1998 (11) TMI 99 - HC - Income Tax

Issues Involved:
1. Non-deduction of tax at source under Section 194C of the Income-tax Act, 1961.
2. Opportunity to show cause and procedural fairness.
3. Jurisdiction and procedural propriety of filing a revision directly in the High Court.
4. Applicability of judicial precedents and exceptions under Common Cause's case.

Issue-wise Detailed Analysis:

1. Non-deduction of tax at source under Section 194C of the Income-tax Act, 1961:
The Income-tax Officer (ITO) filed a complaint under Section 276B of the Income-tax Act, 1961, against the accused for failing to deduct tax at source from payments made to sub-contractors as required under Section 194C. The accused argued that the payments to each sub-contractor did not exceed Rs. 10,000, thus no tax deduction was required. However, the court found that the aggregate payment to sub-contractors exceeded Rs. 10,000, making the accused liable for tax deduction. The court concluded that a prima facie case for an offence under Section 276B was made out.

2. Opportunity to show cause and procedural fairness:
The accused contended that they were not given a reasonable opportunity to show cause before the prosecution was launched. The court examined the evidence and found that multiple show-cause notices were served, including by affixation, and the accused failed to respond. Thus, the court rejected the contention, stating that the accused were given ample opportunity to show cause.

3. Jurisdiction and procedural propriety of filing a revision directly in the High Court:
The court discussed whether a litigant has the right to directly approach the High Court against an order of the Magistrate/Chief Judicial Magistrate. The court referred to Section 397 of the Code of Criminal Procedure, which allows for revision by the High Court or Sessions Judge. It emphasized that revisions against Magistrate's orders should first go to the Sessions Court unless a complicated question of law is involved. The court found that the petitioner bypassed the Sessions Court without presenting a complicated legal question, thus the revision deserved dismissal on this ground.

4. Applicability of judicial precedents and exceptions under Common Cause's case:
The court examined the applicability of various judicial precedents cited by the accused, including Bee Gee Motors and Tractors v. ITO, Hanuman Rice and Oil Mills v. State of Bihar, and Sequoia Construction Co. Pvt. Ltd. v. P. P. Suri, ITO. It found these cases distinguishable on facts and not applicable. The accused also invoked the Common Cause's case, arguing for dismissal due to the delay in prosecution. However, the court noted that the Supreme Court's exceptions in Common Cause's case excluded offences under taxing enactments from such relief. Therefore, the court found no merit in the argument for dismissal based on delay.

Conclusion:
The court dismissed both Criminal Revisions Nos. 1228 and 1229 of 1998, finding no merit in the petitioner's arguments. The accused were found prima facie liable for non-deduction of tax at source under Section 276B of the Income-tax Act, and procedural fairness was observed in the issuance of show-cause notices. The court also emphasized the procedural propriety of first approaching the Sessions Court for revisions against Magistrate's orders.

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