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TMI Blog2024 (1) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... ment account, was on account of crisis in the company. In the said circumstanes, it cannot be said that company entertained any fraudulent intention to avoid the TDS collected. No useful purpose would be served at this length of time to criminally prosecute the petitioners.
In the peculiar facts and circumstances of the present case, when the entire amount of TDS along with interest was paid even prior to the first communication from the Department and the balance interest amount was paid after the notice, this Court deems it appropriate to quash the proceedings against the petitioners.
Proceedings against the petitioners on the file of Special Judge for Economic Offences at Hyderabad, are hereby quashed. Criminal Petition is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... rosecution was proposed to be launched. The Commissioner further gave an opportunity of hearing on 07.04.2014 to the petitioners. Accordingly, on 25.07.2014, the Managing Director/2nd petitioner addressed a letter stating that the entire amount of TDS and also the tax which was collected with interest was paid and the delay in payment was not willful or negligent, but due to financial crisis in the company. 5. On 02.12.2016, the Commissioner of Income Tax accorded sanction for prosecuting the petitioners. Accordingly, the complaint was filed on 03.02.2017 by the Income Tax Officer. 6. Learned Senior Counsel appearing for the petitioners would submit that the entire TDS was paid even prior to giving notice for paying the balance interest c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners would have suppressed the TDS calculation and would have remained unpaid. He relied on the judgment of Hon'ble Supreme Court in the case of Madhumilan Syntex Limited and others v. Union of India and another (2007) 11 Supreme Court Cases 297, wherein the Hon'ble Supreme Court held as under: "27. From the above provisions, it is clear that wherever a company is required to deduct tax at source and to pay it to the account of the Central Government, failure on the part of the company in deducting or in paying such amount is an offence under the Act and has been made punishable. It, therefore, cannot be said that the prosecution against a company or its Directors in default of deducting or paying tax is not envisaged by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the law." 9. The payment of the entire TDS amount of Rs.77,37,097/- along with interest of Rs.12,37,164/- was paid by the petitioners even prior to the letter addressed, dated 16.01.2013 by the Income Tax Officer. Having received the notice, the balance of TDS interest of Rs.99,114/- was paid. The income tax authorities have accepted both the TDS amounts and the interest component without any objection. Having accepted the entire amount nearly one year thereafter, proposal for launching prosecution was made on 14.03.2014 and two years and nine months thereafter on 02.12.2016, sanction was accorded for prosecution by the Commissioner of Income Tax. 10. Section 276-B of the Income Tax Act prescribes punishment to the person failing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. No useful purpose would be served at this length of time to criminally prosecute the petitioners. In the peculiar facts and circumstances of the present case, when the entire amount of TDS Rs.77,37,097/- along with interest of Rs.12,37,164/- was paid even prior to the first communication from the Department and the balance interest amount of Rs.99,114/- was paid after the notice, this Court deems it appropriate to quash the proceedings against the petitioners. 14. In the result, the proceedings against the petitioners in C.C.No.41 of 2017 on the file of Special Judge for Economic Offences at Hyderabad, are hereby quashed. 15. Accordingly, the Criminal Petition is allowed. Consequently, miscellaneous applications, if any pending in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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