Prosecution for failure to deposit T.D.S. is invalid if the amount is deposited with interest before the complaint is filed, emphasizing the need to avoid harassment of compliant taxpayers.

JUDGMENT :

ANIL KUMAR CHOUDHARY, J.

Heard the parties.

2. This Criminal Miscellaneous Petition has been filed invoking the jurisdiction of this Court under Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 with a prayer to quash and set aside the order dated 10.08.2022 passed by the learned Special Judge, Economic Offences, Ranchi in Economic Offence Case No.14 of 2018 whereby and where under the learned Special Judge has taken cognizance of the offence punishable under Section 276B read with Section278B of the Income Tax Act, 1961 against the petitioners.

3. The brief facts of the case is that the petitioner No.2 being the partner and the person responsible for the acts of the petitioner No.1- partnership firm, has failed to pay to the credit of the Central Government, the T.D.S. amount deducted by him, to the tune of Rs. 21,72,670/- by the end of the month; after deducting such tax at source, i.e. by30.04.2014.

4. Learned counsel for the petitioners submits that the undisputed fact remains that the petitioners have deposited the deducted T.D.S. from the payment made with interest thereon till the date of such deposit on 17.09.2014 but after receipt of such payment with interest, instead of compounding the offences, which is compoundable under Section 279 (2) of the Income Tax Act, 1961, just to harass the petitioners knowing pretty well the facts of this case, this prosecution has been instituted. Learned counsel for the petitioners relies upon the judgment passed by a co-ordinate Bench of this Court in the case of M/s Dev Multicom Private Ltd. vs. The State of Jharkhand & Another in Cr.M.P. No.2941 of 2018 and other allied cases dated 28.02.2022; wherein the co-ordinate Bench of this Court relied upon the judgment of the Hon’ble Patna High Court in the case of Sonali Autos (P) Ltd. vs. State of Bihar passed in Criminal Miscellaneous No.16498 of 2014 dated 02.08.2017 and inter alia considering the fact that the prosecution was instituted after receipt of the deducted T.D.S. amount with requisite interest; it was observed that such a prosecution is not in accordance with law. Hence, it is submitted that the prayer as prayed for by the petitioners, in the instant Cr.M.P., be allowed.

5. Learned Addl.P.P. appearing for the State and the learned counsel for the opposite party No.2 oppose the prayer of the petitioners made in the instant Cr.M.P. but learned counsel for the opposite party No.2 fairly submits that the petitioners have deposited the said deducted T.D.S. amount of Rs. 21,72,670/- with stipulated interest thereon, on 17.09.2014 after a delay of less than five months from the due date of the deposit. It is also fairly submitted by the learned counsel for the opposite party No.2 that after deposit of the said amount, this case being Economic Offence Case No. 14 of 2018 has been instituted on 13.04.2018. Though, it is fairly submitted by the learned counsel for the opposite party No.2 that the Principal Chief Commissioner or Chief Commissioner or Principal Director General or a Director General of Income Tax Act has been vested with the power of compounding any offence either before or after the institution of the proceedings but since a format is prescribed in Form No.1 under the Central Board of Direct Taxes (C.B.D.T) guidelines; which prescribes a format for the application to be made by the applicant desirous of compounding of any offence, hence, the petitioners having not made any application for composition of the offence, therefore, the complaint has been instituted. Hence, it is submitted that this Cr.M.P., being without any merit, be dismissed.

6. Having heard the rival submissions made at the Bar and after carefully going through the materials available in the record, it is pertinent to mention here that Section 279 (2) of the Income Tax Act, 1961 in no uncertain manner, vests the power upon the Principal Chief Commissioner or Chief Commissioner or a Principal Director General or a Director General of Income