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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Prithviraj K. Chavan, J.
Hemant Mahipatray Shah and another – Petitioners
Versus
Anand Upadhyay and another - Respondents
Criminal Writ Petition No.3034 Of 2022 A/W Criminal Writ Petition No.3035 Of 2022 A/W Criminal Writ Petition No.3036 Of 2022 A/W Criminal Writ Petition No.3037 Of 2022 A/W Criminal Writ Petition No.3038 Of 2022, Criminal Writ Petition No.3039 Of 2022
Decided On : 12-08-2024
| Table of Content |
|---|
| 1. prosecution based on delayed tds payments (Para 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 2. arguments on vicarious liability under it act (Para 12 , 13 , 14 , 15 , 16 , 17) |
| 3. missing elements for prosecution under it act provisions (Para 18 , 19 , 20 , 21 , 22 , 23) |
| 4. interpretation of section 276b post-amendment (Para 24 , 25 , 26 , 27 , 28) |
| 5. relevance of cbdt guidelines in prosecution cases (Para 29 , 30 , 31) |
| 6. prosecution not warranted where tds is deposited (Para 32 , 33 , 34) |
| 7. conditions for chief officer liability under it act (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42) |
| 8. precedents influencing vicarious liability in prosecution (Para 43 , 44 , 45) |
| 9. petitions allowed and processes quashed (Para 46) |
| 10. court orders conclusion and disposal of petitions (Para 47) |
ORDER:
Prithviraj K. Chavan, J.
1. Rule.
2. Rule is made returnable forthwith.
3. Learned Counsel for the respondents waives service.
4. With the consent of the learned Counsel for the parties, the petitions are taken up for final disposal at the stage of admission.
5. This bunch of petitions arose from identical set of facts questioning legality and propriety of prosecution of the petitioners by the respondent No.1.
6. The petitioners, have, therefore, invoked inherent jurisdiction of this Court under Section 482 of the Code of Criminal Procedure, 1973 (for short “Cr. P.C”) r/w Article 227 of the Constitution of India impugning issuance of process on the basis of the complaints filed by the Income Tax Officer under Section 279 (1) of the INCOME TAX ACT , 1961 (for short “I.T Act”) to prosecute them for the offence punishable under sections 276B r/w 278B of the I.T. Act. Briefly stated, facts are as follows.
7. Respondent No.1 - Income Tax officer has filed complaints under Section 279 (1) of the I.T Act along with sanction to prosecute the petitioners for the offences as referred hereinabove. The complainants alleged that M/s. Hubtown Ltd (hereinafter referred to as “assessee” ) is a Company incorporated under the Companies Act, 1956. It was brought to the notice of the respondent No.1 by the assessee that it has deducted amounts of Rs. 13,11,35,617/- during the Financial Year 2011-2012 (Relevant Assessment Year 2012-13); Rs.14,54,20,798/- during the Financial Year 2013-2014 (relevant Assessment Year 2014-15), Rs.15,38,51,407/- during the Financial Year 2012-2013 (relevant Assessment Year 2013-2014), Rs.15,78,03,299/-, during the Financial Year 2016-2017 (relevant assessment year 2017-2018) , Rs. 12,70,04,846/- during the financial year 2014-2015 (Relevant Assessment Year 2015-2016) and Rs.8,78,68,793/- during the Financial Year 2017-2018 (relevant Assessment Year 2018-2019) but delayed in paying the same to the Government Treasury within the prescribed time limit.
8. Show cause notices came to be issued to the assessee and it’s Directors i.e the petitioners herein. The petitioners tendered their explanation to the respondent No.1. However, respondent No.1 arrived at a conclusion that the assessee and it’s Directors are responsible for paying tax as per Section 204 of the I.T Act and have, therefore, committed default under Section 200 of the I.T Act r/w Rule 30 of the INCOME TAX RULES without reasonable cause or to pay the tax so deducted under the various sections of the I.T Act from payment made to various parties, which amounts to an offence punishable under section 276B r/w Section 278B of the I.T Act.
9. The CIT (TDS) accorded sanction under section 279 (1) of the I.T Act to prosecute the assessee and it’s Directors under section 276B r/w 278B of the I.T. Act as, prima facie, they are liable to be prosecuted under these sections. Complaints, therefore, came to be filed being C.C. No.529/SW/2019; C.C. No.532/SW/2019; C.C.No.530/SW/2019; C.C. No.2365/SW/2018; C.C. No.531/SW/2019 and C.C. No.27/SW/2020 in the Court of Additional Chief Metropolitan Magistrate, Mumbai.
10. The Additional Chief Metropolitan Magistrates, Mumbai vide orders dated 16th November, 201
Prosecution for delayed TDS deposits under Income Tax Act may be quashed when reasonable causes are established; the recent CBDT circular allows for compounding such offences.
The main legal point established in the judgment is that the timing of TDS payment, the liability of the petitioners under Sections 276(B) and 278(B) of the Income Tax Act, and the interpretation of ....
Non-compliance with mandatory statutory requirements, such as serving notice under section 2(35)(b) of the Income Tax Act, can invalidate a prosecution.
An annulled penalty under the Income Tax Act negates the foundation for criminal prosecution for concealment unless reversed, thus quashing ongoing prosecution.
object of launching criminal prosecution for wilful default in complying with the provisions of the Income Tax Act is to prevent evasion of tax
Prosecution for delayed TDS deposits during COVID-19 was deemed unwarranted as the pandemic constituted a 'reasonable cause' for non-compliance.
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