogi, Advocate For the Opposite : Mr. Nawal Kishore Prasad, APP Mrs. Archana Sinha, Advocate JUDGMENT 1. This application under Section 482 of the Code of Criminal Procedure has been filed for quashing the order dated 15.05.2013 passed by the Special Judge, Economic Offences, Patna, in Complaint Case No .....

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pect of Tax deducted at source on different nature of payment from its Patna Office at Patna having TAN- PTNS00778S. As per scheme of Section 276-B of the Act and the details available on the ITD system, the list of cases/deductors, who have failed to pay to the credit of Central Govt. the tax deducted by them has been obtained by the complainant. 3. From perusal of TDS return filed by the accused, it has been gathered by the complainant that TDS amounting to ₹ 1,43,029/- had not been depo .....

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cial year 2009-10 and have committed offence under Section 276 B read with 278 B of the Act and the accused have rendered themselves liable for punishment under Section 276 B of the Act. 6. The Commissioner of the Income Tax (TDS), Patna, considering the facts involved in the case, accorded sanction under Section 279(1) of the Act for launching prosecution for the offence committed by the accused under Section 276 B of the Act. An original copy of the order under Section 279 (1) of the Act has b .....

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ection 276 B of the Act is mechanical and contrary to the instructions issued by the Central Board of Direct Taxes (hereinafter to be referred as CBDT ), 9. The petitioner-company is involved in business of motor vehicle under the name and style of Sonali Autos and derives its income from the same. The petitioner has been filing its return of income for the purpose of the Act and paying requisites taxes thereupon at all material times. The Act provides for three modes of collection of taxes; (i) .....

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liable to penalty under Section 221 or 271 C read with section 273 B of the Act. As soon as the tax is deducted at source by the person responsible to make payment, the liability of an assessee to pay that tax gets discharged and it is responsibility of the person, who has deducted tax at source, to deposit the same with the government. The tax has to be deposited at the time of crediting payment and the amount so deducted has to be paid over to the Central Government before the 7th day of the .....

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nts and Income Tax matters, the petitioner could not deposit the aforesaid sum of ₹ 1,43,029/- with the Central Government within the specified time limit. Subsequently, at the time of audit of Books of Accounts in August, 2010, this mistake was noticed by the Statutory Auditors of the petitioner-company. The petitioner out of total amount of ₹ 1,43,029/- so deducted under Section 194 A and 194 H of the Act, paid a sum of ₹ 41,029/- on 07.09.2010 and thereafter paid ₹ 1,0 .....

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sited interest of ₹ 23,595/- on the delayed payment of TDS. 13. All of a sudden, at a very belated stage, Opposite Party No.2 granted sanction to Opposite Party No.3 under Section 279(1) of the Act on 31.03.2013 for launching prosecution under Section 276 B of the Act against the petitioner and its Directors. After a lapse of three years from the date of payment of dues (tax + interest), a Complaint Petition (Annexure-1) was filed by the complainant before the Special Judge, Economic Offen .....

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ound guilty of tax evasion and other tax related offences and to install fear of law in the minds of those, who may even contemplate evading payment of legitimate taxes. Instant prosecution has been launched against the petitioner with a view to spite the petitioner considering that amount of ₹ 1,43,029/- and the period of default are not substantial after lapse of period of three years from the date of payment of due taxes along with interest thereon under Section 201 (1A) of the Act. 15. .....

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mount in default has also been deposited in the meantime to the credit of the government. No such consideration will, of course, apply to levy of interest under Section 201 (1A) of the Act. Copy of the aforesaid instruction has been annexed as Annexure-1 to the reply to Counter Affidavit. 16. Counsel for the petitioner has finally submitted that the instant prosecution is mechanical and contrary to the instructions issued by the CBDT and is wholly unsustainable in law. Reasonable cause would mea .....

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07, wherein, this Court was pleased to quash the order taking cognizance on the ground that due tax along with interest had been paid. 18. Counsel for the petitioner has further submitted that in similar situation in the case of Bee Gee Motors & Tractors Vs. ITO (P & H) reported in [1996] 218 ITR 155 (P & H), Hon ble Punjab & Haryana High Court was pleased to quash the criminal complaint when the amount and/or period of default was not substantial and when the prosecution came to .....

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etitioner had deducted tax at source to the tune of ₹ 1,43,029/- under Section 194 A and 194 H of the Act respectively for the financial year 2009-10, but did not deposit the aforesaid sum with the Central Government within the specified time limit. 21. Having heard argument of both sides and on perusal of the materials on record, it appears that it is admitted position that the petitioner deducted tax at source at the rate of ₹ 1,43,029/- for the financial year 2009-10, but did not .....

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ount. 22. Copy of the instructions bearing F. No.255/339/79-IT (Inv.) dated 28.05.1980 issued by the CBDT has been annexed by the petitioner as Annexure-1 to the reply to the Counter Affidavit, wherein, it is mentioned in clause (g) that prosecution under Section 276 B of the Act should not normally be proposed when the amount involved and/or the period of default is not substantial and the amount in default has also been deposited in the meantime to the credit of the government. No such conside .....

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deposited by the petitioner along with interest on various dates in the year 2010 when the mistake was noticed by the petitioner at the time of audit of Books of Accounts in 2010. Prosecution has been launched against the petitioner after the lapse of three years on 14.05.2013 as a consequence of sanction order passed under Section 279 (1) of the Act (Annexure-3) on 31.03.2013, in contravention of the instructions bearing F. No.255/339/79-IT (Inv.) dated 28.05.1980 issued by the CBDT in this re .....

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roves that there was reasonable cause for such failure. 26. The petitioners have stated in the petition that the aforesaid tax could not be deposited within time due to oversight on the part of the Accountant, who was appointed to deal with the Accounts and Income Tax matters. This mistake was detected at the time of audit of Books of Accounts by the Statutory Auditors of the petitioner-company in August, 2010. Thereafter, the petitioner immediately deposited the amount of tax along with interes .....

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