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2023 (10) TMI 279 - HC - Income TaxValidity of prosecution proceedings against the complainant / service provider along-with the accused person who deducted the TDS - TDS was deducted but not deposited by the deductor with the income tax authority - The accused persons flatly refused to pay the said TDS amount to the complainant. - proceeding being Complaint u/s 120B/420/406 of the Indian Penal Code along with all orders passed therein - whether mandatory provision of section 202 Cr.P.C. has not been complied with by the learned Magistrate? - HELD THAT - Section 202 Cr.P.C. makes it obligatory upon the Magistrate that before summoning the accused residing beyond his jurisdiction he shall inquire into the case himself or direct investigation to be made by a Police Officer or by such other person as he thinks fit, for finding out whether or not there is sufficient ground for proceeding against the accused. In the present case only the complainant has been effectively examined u/s 202 Cr.P.C., who has stated about the facts/offences alleged in the present case. The deposition of the sole witness is clearly not in respect of the statements made in the written complaint and thus not part of an inquiry. Thus in view of the judgment in Vijay Dhanuka and Ors. vs Najima Mamtaj and Ors. 2014 (3) TMI 1103 - SUPREME COURT it is clear from the said order that no inquiry as obligatory u/s 202 Cr.P.C. has been conducted. The Magistrate did not comply with the provision of Section 202 Cr.P.C., even though the petitioners reside (State Rajasthan) outside the jurisdiction of the Court (District Kolkata). In the present case the Magistrate did not Conduct any inquiry into the case himself or direct an investigation as required under Section 202 Cr.P.C. before directing the issue of process and as such the order is not in accordance with law, and is thus an abuse of the process of law. It is evidently clear that assessee received the rent income, and the Tenant (Deductor) has deducted TDS but has not deposited the TDS so deducted into the Central Government Account. We note that issue u/s is no longer res integra. In the case of Kartik Vijaysinh Sonavane 2021 (11) TMI 682 - GUJARAT HIGH COURT held that where TDS has been deducted by employer of assessee, it will always been open for department to recover same from said employer and credit of same could not have been denied to assessee. As such the proper approach for the complainant was to inform the Income Tax Authority as an assessee is not liable under the Act for the deposit of TDS. Thus, the ingredients required to constitute the offences alleged u/s 406/420/120B is clearly absent in the present case. Surprisingly, none of the parties herein have produced the document relating to either full payment (as claimed by the petitioners) or with TDS (as claimed by the complainant), which relates to the dispute. Thus there being no prima facie case made out against the petitioners in respect of the offences alleged, the interference of this court is necessary in the interest of justice and the proceedings liable to be quashed in respect of the petitioners.
Issues Involved:
1. Quashing of the impugned proceeding. 2. Allegations of non-deposit of TDS amount. 3. Territorial jurisdiction and compliance with Section 202 Cr.P.C. 4. Existence of prima facie case and abuse of process of law. Summary: Issue 1: Quashing of the Impugned Proceeding The petitioners sought to quash Complaint Case No. CNS/376 of 2019 under Sections 120B/420/406 of the Indian Penal Code, pending before the 12th Court of Metropolitan Magistrate at Calcutta, alleging abuse of the process of law. Issue 2: Allegations of Non-Deposit of TDS Amount The complainant alleged that the accused assured the deposit of TDS amounting to Rs. 48,08,840/- with the authority concerned but failed to do so, resulting in wrongful loss to the complainant and wrongful gain to the accused. The accused denied these allegations, claiming full payment to the complainant and that the complaint was malicious. Issue 3: Territorial Jurisdiction and Compliance with Section 202 Cr.P.C. The petitioners argued that no inquiry under Section 202 Cr.P.C. was conducted despite the accused residing outside the territorial jurisdiction of the Magistrate. The court noted that the mandatory provision of Section 202 Cr.P.C. was not complied with, as the accused resided in Rajasthan, outside the jurisdiction of the Kolkata court. Issue 4: Existence of Prima Facie Case and Abuse of Process of Law The court observed that there was no prima facie case against the petitioners for the alleged offenses under Sections 406/420/120B IPC. The court highlighted that the proper approach for the complainant was to inform the Income Tax Authority, as the assessee is not liable for the deposit of TDS. The court noted the absence of essential ingredients to constitute the offenses alleged and found the proceedings to be an abuse of the process of law. Conclusion: The court allowed the revisional application, quashing the impugned proceedings and all orders passed therein, deeming it a sheer abuse of the process of law. All connected applications were disposed of, and the interim order was vacated. The judgment was directed to be sent to the learned Trial Court for compliance.
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