IMPORTANT POINT
Prosecution under Section 276B of the Income Tax Act requires proof of failure to remit TDS without reasonable cause, which the petitioners successfully established.

ORDER :

Venkata Jyothirmai Pratapa, J.

1. The instant petitions under Section 482 of Code of Criminal Procedure, 1973, [for short ‘Cr.P.C’] have been filed by the Petitioners/Accused Nos.,1 to 3, seeking quashment of proceedings against them in C.C. Nos.31, 32 and 33 of 2018 respectively on the file of the Court of IV Additional District Judge-cum-Special Economic Offences Court, Visakhapatnam for the offence under Section 276-B of the Income Tax Act, 1961, [for short ‘I.T.Act’].

2. Since the parties in the above three petitions are one and the same, all these petitions are decided by way of common order.

3. The facts leading to the filing of these Petitions are:

a. During the assessment years 2014-15, 2015-16 and 2016-17, the Accused has TDS on contract payments, but the same were not credited into Central Government’s account within time. Accused deducted amounts of Rs.32,82,250/-, Rs.21,31,332/- and Rs.10,85,795/- respectively under Sections 192B, 194A, 194C and 194J on different dates and the same were deposited belatedly. Late payment interest of Rs.2,72,841/-, Rs.1,86,743/- and Rs.43,279/- for above assessment years respectively have also been paid under Section 201(1)(a) of the I.T. Act.

b. The Accused has not deposited the tax deducted at source within the stipulated time. As such, show-cause notice was issued on 17.11.2016 calling upon the Accused to furnish the information by 07.12.2016 at 11.00 a.m. Despite receiving the said notice on 21.11.2016, Accused had not chosen to appear before Respondent No.2. Respondent No.2 had issued another show-cause notice to the Accused on 19.12.2016 and having received the same, Accused gave a reply on 20.12.2016, but had not appeared before Respondent No.2.

c. Respondent No.2 had given final show-cause notice to the Accused on 16.01.2018, for which, the Accused gave an explanation on 30.01.2018. Despite several opportunities, the Accused had not shown sufficient cause for not depositing the amounts.

d. As such, Respondent No.2 filed three private complaints on the file of the Court of IV Additional District Judge-cum-Special Economic Offences Court, Visakhapatnam against the Petitioners/Accused Nos.1 to 3 and the same were taken on file and numbered as C.C.Nos.31, 32 and 33 of 2018 respectively.

Grounds Sought for Quashment:

4. Being aggrieved by the registration of the said cases, Petitioners/Accused Nos.1 to 3 filed the present petitions seeking quashment of the proceedings against them on the following grounds;

(a) Absolutely no case is made out against the Accused, as such, continuation of prosecution against the Petitioners is an abuse of process of law.

(b) The Petitioners have not committed any offence much less the alleged offence.

(c) Respondent No.2 specifically admits that the amounts have been paid along with the late payment interest.

(d) The complaints are totally misconceived and the same were registered without verifying any facts in a routine manner.

(e) The Petitioners intimated to Respondent Department in writing that due to inordinate delay in getting the reimbursement from the State Government, they were unable to deposit the TDS amounts and also pleaded that they were ready to pay the penalty and finally they have paid the same with the said interest as well.

(f) There is no absolutely no provision of prosecution or punishment for the late payment, and the contemplated prosecution or punishment is only for those who have not paid at all.

(g) Petitioner organization is an Educational Institution having great reputation. Prosecution affects its reputation.

Arguments Advanced at the Bar

5. Heard Sri Vijay Mathukumilli, learned counsel for the Petitioners and Ms. D. Prasanna Lakshmi learned Assistant Public Prosecutor for State/Respondent No.1 and Sri P. Vijay Kumar, learned Senior Standing Counsel and Ms. M. Iswarya, learned Junior Standing Counsel for Respondent No.2.

6. Learned counsel for the Petitioners/Accused Nos.1 to 3, in elaboration to what was stated in the Petition, woul