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2023 (10) TMI 709 - HC - Income TaxOffence u/s 276B r.w.s. 278B - Economic Offence - delay in depositing the TDS amount by seven days - plea of the petitioner is that the entire TDS amount has been deposited even before the issuance of receipt of notice - HELD THAT - Whether there existed a reasonable ground for not depositing the said amount is a matter which can be looked into only by the learned Trial Court. The Income Tax Department in the counter-affidavit has not disputed that the TDS amount has been deposited, although after a delay of 12 months. This Court is of the view that pendency of BIFR proceeding against the company due to industrial sickness of the company, delay in deposit of the TDS amount within the stipulated time was a reasonable cause. In view of the reasonable cause, Section 278 AA of the Income Tax will apply. Thus entire criminal proceeding is quashed against the petitioners.
Issues involved:
The issues involved in this judgment are the quashing of criminal proceedings u/s 276B of the Income Tax Act, 1961 and delay in depositing TDS amount. Quashing of Criminal Proceedings: The petitioners filed Cr. M. P. No.1664/2015 and Cr. M. P. No.810/2016 seeking to quash the criminal proceedings, including the order taking cognizance u/s 276B of the Income Tax Act, 1961. The prosecution complaint alleged delay in depositing TDS amount for the Financial Year 2011-12 and assessment year 2012-13, which was deposited after the stipulated time. The main plea of the petitioners was that the TDS amount was deposited before the issuance of notice, citing industrial sickness of the company as a reason for the delay. Delay in TDS Deposit: The main allegation against the Petitioner Company was delay in depositing the TDS amount for the Financial Year 2011-2012 and assessment year 2012-2013. The prosecution claimed that the amount was deposited after the stipulated time, leading to the criminal proceedings. The petitioners argued that the delay was unintentional due to the company's industrial sickness and pending BIFR proceedings since 1991. Legal Arguments: The petitioner's counsel relied on previous judgments to support their case, highlighting a similar case where criminal prosecution was quashed by the Supreme Court. They also argued that there was an inordinate delay of six years in issuing the show cause notice, as the TDS amount was deposited in 2009 but the notice was issued in 2014. The Income Tax Department opposed the quashing petition, stating that penal provisions are attracted if the TDS is not deposited, and reasonable grounds for delay should be examined by the Trial Court. Reference was made to the Sick Industrial Company (Special Provisions) Act, 1985, and a Supreme Court case to support their argument. Court's Decision: The Court considered the industrial sickness of the company and the delay in TDS deposit as a reasonable cause, applying Section 278 AA of the Income Tax Act. Consequently, the Court quashed the impugned order and the entire criminal proceedings against the petitioners. The Criminal miscellaneous petitions were allowed, leading to the dismissal of the criminal proceedings against the petitioners.
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