2022 (6) TMI 813 - SCH - Income Tax

Prosecution proceedings u/s 279(1) - TDS not deposited in the government treasury within the prescribed statutory time - defaults were in respect of salary as well as non-salary TDS deductions - Company and the person in charge faced the trail - Refund paid towards TDS arrears - HELD THAT - As huge amount of Rs.3,52,99,059/-, though was deducted by the petitioner-Company as TDS, was not deposited in the Government treasury within the prescribed statutory time. It was deposited after 11 months (may be before 12 months). Therefore, once there was a non-deposit, the necessary consequences shall follow including the prosecution. Whatever the submissions are made on behalf of the petitioner-assessee are all defences which are required to be considered by the trial Court in the trial. Even the same is also observed by the High Court in the impugned judgment and order. It is also required to be noted that when the petitioner(s) approached the High Court to set aside the sanction order under Article 226 of the Constitution of India by the time the learned Magistrate had already taken the cognizance and issued summons to the petitioner(s). Therefore, the High Court was justified in observing that the Company and the person in charge are required to face the trial. We are in complete agreement with the view taken by the High Court. No interference of this Court is called for in exercise of powers under Article 136 of the Constitution of India. Hence, the Special Leave Petition stands dismissed.

Summary

Issues Involved:
1. Sanction for prosecution due to non-deposit of TDS by the petitioner-Company.
2. Validity of High Court's decision to uphold the sanction order and allow the trial to proceed.

Issue 1: Sanction for Prosecution:
The Supreme Court, comprising Hon'ble Mr. Justice M.R. Shah and Hon'ble Mrs. Justice B.V. Nagarathna, deliberated on the matter involving the non-deposit of a significant amount of Rs.3,52,99,059/- in the Government treasury as TDS by the petitioner-Company within the stipulated time frame. Despite the deduction, the amount was not remitted promptly, leading to the grant of sanction by the appropriate Authority to prosecute the petitioner(s). The Court acknowledged the delayed deposit and emphasized that the consequences of non-compliance, including prosecution, must ensue. The defenses raised by the petitioner-assessee were deemed as issues to be addressed during the trial proceedings, as highlighted by the High Court's judgment. The Court noted that the High Court's decision to uphold the sanction order was justified, especially considering that the trial had already commenced with the issuance of summons by the learned Magistrate before the High Court's intervention under Article 226 of the Constitution of India. Ultimately, the Supreme Court concurred with the High Court's stance, finding no grounds for interference in the matter under Article 136 of the Constitution of India, consequently leading to the dismissal of the Special Leave Petition.

Issue 2: Validity of High Court's Decision:
The Court further emphasized the necessity for the Company and the responsible individual to undergo the trial process, as directed by the High Court, in light of the ongoing legal proceedings initiated prior to the High Court's involvement. The Supreme Court affirmed the High Court's observation that the Company and the concerned individual must face the trial proceedings, indicating a concurrence with the High Court's decision. The Court concluded that no intervention from the Supreme Court was warranted in this scenario, thereby dismissing the Special Leave Petition and disposing of any pending applications related to the case.