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TMI Blog1996 (2) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... mited, Respondent No. 1 was required to deduct interest at the rate of 21 per cent. amounting to Rs. 1,864 as required under section 194A of the Act, but respondent No. 1 instead of depositing the said amount, deducted and paid tax at the rate of 10 per cent. amounting to Rs. 880. Thus, the balance tax of Rs. 976 was neither deducted by the accused-firm by January 8, 1979, nor paid till February 7, 1979, the stipulated time as provided by law and rules, and the accused firm deposited Rs. 975 in the Central Government account on November 18, 1983, i.e., after 57 months and that, too, after receiving a show-cause notice from the complainant-petitioner. Thus, the accused firm has contravened the provisions of sections 194A/200 of the Act read with rule 30 of the Income-tax Rules, 1962, and thereby they are liable to be punished under section 276B of the Act. On the filing of the complaint, the respondents were summoned. The complainant examined two witnesses to prove the charge on prima facie basis. Thereafter, after hearing both the parties, the learned Chief Judicial Magistrate, Ludhiana, discharged the accused persons vide order dated October 24, 1990. The complainant-petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a petition under section 482 of the Criminal Procedure Code, for quashing the impugned orders as not only it amounts to abuse of the process of the court but even single Bench and the Division Bench judgments of this court were not properly considered and followed by the courts below. In Raj Kapoor v. State (Delhi Administration), AIR 1980 SC 258, the apex court has held (headnote) "Inherent power of the High Court under section 482 of the Code does not stand repelled when the revisional power under section 397 of the Code overlaps. Nothing in the Code, not even section 397 can affect the amplitude of the inherent power preserved in so many terms by the language of section 482. Even so, when a specific provision is made easy resort to inherent power is not right except under compelling circumstances. Not that there is absence of jurisdiction but that inherent power should not invade areas set apart for specific power under the same Code. There is no total ban on the exercise of inherent power where abuse of the process of the court or other extraordinary situation excites the court's jurisdiction. The limitation is self-restraint, nothing more. " In this case also it is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a firm is a legal entity for purposes of tax laws and is liable to be prosecuted under section 276B for failure to deduct tax at source from interest paid or credited and for not depositing it as required by the section. The petitioner's learned counsel further pointed out that the courts below have wrongly relied on P. V. Devassy v. CIT [1972] 84 ITR 502, wherein the Kerala High Court has held that mere failure to file return within the time allowed will not make the assessee liable for penalty. The Department must prove that the assessee has no reasonable cause for not filing or he acted deliberately in defiance of law or was guilty of conscious disregard of its obligations. He also pointed out that the courts below have also wrongly relied on Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO [1986] 158 ITR 496 (Delhi). He contends that the facts of that case are totally distinguishable. The complainant-petitioner's counsel submits that the prosecution cannot be asked to prove a negative fact. Admittedly, the accused persons have not deducted tax at the rate of 21 per cent. on the amount of interest credited by them to J. R. Bansal and Company Private Limited, though they d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld in Rishikesh Balkishandas's case [1987] 167 ITR 49 (Delhi). In Jagmohan Singh's case [1992] 196 ITR 473 (P H), it is further elucidated that offence under section 276B is complete when tax deducted at source is not deposited in time. Even late deposit will not absolve the accused. This fact was held not relevant that the revenue authorities only charged interest on the amount not deposited and did not impose any penalty. A single Bench of this court has held in this case that the offence is complete on the due date on which the amount should have been deposited but not deposited and late deposit will not absolve the accused. Hence, it was held that the prosecution under section 194A/200/276B of the Act read with rule 30 of the Income-tax Rules, 1962, cannot be quashed. In Anil Kumar's case [1992] 196 ITR 638, a Division Bench of this court has again considered the point as to when an offence under section 276B of the Act is committed. It is held that if the firm accused fails to pay tax deducted at source, its prosecution and punishment under section 276B is valid. They have further clarified that the firm is a legal entity for purposes of tax laws and is liable to be prosecute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides or showing that they had any reasonable cause or excuse for not depositing the tax on the due date. It seems that the courts below are misled by this fact that these accused-respondents/assessees deposited income-tax in excess, which was later on refunded to them and further the concern J. R. Bansal and Co. P. Ltd. also deposited income-tax in excess, which was later on returned to them. Payment of income-tax, its assessment, its excess payment or its refund had nothing to do with the liability of the accused-respondents for deducting 21 per cent. tax on the amount of interest credited by them to J. R. Bansal and Co. P. Ltd. The provisions of section 194A of the Act are mandatory and the accused-respondents were duty bound to comply with these provisions. Considering all the above facts and the authorities cited by both the parties, in my considered view the courts below have fallen into an error in discharging the accused-respondents/affirming the order of discharge of the accused persons. The accused-respondents are required to prove whether there was any reasonable cause for them not to deposit the amount of balance tax of Rs. 976 on the due date. Mens rea is not an ingre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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