The main legal point established in the judgment is the importance of balancing the interests of both parties and considering legal submissions in prosecution proceedings under the Income Tax Act.

JUDGMENT

(Prayerin W.P.No.20405 of 2020: Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorarified mandamus calling for records placed before the 1 st respondent by the 2 nd respondent for sanction for prosecution and quash the impugned sanction for prosecution in Proceedings C.No.CIT(TDS)/CHE/Person.24/2017-18 dated 30.01.2018 for the Financial Year 2009-10 issued by the 1 st respondent and direct the 1st respondent to consider the representations dated 12.02.2012, 14.12.2012 and 23.05.2015 of the petitioner.

in W.P.No.20406 of 2020: Petition filed under Article 226 of the Constitution of India praying to issue a writ of certiorarified mandamus calling for records placed before the 1 st respondent by the 2 nd respondent for sanction for prosecution and quash the impugned sanction for prosecution in Proceedings C.No.CIT(TDS)/CHE/Person.24/2017-18 dated 30.01.2018 for the Financial Year 2010-11 issued by the 1 st respondent and direct the 1 st respondent to consider the representations dated 12.02.2012, 14.12.2012 and 23.05.2015 of the petitioner.)

Common Order:

1. The petitioner is a Company and challenges an order passed by the first respondent sanctioning prosecution under Section 276B read with Section 278B of the Income-Tax Act, 1961(in short, ''the Act'') dated 30.01.2018.

2. The proceedings relate to the period April, 2009 to February, 2010 and the prosecution proposed is for the reason that, according to the respondent, rental and other payments made by the petitioner were subject to tax deduction but the tax deducted had not been deposited into the treasury as statutorily required.

3. At paragraphs 7 and 12 of the counter filed by the respondents, they refer to their system database that, according to them, establishes the position that the tax was deducted but failed to be deposited within the prescribed period.

4. Per contra, the argument of the petitioner is that while admittedly there was some delay in remitting of taxes deducted in a significant number of instances, the rental and other amounts had been outstanding in some cases and in such an instance, the question of tax deduction does not arise. This position has been tentatively enunciated by the petitioner in its only reply filed before the second respondent on 23.03.2015 that reads thus:-

“Sub: Prosecution proceedings u/s276B.

Ref: C.No:24/CIT(TDS)/PROSN/2014-15- Ref.20/155

I was unable to represent myself with you as requested on 6/3/2015.

However we wish to make the following submissions.

1. For Fy2009/10, we had remitted the TDS up to date with interest and penalty payable and filed the returns of our own accord prior to receiving any intimation from the department.

2. We as a company have been incurring huge losses and the delay was neither wilful nor wanton.

3. Several of the delayed TDS remittances are for payments only being accounted but not actually paid, due to the accrual method of accounting.

4. We wish to once again submit that all these TDS amounts have been remitted with interest and penalty for the delay.

We request you to kindly acknowledge our genuine request and not initiate any action against us.

Thanking you, Yours faithfully, for Bohemain Destinations Pvt Ltd.,”

5. While in the impugned order, the officer refers to the explanation given for delay in remittance of TDS, he has not referred to the specific submission that there was no deduction in several cases as the payments itself were not made. The officer concludes in the impugned order that there has been no explanation put forth from the assessee, which statement is not correct in view of the explanation advanced on 23.03.2015.

6. The legal submission made finds support from the provisions of Section 276B of the Act dealing with ''failure to pay taxes to the credit of Central Government under Chapter XIID or XVIIB'' and