M/S CENTURY REAL ESTATE HOLDINGS PVT LTD vs INCOME TAX DEPARTMENT

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Online)(Kar) 41402

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 15^TH DAY OF SEPTEMBER, 2022
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CRIMINAL PETITION NO. 3321 OF 2022
C/W.
CRIMINAL PETITION Nos.3322 OF 2022, 3318 OF 2022
& 3361 OF 2022

IN CRL.P. No.3321/2022

BETWEEN:
1.
M/S CENTURY REAL ESTATE
HOLDINGS PVT LTD
NO.10/1, LAKSHMINARAYANA COMPLEX
PALACE ROAD,
VASANTH NAGAR
BENGALURU-560052
REP BY ITS MANAGING DIRECTOR
SRI P RAVINDRA PAI.
2.
SRI RAVINDRA PAI
S/O SRI P DAYANANDA PAI
AGED ABOUT 46 YEARS
R/A NO.10/1, GROUND FLOOR
LAKSHMINARAYAN COMPLEX
PALACE ROAD, VASANTH NAGAR
BENGALURU-560052.
(MANAGING DIRECTOR)

Digitally signed by
PADMAVATHI B K
Location: HIGH
COURT OF
KARNATAKA

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

CENTURY REAL ESTATE
HOLDINGS PVT LTD.
&PETITIONERS
(BY SRI. M.V. SHESHACHALA, SENIOR ADVOCATE FOR
SRI. ARAVIND V. CHAVAN, ADVOCATE)
AND:
INCOME TAX DEPARTMENT
CIRCLE-1(1), HMT BHAVAN
BENGALURU-560032
BELLARY ROAD
BY ITS ASST. COMMISSIONER
OF INCOME TAX(TDS).
&RESPONDENT
(BY SRI.E.I. SANMATHI, ADVOCATE)

THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
CR.P.C PRAYING TO:
A. QUASH THE COMPLAINT REGISTERED IN C.C.NO.94/2018
BEFORE
THE
SPL.
COURT
FOR
ECONOMIC
OFFENCES,
BANGALORE PRODUCED AS ANNEXURE-A.
B. QUASH THE COGNIZANCE TAKEN AND ISSUE OF PROCESS
DATED
06.04.2018
OF
THE
OFFENCE
ALLEGED
IN
C.C.NO.94/2018
BY
THE
SPL.
COURT
FOR
ECONOMIC
OFFENCES, BANGALORE ANNEXURE-F3 AND ETC.

IN CRL.P.NO.3322/2022
BETWEEN
1 .
M/S. CANARA HOUSING
DEVELOPMENT COMPANY
NO. 10/1, LAKSHMINARAYANA COMPLEX

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

PALACE ROAD, VASANTH NAGAR
BENGALURU-560 052
REP. BY ITS MANAGING PARTNER
NOW SRI. RAVINDRA PAI.
2 .
SRI. DAYANAND PAI
S/O. P. NARASIMHA PAI
AGED ABOUT 78 YEARS
R/AT NO. 10/1
GROUND FLOOR
LAKSHMINARAYANA COMPLEX
PALACE ROAD, VASANTH NAGAR
BENGALURU-560 052.
(MANAGING PARTNER

M/S CANARA HOUSING DEVELOPMENT
COMPANY)
...PETITIONERS
(BY SRI.M V SHESHACHAL, SENIOR ADVOCATE FOR
SRI. ARAVIND V. CHAVAN, ADVOCATE)

AND
INCOME TAX DEPARTMENT
TDS, CIRCLE-1(1), HMT BHAVAN
BENGALURU-560 032
BY ITS DEPUTY DIRECTOR OF INCOME TAX
DR. VIJAYAKUMAR M.D.
&RESPONDENT
(BY SRI.E.I.SANMATHI, ADVOCATE )
THIS CRIMINAL PETITION FILED UNDER SECTION 482
CR.P.C PRAYING TO
A. QUASH THE PROCEEDINGS PURSUANT TO COMPLAINT
REGISTERED IN C.C.NO.140/2019, BEFORE THE SPL. COURT

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

FOR ECONOMIC OFFENCES, BANGALORE PRODUCED AS
ANNEXURE-A.
B. QUASH THE ISSUING OF PROCESS AFTER TAKING
COGNIZANCE DATED 27.04.2019 OF THE OFFENCE ALLEGED
IN C.C.NO.140/2019 BY THE SPL. COURT FOR ECONOMIC
OFFENCES, BANGLAORE ANNEXURE-F2 AND ETC.

IN CRL. P. No.3318/2022

BETWEEN
1 .
M/S GEETHANJALI EFFECTIVE
REALTY SOLUTIONS PVT LTD
NO.10/1, GROUND FLOOR
LAKSHMINARAYANA COMPLEX
PALACE ROAD, VASANTH NAGAR
BENGALURU-560052
REP. BY ITS DIRECTOR
SRI P RAVINDRA PAI.
2 .
SRI RAVINDRA PAI
S/O SRI P DAYANANDA PAI
AGED ABOUT 46 YEARS
R/A NO.10/1, GROUND FLOOR
LAKSHMINARAYANA COMPLEX
PALACE ROAD, VASANTH NAGAR
BENGALURU-560052
(DIRECTOR M/S GEETHANJALI
EFFECTIVE REALTY SOLUTIONS PVT. LTD.)
...PETITIONERS
(BY SRI.M.V.SHESHACHAL, SENIOR COUNSEL ALONG WITH
SRI.ARAVIND V. CHAVAN, ADVOCATE)

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

AND
INCOME TAX DEPARTMENT
WARD -1(3), HMT BHAVAN
BENGALURU-560032
BY ITS INCOME TAX OFFICER-TDS
&RESPONDENT
(BY SRI.E.I.SANMATHI, ADVOCATE)
THIS CRIMINAL PETITION IS FILED UNDER SECTION 482
CR.P.C PRAYING TO:
A. QUASH THE COMPLAINT REGISTERED IN C.C. NO.
115/2019, BEFORE THE SPECIAL COURT FOR ECONOMIC
OFFENCES, BENGALURU, PRODUCED AS ANNEXURE-A.
B. QUASH THE COGNIZANCE TAKEN AND ISSUE OF
PROCESS DATED 2.4.2019 OF THE OFFENCE ALLEGED IN CC
NO. 115/2019, BY THE SPECIAL COURT FOR ECONOMIC
OFFENCES, BENGALURU ANNEXURE-F3 AND ETC.

IN CRL. P. No.3361/2022

BETWEEN
1 .
M/S CANARA HOUSING
DEVELOPMENT COMPANY
NO.10/1, LAKSHMINARAYANA COMPLEX
PALACE ROAD, VASANTH NAGAR
BENGALURU-560052
REP BY ITS MANAGING PARTNER
SRI RAVINDRA PAI.

2 .
SRI RAVINDRA PAI
S/O SRI P DAYANAND PAI
AGED 46 YEARS

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

NO.10/1, LAKSHMINARAYANA COMPLEX
PALACE ROAD, VASANTH NAGAR
BENGALURU-560052
(MANAGING PARTNER M/S CANARA HOUSING
DEVELOPMENT COMPANY)
...PETITIONERS
(BY SRI. M.V. SHESHACHAL, SENIOR COUNSEL ALONG WITH
SRI.ARAVIND V. CHAVAN, ADVOCATE)

AND
INCOME TAX DEPARTMENT
TDS CIRCLE-1(1), HMT BHAVAN
BENGALURU-560032
BY ITS DEPUTY DIRECTOR OF INCOME TAX
DR VIJAYAKUMAR M D.
&RESPONDENT
(BY SRI. E.I.SANMATHI, ADVOCATE )
THIS CRIMINAL PETITION IS FILED UNDER SECTIION 482
CR.P.C PRAYING TO:
A.
QUASH
THE
COMPLAINT
REGISTERED
IN
C.C.NO.141/2019
BEFORE
THE
SPECIAL
COURT
FOR
ECONOMIC
OFFENCES,
BENGALURU,
PRODUCED
AS
ANNEXURE-A.
B. QUASH THE COGNIZANCE TAKEN AND ISSUE OF
PROCESS DATED 27.04.2019 OF THE OFFENCE ALLEGED IN
C.C.NO.141/2019 BY THE SPECIAL COURT FOR ECONOMIC
OFFENCES, BENGALURU ANNEXURE-F4.

THESE PETITIONS, COMING ON FOR ADMISSION THIS
DAY, THE COURT MADE THE FOLLOWING:

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CRL.P No. 3321 of 2022
AND CONNECTED MATTERS

The petitioners in all these cases are assessed to income

tax and bring about identical questions of law and call in

question the proceedings instituted to prosecute the petitioners

for offences punishable under Section 276B r/w. Section 278B

of the Income Tax Act, 1961 (8the Act9 for short).

2. Since the issue involved is common, these petitions are

taken up together and considered by this common order.

3. Brief facts that lead the petitioners to this Court, as

borne out from the pleadings of Crl.P.No.3321/2022, are as

follows:-

A complaint comes to be registered invoking Section 200

of the Cr.P.C. against the petitioners alleging that they have

committed offences under Sections 276B r/w. 278B of the Act.

The allegation was that the petitioners have remitted tax

deduction at source in terms of Section 193 of the Act

belatedly. The components that were alleged were the interest

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on securities, professional and consultancy charges, rent,

payment to contractors and commission or brokerage. Under

these heads invoking Sections 193, 194J, 194I, 194C & 194H of

the Act, the total TDS that had to be paid which has been

belatedly paid was Rs.5,12,41,318/-. It is the case of the

complainant that there has been delay in the remittances made

for the assessment year 2013-14, which would be the financial

year between 01-04-2012 and 31-03-2013.

4. Prior to registration of the complaint based upon the

aforesaid delay in paying TDS amount, a show cause notice

comes to be issued against the petitioners on 23-03-2015,

alleging that the tax deducted at source in a sum of

Rs.1,39,57,179/- and Rs.90,99,039/- was not remitted to the

Income Tax Department, which becomes an offence punishable

under Section 276B of the Act. The petitioners replied to the

said

show

cause

notice

denying

the

allegations.

Notwithstanding the detailed reply given, the Commissioner of

Income-Tax i.e., the competent authority accorded sanction for

prosecuting these petitioners on 28-02-2018, prima facie

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holding that the petitioners had committed default by non-

remitting of TDS amount to the Government account in a sum

of Rs.5,12,41,318/-. What drove to grant of sanction for such

prosecution was the delay that would range from 4 months to

10 months in remittance of TDS amount. It is, therefore,

sanction was accorded to prosecute the petitioners under

Sections 276B r/w 278B of the Act. Proceedings later go on

and are at the stage of evidence. At that point in time, the

petitioners have knocked the doors of this Court in the subject

petitions calling in question grant of sanction and all

proceedings pending before the concerned Court.

5. Heard Sri M.V.Sheshachala, learned senior counsel

appearing for the petitioners and Sri E.I.Sanmathi, learned

counsel representing the respondent/Department.

6. The learned senior counsel would contend that the

order of sanction runs counter to the amended provisions of the

Act. Cognizance and issuance of process is mechanically done

without application of mind and the evidence of the Department

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itself clearly indicates that the petitioners had to deposit TDS

amount in terms of the extended period as depicted in the

amended provision as the words <reasonable cause= for delayed

payment was introduced in the amendment. An opportunity to

demonstrate reasonable cause ought to have been given by the

Department / Authority, who sanctioned prosecution and the

reasons for such delay ought to have been considered prior to

grant of sanction for such prosecution.

7. On the other hand, the learned counsel appearing for

the respondent would contend that the stage at which the

petitioners have approached this Court is clearly erroneous as

criminal liability of the petitioners would not get absolved even

if there has been amendment to the provision and the

remittance of TDS could have been done at a particular date.

All these are a matter of evidence and, therefore, the

petitioners have to come out clean in a full

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