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2023 (4) TMI 1216 - HC - Income TaxCommission of offence u/s 276B r.w.s 278B of Income Tax Act - Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B - as alleged in the complaints that the petitioners had deducted tax from the payments made to various parties and failed to deposit the tax to the credit of the Central Government within the prescribed time - petitioners submitted that the assessing officer had not issued a notice under Section 2 (35) of the Income Tax Act to the Directors of the Company before the impugned prosecution was launched and hence the impugned complaint is liable to be quashed - HELD THAT - This Court finds that the Company and its Directors have been prosecuted for the offence under Section 276 B of the Income Tax Act. The contention of the learned counsel for the petitioners that no notice was issued to the Directors as mandated under Section 2 (35) of the Income Tax cannot be accepted. The impugned complaints cannot be quashed on the ground that no notice under Section 2 (35) of the Income Act was issued to the Directors. Further, the question as to whether the Directors were in charge of and responsible to the Company for its business is factual and has to be agitated only before the trial Court. Ground raised by the petitioner that the sanction to prosecute was given belatedly in violation of the Standard Operating Procedure given by the Board which prescribed the time limit for granting sanction of prosecution for the offence under Section 276 B as sixty days. It is seen that the instructions further provide that the time taken for a reply by the Assessee has to be excluded. The question of whether the Assessee had taken time to give the reply or whether there was a delay by the sanctioning authority is again factual in nature. Hence, this Court is of the view that the points raised by the petitioners have to be adjudicated only before the trial Court, and this Court is not inclined to entertain this quash petition.
Issues involved: Challenge to complaints under Section 276 B r/w 278 B of the Income Tax Act, 1961.
Summary: 1. The petitions challenged complaints alleging failure to deposit deducted tax to the Central Government within the prescribed time for three assessment years. 2. The petitioners argued that the assessing officer did not issue a notice under Section 2 (35) of the Income Tax Act to the Directors before prosecution, citing precedents. They also contended that the delay in granting sanction by the Commissioner of Income Tax violated Board instructions under Section 119 of the Income Tax Act. 3. The respondents argued that separate notice to Directors was unnecessary as per Supreme Court precedent and that the delay in granting sanction was due to the petitioners' belated reply, which is allowed under the instructions. 4. The Court found that the Company and its Directors were prosecuted for the offence under Section 276 B of the Income Tax Act, rejecting the argument that no notice to Directors was issued. Citing Supreme Court precedent, the Court held that initiation of criminal proceedings based on necessary averments in the complaint is valid. 5. Regarding the belated sanction issue, the Court noted it as a factual matter to be decided at trial and declined to quash the complaints, stating that the points raised should be addressed before the trial Court. 6. The Court dispensed with the appearance of the petitioners before the trial Court considering their age, and dismissed the Criminal Original Petitions, closing the connected Miscellaneous Petitions.
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