Failure to deposit TDS amount within the prescribed time constitutes an offence under the Income Tax Act, regardless of the completion of assessment proceedings.

This petition is directed as against the proceedings in E.O.C.C.No.134 of 2017 on the file of the learned Additional Chief Metropolitan Magistrate, Economic offences-I, Egmore, Chennai.

2. The learned counsel appearing for the petitioners submitted that the petitioners are arraigned as A1 to A5. The complaint has been lodged as against them under Section 276B(a) r/w 278B of the Income Tax Act 1961. He further submitted that the complaint itself not maintainable, untenable, since no prima facie case has been made out as against the petitioners to prosecute them. No offence had been committed as alleged by the prosecution. Further submitted that none of the provision of Income Tax Act is not attracted as against the petitioners. The petitioners have remitted the TDS amount on rents and salaries paid. The details of TDS remittance with the department were also filed with this petition. Therefore, the petitioners are not default in remittance of TDS amount paid, as such need not to launch prosecution after accepting the TDS amount and none of the provisions attracted as against the petitioners to proceed further under the Income Tax Act.

2.1. He further submitted that once assessment completed to the satisfaction of the authority, there was no withholding of the information or suppressing of the income or evasion of tax, and it is not within the jurisdiction of the revenue to initiate criminal action. He further submitted that time limit for concluding the assessment proceedings is two years from the end of the assessment year. Therefore, the respondent could not have been initiated action under Section 276 B(a) r/w 278 B of the Income Tax Act, as there was no willful attempt to evade payment of TDS amount. Further the amount was already paid and the assessment was also completed, as such the evasion of tax does not arise. Therefore, he prayed for quashment of the entire proceedings.

3. Per contra, the learned Special Public Prosecutor (Income Tax) appearing for the respondent filed counter and submitted that the complaint has been filed to prosecute the petitioners in E.O.C.C.No.134 of 2017 for the offence punishable under Section 276 B(a) r/w 278 B of the Income Tax Act, 1961 for the financial year 2009-2010 and the assessment year 2010-2011. The petitioners are assessed to TDS with Income Tax officer, TDS Ward1(2) and maintained an individual TAN No. CHEG0792D, within the jurisdiction of the respondent/complainant. The first petitioner/company represented by its Directors during the financial year 2009-2010 during the assessment year 2010-11, had deducted TDS to the tune of Rs.16,46,579/- under Sections of Chapter XVII B of Income Tax Act 1961, from payments made to various parties. After deducting the said tax, the petitioners ought to have been deposited the same to the credit of the Central Government within the period of stipulated time. But the petitioners failed to remit the tax deducted at source to the credit of the Central Government within the prescribed period of time. Therefore, the respondent/complainant issued show cause notice call upon the petitioners regarding the default in depositing TDS. On receipt of the same the petitioners issued reply, wherein they stated that they did not have proper accounting challans for the TDS deducted by them. They also admitted the mistake of belated payment of TDS and sought pardon for the same. They also pleaded ignorance of the provisions of law under Section 276B of Income Tax Act. Further they also admitted that the directors fell under the highest bracket of 30% of tax which implies that they had sufficient source of income and hence there was no need to withhold the TDS so deducted.

3.1. Further she submitted that the directors received remuneration in the form of salaries, rent and other benefits but the TDS so deducted was not remitted to the coffers of the government as mandated under the law. In fact, the petitioners filed a compounding application seeking to co