9911796707
TMI Blog2014 (2) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... . On 18.03.2011 respondent - Income Tax Department conducted a survey on the premises of petitioner No. 1 under Section 133-A of the Income Tax Act (for short `the I.T. Act'). During the course of survey the respondent department noticed from the records available in the premises of petitioner No. 1 that they have deducted tax at source and failed to remit the same to the Government account for the financial years 2009-10, 2010-11 and 2011-12 to the tune of Rs.400,56,08,659/- (Four hundred crores fifty six lakhs eight thousand six hundred fifty nine only). During the course of verification of the records, at the time of survey and in the subsequent proceedings after the survey it was detected that the petitioner No. 1 company had deducted TDS on various payments and failed to remit the same to the Government accounts. Petitioner No. 1 company, its principal officer and the authorized representatives admitted the liability of TDS and failed to pay the same. 4. The Assessing Officer passed an order on 30.12.2011 under Section 201(1) and 201(1-A) of the I.T. Act treating petitioner No. 1 company as an assessee in default and levied interest for not remitting the TDS within the stipul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78-B of the I.T. Act before the Special Court are not maintainable. The interim order granted by this Court in I.T.A. No. 165/2012 and connected matters is only restraining further proceedings pursuant to the order of remand but, it will not amount to revival of the order of assessing officer. Therefore the very initiation of criminal proceedings against the petitioners before the special Court are liable to be dismissed as not maintainable. It is contended that without quantification of the salaries paid and the tax deducted at source the proceedings initiated before the Special Court are liable to be dismissed. In the complaint filed by the respondent it is not pleaded what is the accrual of payment and what is the actual payment made to the employees as salaries and actual deductions. In the absence of any such pleadings the question of deducting the tax at source and remittance of the same will not arise. The alleged admission of the liability to pay tax deducted at source by the petitioners is categorically negatived by the ITAT and as such no reliance can be placed on the alleged admissions by the petitioners. It is further contended that as per the proviso to Section 279(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns are referred in the course of judgment. On the basis of pleadings and the arguments the following points will arise for my consideration. i. Whether the complaints filed by the respondents against the petitioners before the Special Court in C.C. No. 49/2013, 77/2013 and 78/2013 are not maintainable since the order of assessing officer treating the petitioners as an assessee in default under Section 201(1) and 201(1-A) of the I.T. Act is set aside by the Income Tax Appellate Tribunal? ii. Whether the criminal proceedings against the petitioners are liable to be quashed for want of necessary ingredients in the complaint filed before the special Judge? iii. Whether the order of sanction under Section 279(1) passed by Commissioner of Income Tax Department to prosecute the petitioners is bad in law? On Point No. i 10. Chapter XXII of the I.T. Act relates to offences and prosecutions. Section 276-B deals with failure to pay tax deducted at source. This section specifies that wherever a company is required to deduct tax at source and to pay to the account of the Central Government, failure on the part of the company in deducting or not paying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the account of the Central Government and pleaded for some time to pay the same. According to respondents the account books maintained by the petitioner No.1 company also specifies the deduction of tax at source and failure to credit the same to the account of the Central Government. It is on the basis of these documentary evidence, admissions and the audited accounts the criminal prosecution is initiated against the petitioners. Therefore the outcome of the proceedings initiated by the Assessing Authority under Section 201(1) and 201(1-A) of the I.T. Act has no bearing on the prosecution proceedings. Therefore point No. i is answered in negative and against the petitioners. On Point No. ii 12. A reading of the complaints specifies the relevant financial years, the amount deducted at source and failure to pay the same to the account of the Central Government. Even the details of non-remittance of TDS of salaries for each financial year and monthwise is also specified. The correspondence between the parties wherein the petitioners have admitted the liability is also referred in the complaint and the same are relied on. Therefore the complaint filed by the respondent contains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner or the Commissioner (Appeals). Therefore it is not necessary for the Commissioner or Commissioner (Appeals) to issue sanction only on the instructions or directions of the Chief Commissioner or Director General. Therefore proviso to sub-section (1) of Section 279 is not a condition precedent for issue of an order of sanction by the Commissioner or the Commissioner (Appeals) under subsection (1) of Section 279 of the I.T. Act. 15. It is contended that the Assistant Commissioner of Income Tax, TDS Circle 16(2) sought sanction from the Commissioner of Income Tax. The Commissioner of Income Tax had given sanction authorizing the Assistant Commissioner of Income Tax, TDS Circle 16(1) to initiate criminal proceedings against the petitioners and as such the same is bad in law. It is not in dispute that the case of petitioner No.1 company was pending before the ACIT, TDS Circle 16(2) and subsequently the case of the assessee was transferred to ACIT, TDS Circle 16(1). By taking note of this development the Commissioner passed an order authorizing ACIT, TDS Circle 16(1) to initiate criminal proceedings. It is necessary for the Commissioner to take into consideration the developments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complainant. It is a matter of evidence and an appropriate order can be passed at the trial. 17. On 02.01.2014 petitioners filed an application under Section 482 Cr. P.C. bringing to the notice of this Court a subsequent event and a document supporting the same. The subsequent event is, treating one Sri. T.R. Venkatadri, Assistant Vice President (Regional Accounts South and Taxation) of petitioner No. 1 company as the Principal Officer under Section 2(35-B) of the I.T. Act. Learned counsel for the petitioners contend that in view of this development proceedings initiated against petitioner No. 2 are liable to be quashed. I decline to accept this contention of the learned counsel for the petitioners. A reading of Section 2(35-B) of the I.T. Act specifies that there is no bar for treating more than one person as the Principal Officer for initiation of criminal proceedings. The Supreme Court in the case of Madumilan Syntex supra, held as under: 27. So far as the directors are concerned, it is alleged in the show-cause notice as well as in the complaint that they were "principal officers" of the company. In the show-cause notice, it was asserted that the appellants were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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