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TMI Blog2017 (8) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... g to ₹ 23,595/- as required under Section 201(1A) of the Act in the year 2010 itself. Instant prosecution has been launched against the petitioner on 14.05.2013 after lapse of about three years from the date of deposit of due tax along with interest by the petitioner under Section 201(1A) of the Act, which is contrary to the instructions bearing F. No.255/339/79-IT (Inv.) dated 28.05.1980 (Annexure-1 to the Counter Affidavit) issued by the CBDT in this regard. Moreover, Section 278 AA clearly states that no person for any failure referred to under Section 276 B of the Act shall be punished under the said provisions if he proves that there was reasonable cause for such failure. This Court on the basis of explanation submitted by the petitioner, as mentioned above, is of the view that the petitioner has been able to prove the reasonable cause for not depositing the aforesaid tax amount within the specified time limit. This Court is of view that continuance of the criminal proceeding against the petitioner is mere harassment to him and abuse of process of the Court. - Criminal Miscellaneous No. 16498 of 2014 - - - Dated:- 2-8-2017 - Sanjay Priya , J. For the Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complainant. 7. The learned Special Judge, Economic Offences, Patna, on the basis of the aforesaid complaint filed by the complainant took cognizance against the petitioner-Company and its three Directors for the offence under Section 276 B of the Act. 8. It has been submitted on behalf of the petitioner that sanction accorded by the Opposite Party No.2 on 31.03.2013 under Section 279 of the Act for launching prosecution against the petitioner under Section 276 B of the Act is mechanical and contrary to the instructions issued by the Central Board of Direct Taxes (hereinafter to be referred as CBDT ), 9. The petitioner-company is involved in business of motor vehicle under the name and style of Sonali Autos and derives its income from the same. The petitioner has been filing its return of income for the purpose of the Act and paying requisites taxes thereupon at all material times. The Act provides for three modes of collection of taxes; (i) direct levy, (ii), levy by deduction at source and (iii) by collection at source. The ordinary method of collection is direct collection of the tax from an assessee. Deduction of tax at source is provided for in certain specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osite Party No.2 granted sanction to Opposite Party No.3 under Section 279(1) of the Act on 31.03.2013 for launching prosecution under Section 276 B of the Act against the petitioner and its Directors. After a lapse of three years from the date of payment of dues (tax + interest), a Complaint Petition (Annexure-1) was filed by the complainant before the Special Judge, Economic Offences, Patna, on 14.05.2013, inter alia, alleging the default pertaining to financial year 2009-10 under Section 276 B of the Act and in respect of which cognizance has been taken by the impugned order. 14. Section 278 AA of the Act postulates an express bar on punishment under Sections 276 A, 276 AB or 276B of the Act if an assesee proves that there was reasonable cause for such failure. The main objective of prosecution provisions contained in Chapter XXII of the Act is to punish the offenders found guilty of tax evasion and other tax related offences and to install fear of law in the minds of those, who may even contemplate evading payment of legitimate taxes. Instant prosecution has been launched against the petitioner with a view to spite the petitioner considering that amount of ₹ 1,43,029/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UOI reported in [2005] 278 ITR 467 (MP). 20. Counsel for the Income Tax Department has appeared. She has submitted that by making payment of TDS amount along with interest will not exonerate the petitioner from the liability of Section 276 B of the Act. She has further submitted that petitioner had deducted tax at source to the tune of ₹ 1,43,029/- under Section 194 A and 194 H of the Act respectively for the financial year 2009-10, but did not deposit the aforesaid sum with the Central Government within the specified time limit. 21. Having heard argument of both sides and on perusal of the materials on record, it appears that it is admitted position that the petitioner deducted tax at source at the rate of ₹ 1,43,029/- for the financial year 2009-10, but did not deposit the same with the Central Government within the specified time limit. It is also admitted position that subsequently out of total amount of ₹ 1,43,029/- so deducted under Section(s) 194A and 194 H of the Act, the petitioner paid a sum of ₹ 41,029/- on 07.09.2010 and thereafter paid a sum of ₹ 1,02,000/- on 20.09.2010. The petitioner also deposited interest of ₹ 23,595/- as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mistake was detected at the time of audit of Books of Accounts by the Statutory Auditors of the petitioner-company in August, 2010. Thereafter, the petitioner immediately deposited the amount of tax along with interest in the year 2010 itself. Section 278 AA of the Act specifically says that no person shall be punished for any failure referred to under the said provisions if the assessee proves that there was reasonable cause for such failure. Reasonable cause would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bonafides. 27. Oversight on the part of the Accountant, who was appointed to deal with Accounts and Income Tax matters, can be presumed to be a reasonable cause for not depositing the tax within time. The petitioner immediately after noticing the aforesaid defects by the Statutory Auditors of the petitioner-company deposited the amount of ₹ 1,43,029/- along with interest amounting to ₹ 23,595/- as required under Section 201(1A) of the Act in the year 2010 itself. Instant prosecution has been launched against the petitioner on 14.05.2013 after lapse of about three ..... X X X X Extracts X X X X X X X X Extracts X X X X
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