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TMI Blog2019 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. The Assessing Officer issued show-cause notice dated November 3, 2011 (financial years from 2010-11 to 2011-12), calling upon accused No. 1-company to show cause as to why prosecution should not be launched against them. Reply was submitted by accused No. 1-company on November 14, 2011 admitting default and sought time to remit the admitted tax deducted at source liability, but remitted the tax amount partially and failed to discharge the entire liability as undertaken. Hence, the Assessing Officer issued letter dated March 16, 2012 directing accused No. 1-company to remit the outstanding tax deducted at source liability on or before March 25, 2012. The accused filed online quarterly tax deducted at source statement and after verification of online payment system, it was found that accused No. 1-company had remitted TDS deducted by it after considerable delay of more than one year, that too, in consequence of survey conducted by the Department and repeated reminders. For delay in remitting the tax deducted at source, accused No. 1-company had not paid any interest which is mandatory under section 201(1A) of the Act. The Assessing Officer noticed that even for the financial ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of State of Kerala v. Kurian Abraham (P.) Ltd. reported in [2008] 303 ITR 284 (SC) ; [2008] 3 SCC 582. In view of this circular/instruction, the petitioners having made the deposits within the prescribed time limit, no offences have been committed by the petitioners entailing their prosecution under section 276B of the Act. 6. Thirdly, by a subsequent circular dated February 7, 2013, paragraph Nos. 3.1(i) and (ii) of the earlier guidelines were amended and a time limit of 60 days was prescribed to make the deposit from the date of the said deduction and the deduction of the said amount could not have been retrospectively made applicable to the petitioners since the violations are alleged to have been committed in the previous assessment years commencing from 2010-11 to 2013-14. Therefore, the prosecution initiated against the petitioners being wholly illegal and an abuse of process of court cannot be sustained. 7. Refuting the above contentions, learned standing counsel appearing for respondent/complainant would however submit that section 200 of the Act read with rule 30 of the Income-tax Rules, 1962 contemplate deposit of the TDS deducted within the prescribed time l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld submit that the said circular deals only with the standard operating procedure and does not extend the time limit for deposit of tax deducted at source nor does it absolve the accused from criminal proceedings and thus, he seeks to dismiss the petition. 11. Having heard the learned counsel for the parties and on considering the materials on record, the question that arises for consideration is whether the prosecution of the petitioners for the offence punishable under section 276B of the Income-tax Act could be sustained without determination of the liability of the petitioners under section 201 of the Act ? 12. Section 201 of the Act deals with the consequences of failure to deduct or pay. The section reads as under : "201. Consequences of failure to deduct or pay.-(1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act ; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent. (2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (1A) shall be a charge upon all the assets of the person, or the company, as the case may be, referred to in sub-section (1). (3) No order shall be made under sub-section (1) deeming a per son to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given. (4) The provisions of sub-clause (ii) of sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may, apply to the time limit prescribed in sub-section (3). Explanation.-For the purposes of this section, the expression 'accountant' shall have the meaning assigned to it in the Explanation to sub-section (2) of section 288." 13. A bare reading of the aforesaid section makes it clear that without prejudice to any other consequences, which the accused may incur, he is deemed to be "an assessee in default" in respect of such deduction. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustice, then the Legislature would have indicated its intention in the section. On the other hand, what we find is that the power of prosecution given under section 276B is not restricted to a particular type of cases alone". 15. In this context, it may also be beneficial to refer section 278AA of the Act. The section opens with non obstante clause and reads as under : "278AA. Punishment not to be imposed in certain cases.-Not withstanding anything contained in the provisions of section 276A, section 276AB, or section 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure." 16. This provision makes it clear that in order to get over the penal consequences that follow on account of non-payment of tax deducted at source, it is open for the accused persons to come clean of the said charge by showing reasonable cause for failure to deposit the said amount. In the light of this provision, contentions urged by the learned counsel for the petitioners cannot be accepted. Since the material placed on record prima facie discloses that the petitioners have deducted tax at source but failed to cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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