2005 (3) TMI 80 - HC - Income Tax

Conviction u/s 276B - Failure to deposit the amount of tax deducted at source within the period prescribed - First Additional Sessions Judge vide impugned judgment allowed the appeal of the co-accused and acquitted them, however, dismissed the appeal filed by the applicant and confirmed the sentence imposed on him - Hence, this revision has been preferred by the applicant - default pertains to the AY 1985-86 and the prosecution was launched in the year 1987 and the matter is pending since 1999 in this court only. The applicant is said to be above 62 years of age at the time of filing of this revision and presently he is said to be of about 70 years of age. Looking to the surrounding circumstances of the case, I do not find it proper to remit the case - Hence, this revision is allowed to the extent of quashing the conviction of the applicant under section 276B of the Income-tax Act and he is acquitted of the charge under section 276B of the Income-tax Act. His bail bonds are discharged.

Summary

Issues:
Prosecution for failure to deposit tax deducted at source within prescribed period, mens rea requirement under section 276B of Income-tax Act, relevance of departmental instructions in prosecution decision, conflict between statute provisions and departmental instructions, proper exercise of discretion in launching prosecution.

Analysis:
The judgment involves a revision filed against a judgment and order passed by the First Additional Sessions Judge, Indore, in a criminal appeal related to failure to deposit tax deducted at source. The accused persons were convicted under section 276B read with section 178B of the Income-tax Act. The co-accused were acquitted, but the applicant's appeal was dismissed, leading to the revision.

The key contention raised was regarding mens rea, with the applicant arguing its necessity for conviction under section 276B. However, the court cited precedent stating that mens rea is not required for this offense, emphasizing that the offense is complete upon failure to deposit tax deducted at source in time.

Another issue raised was the propriety of prosecuting the applicant after the tax amount was deposited, citing a circular from the Finance Department. The court referred to a relevant case and the circular's instructions, highlighting that prosecution should not be proposed when the amount involved is not substantial and has been deposited. The court emphasized that discretion in launching prosecution should be exercised in accordance with these instructions to avoid arbitrariness.

The judgment emphasized that the trial and appellate courts failed to consider the proper exercise of discretion in launching the prosecution. It noted the delay in the proceedings and the applicant's age, leading to the decision to quash the conviction and acquit the applicant based on surrounding circumstances and the precedent cited. The court found it unnecessary to remit the case for fresh proceedings, ultimately acquitting the applicant and discharging his bail bonds based on the principles established in the cited case law.

In conclusion, the revision was allowed to the extent of quashing the conviction under section 276B of the Income-tax Act and acquitting the applicant based on the considerations discussed in the judgment.