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2024 (6) TMI 1070 - HC - Income TaxIssues Involved: 1. Quashment of proceedings under Section 482 Cr.P.C. 2. Alleged offence under Section 276-B of the Income Tax Act, 1961. 3. Reasonable cause for delayed TDS remittance. 4. Applicability of Section 278AA of the I.T. Act. Summary: 1. Quashment of Proceedings under Section 482 Cr.P.C.: The Petitioners/Accused Nos. 1 to 3 sought quashment of proceedings in C.C. Nos. 31, 32, and 33 of 2018 on the file of the IV Additional District Judge-cum-Special Economic Offences Court, Visakhapatnam, under Section 482 of the Code of Criminal Procedure, 1973. They argued that no case was made out against them, and continuation of prosecution would be an abuse of process of law. 2. Alleged Offence under Section 276-B of the Income Tax Act, 1961: The Petitioners were accused of failing to credit the tax deducted at source (TDS) to the Central Government's account within the stipulated time for the assessment years 2014-15, 2015-16, and 2016-17. Despite deducting amounts under various sections, they deposited the amounts belatedly along with late payment interest. 3. Reasonable Cause for Delayed TDS Remittance: The Petitioners contended that the delay in remittance was due to the inordinate delay in receiving fee reimbursements from the State Government of Andhra Pradesh. They argued that this constituted a "reasonable cause" under Section 278AA of the I.T. Act, which exempts individuals from punishment if they can prove such a cause. 4. Applicability of Section 278AA of the I.T. Act: The Court examined whether the Petitioners had established a reasonable cause for the delay in remittance. The explanation provided by the Petitioners, which included documentation of delayed fee reimbursements from the government, was found to be sufficient to constitute a "reasonable cause" under Section 278AA. The Court noted that the Commissioner of Income Tax had ignored this material. Determination by the Court: The Court concluded that the reason provided by the Petitioners for the delay in remitting the amount to the Central Government was sufficient to constitute a "reasonable cause" under Section 278AA of the I.T. Act. Consequently, the criminal prosecution against the Petitioners was deemed unwarranted. The Court allowed the Criminal Petition Nos. 1207, 1208, and 1212 of 2020, quashing the proceedings against the Petitioners/Accused Nos. 1 to 3 in C.C. Nos. 31, 32, and 33 of 2018. Result: The proceedings against the Petitioners in C.C. Nos. 31, 32, and 33 of 2018 were quashed, and any pending Interlocutory Applications were also closed.
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