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IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAY KUMAR DWIVEDI, J.
M/s Maithon Power Limited & Ors. - Petitioners
Versus
The State of Jharkhand & Ors. - Opposite Parties
Cr. M.P. No. 2193 of 2018
Decided On : 14-02-2022
TDS - Criminal Proceedings - Income Tax Act, 1961, Sections 276(B) and 278(B)
Fact of the Case:
The petitioners filed a criminal miscellaneous petition seeking to quash the entire criminal proceeding, including the order dated 08.12.2017, passed by the learned Special Judge, Economic Offences, Dhanbad, in connection with C.O. Case No. 13 of 2017, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, pending in the Court of learned Special Judge, Economic Offences, Dhanbad.
Finding of the Court:
The court found that the TDS amount in question was paid on 07.03.2013, but credited in the account of the Income Tax Department on 08.03.2013. The court also noted that interest for the delay of one day in payment of TDS amount had been paid to the department. The court further found that the petitioner No. 2 was not overall in-charge and responsible for the conduct of the business, as required by Section 278(B) of the Income Tax Act. The court also considered the provisions of Section 95 of the Indian Penal Code, which states that an act causing slight harm is not an offence.
Issues: The issues revolved around the timing of the TDS payment, the liability of the petitioners under Sections 276(B) and 278(B) of the Income Tax Act, and the interpretation of the term 'in-charge' as per Section 278(B).
Ratio Decidendi: The court held that the TDS amount was paid within the required time, and the delay in crediting the amount to the Income Tax Department did not warrant criminal prosecution. The court also emphasized that the petitioner No. 2 was not overall in-charge and responsible for the conduct of the business, as required by Section 278(B) of the Income Tax Act. Additionally, the court considered the provision of Section 95 of the Indian Penal Code, which states that an act causing slight harm is not an offence.
Final Decision: The entire criminal proceeding, including the order dated 08.12.2017, passed by the learned Special Judge, Economic Offences, Dhanbad, in connection with C.O. Case No. 13 of 2017, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, pending in the Court of learned Special Judge, Economic Offences, Dhanbad, was quashed.
JUDGMENT :
Heard Mr. Pandey Neeraj Rai, learned counsel appearing for the petitioners, Mr. Bhola Nath Ojha, learned A.P.P. for the State and Ms Amrita Sinha, learned counsel appearing for the O.P. No. 2 (Income Tax Department).
2. This petition has been heard through Video Conferencing in view of the guidelines of the High Court taking into account the situation arising due to COVID-19 pandemic. None of the parties have complained about any technical snag of audio-video and with their consent this matter has been heard.
3. This criminal miscellaneous petition has been filed for quashing of the entire criminal proceeding including the order dated 08.12.2017, passed by the learned Special Judge, Economic Offences, Dhanbad, in connection with C.O. Case No. 13 of 2017, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, pending in the Court of learned Special Judge, Economic Offences, Dhanbad.
4. The complaint was lodged by one Sandeep Ganguly, Assistant Commissioner, Income Tax Department, stating therein:-
(ii) The accused no. -1 is a joint venture company and is juristic person represented through its principal officer i.e., accused no. - 2 and was carrying business of power generator in the name and style of accused no. 1 M/s Maithon Power Limited, having PAN AACCM8705H, having its office at Village Dambhuli, P.O. Barbendia, P.S.-Nirsa, Dist. Dhanbad (Jharkhand) – 828205 within the jurisdiction of your kind honour.
(iii) The accused no. -1 is a private limited company having TAN -RCHM02200C registered under The Companies Act and derived Income from business of generating power and is an assessee within the meaning of Income Tax Act under T.D.S. Ward Circle, I.T. Department, Dhanbad.
(iv) The accused no. 2 is the principal officer of accused no. 1 having PAN -AFETR8883F and was / is quite aware of the day to day, conduct of the business and entire business affairs of accused no. – 1 and actively participating in the function and management of companies affairs of accused no. -1 and being a principal officer as per Section 2(35) of the I. T. Act of accused no. -1 he was liable and responsible to the company for the conduct of the business of the company i.e., accused no. -1 for each and every act done by him or by any other person of the company for and on behalf of accused no.-1.
(v) The accused No. 2 for and on behalf of accused no. 1 being a principal officer of accused no. 1 deducted TDS amount, amounting to Rs.8,22,23,551/- for F.Y.-2012-13 but failed to credit the same to the account of Central Government of India, TDS Ward Dhanbad. To avoid repeation of the contents of the detail a list of the details of PAN, payment date, due date, date of deposit, late payment, interest, date of deduction, period is attached herewith marked as Annexure-A which may be treated as part and parcel of the complaint petition.
(vi) The accused no. 2 being principal officer of accused no. -1 and quite aware of day to day business and conduct of the business of the assessee i.e. accused no.-1 and being responsible officer of accused no. 1 deliberately, intentionally, knowingly, willingly and having mens rea in his mind failed, neglected and avoided to deposit the same in time to the credit of Central Government account i.e., I.T. Department, TDS Ward, Dhanbad without reasonable cause rather converted the aforesaid amount into their own use for their wrongful gain and for wrongful loss to the Central Government i.e., TDS Ward, Dhanbad.
(vii) As per provision laid down under Income Tax Act that any person deducting any sum in accord
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 ....
The deposit of TDS amounts with interest should be considered before initiating criminal proceedings under Sections 276(B) and 278(B) of the Income Tax Act.
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.
Prosecution under Section 276B of the Income Tax Act requires proof of failure to remit TDS without reasonable cause, which the petitioners successfully established.
Prosecution for delayed TDS deposits during COVID-19 was deemed unwarranted as the pandemic constituted a 'reasonable cause' for non-compliance.
The main legal point established is that in cases of willful failure to furnish income tax return, the prosecution under section 276CC is not sustainable if the tax has been deposited and there are n....
The prosecution for delays in depositing TDS cannot proceed when the amounts were eventually paid with interest, and valid explanations for the delays were provided.
Non-compliance with mandatory statutory requirements, such as serving notice under section 2(35)(b) of the Income Tax Act, can invalidate a prosecution.
There shall not be any penalty leviable under Section 271C of Income Tax Act, 1961 on mere delay in remittance of TDS after deducting the same by concerned assessee.
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