Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Jhk) 718

IN THE HIGH COURT OF JHARKHAND AT RANCHI
SANJAY KUMAR DWIVEDI, J.
M/s Dev Multicom Private Ltd. & Ors. - Petitioners
Versus
The State of Jharkhand & Ors. - Opposite Parties
Cr. M.P. Nos. 2941, 2942, 2943, 2944, 2948, 2949, 2950, 2953 of 2018
Decided On : 28-02-2022

Advocates Appeared:
For the Petitioners: Mr. Sumeet Gadodia, Mr. Shrestha Gautam.
For the Opposite Parties : Mr. Veer Vijay Pradhan, A.P.P., Mr. Vibhuti Sahay, A.P.P., Mr. Satish Prasad, A.P.P., Mrs. Ruby Pandey, A.P.P., Mrs. Priya Shrestha, Spl.P.P., Mr. Rajesh Kumar, A.P.P., Mr. Vishwanath Ray, A.P.P., Ms. Amrita Sinha, Mr. A.M. Khandelwal.

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.

Headnote:
Income Tax Act - Criminal Proceedings - Sections 276(B) and 278(B)
Fact of the Case:

The petitioners sought to quash the cognizance orders passed by the Special Judge, Economic Offences, Dhanbad, for offences under Sections 276(B) and 278(B) of the Income Tax Act. The complaint alleged failure to deposit TDS amounts to the credit of the Central Government, leading to the initiation of criminal proceedings.
Finding of the Court:

The Court found that the TDS amounts had been deposited with interest, and the prosecution was launched after the amounts were received, contrary to the CBDT guidelines. It held that the continuation of the proceedings would amount to an abuse of the process of the Court.
Issues: The main issue was whether the prosecution under Sections 276(B) and 278(B) of the Income Tax Act should proceed despite the deposit of TDS amounts with interest.
Ratio Decidendi: The Court relied on the CBDT guidelines, which state that prosecution under Section 276(B) should not be proposed when the amount involved and/or the period of default is not substantial and the amount in default has been deposited to the credit of the Government. It also considered Section 278(AA) of the Act, which provides for no punishment if reasonable cause for failure is proven.
Final Decision: The Court quashed the entire criminal proceedings and the cognizance orders, finding that the continuation of the proceedings would amount to an abuse of the process of the Court.

JUDGMENT :

Heard Mr. Sumeet Gadodia, learned counsel appearing for the petitioners, learned A.P.Ps. for the State and Ms Amrita Sinha, learned counsel appearing for the O.P. No. 2 (Income Tax Department).

2. In all these petitions, common questions of facts are involved, as such, all the matters have been heard together with the consent of the parties and are being disposed of by this common order.

3. These criminal miscellaneous petitions have been filed for the following reliefs:-

(i) For quashing of the cognizance order dated 28.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 23 of 2018], as well as the entire criminal proceedings [in Cr. M.P. No. 2941 of 2018].

(ii) For quashing of the cognizance order dated 09.02.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioner for the offences under Section 276(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 01 of 2018] as well as the entire criminal proceedings [in Cr. M.P. No. 2942 of 2018].

(iii) For quashing of the cognizance order dated 27.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 22 of 2018] as well as the entire criminal proceedings [in Cr. M.P. No. 2943 of 2018].

(iv) For quashing of the cognizance order dated 28.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 24 of 2018] as well as the entire criminal proceedings [in Cr. M.P. No. 2944 of 2018].

(v) For quashing of the cognizance order dated 27.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 21 of 2018] as well as the entire criminal proceedings [in Cr. M.P. No. 2948 of 2018].

(vi) For quashing of the cognizance order dated 09.02.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Section 276(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 02 of 2018] as well as the entire criminal proceedings [in Cr. M.P. No. 2949 of 2018].

(vii) For quashing of the cognizance order dated 15.02.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Section 276(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 05 of 2018] as well as the entire criminal proceedings [in Cr. M.P. No. 2950 of 2018].

(viii) For quashing of the cognizance order dated 16.12.2017 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 19 of 2017] as well as the entire criminal proceedings [in Cr. M.P. No. 2953 of 2018].

The aforesaid cases are now 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 [in Cr. M.P. No. 2941 of 2018]:-

The prosecution case as narrated in the complaint case filed by one Sri Sandip Ganguly, in discharge of his official duty on the strength of sanction order and direc