2003 (6) TMI 15 - HC - Income Tax

By this writ application the writ petitioner has prayed for setting aside the decision to initiate prosecution against the petitioner under section 276B of the Income-tax Act, 1961 maintainability - I make it clear that I have not gone into the merits; simply because I am not willing to decide such question before initiation of criminal proceedings, I have decided not to entertain this application. The writ application is, thus, dismissed.

Summary

Issues:
- Setting aside decision to initiate prosecution under section 276B of the Income-tax Act, 1961
- Validity of grounds for not depositing the tax deducted at source
- Quashing the decision to prosecute based on valid and sufficient grounds

Analysis:
The writ petitioner sought to set aside the decision to prosecute under section 276B of the Income-tax Act, 1961. The petitioner had previously received a show cause notice regarding the failure to pay the tax deducted at source to the Central Government. Despite multiple hearings, no written decision was communicated to the petitioner. The petitioner learned about the decision to initiate proceedings through this application. The petitioner argued that since a penalty was initially imposed but later set aside due to jurisdictional issues, there was no valid reason for prosecution. The petitioner contended that valid grounds existed for not depositing the amount, making it a case for quashing the prosecution.

The respondents opposed the application, stating that no valid grounds were presented for quashing the decision to prosecute. The court, after hearing both parties and reviewing the evidence, declined to entertain the application at that stage. The court emphasized that the determination of whether there were justifiable reasons for not depositing the tax deducted at source is a factual question to be addressed during the criminal trial. The court noted that if the petitioner could establish the validity of their grounds during trial, the prosecution would fail. However, the court found no basis to preempt the criminal proceedings by entertaining the writ application, especially since the disputed issues were factual and required evidence for resolution.

The court rejected the application solely on the grounds of not intervening before the criminal proceedings. The court clarified that the decision was not based on the merits of the case but on the procedural stage. The writ application was dismissed, with no costs imposed on any party. All parties were instructed to act upon a signed copy of the order.