INCOME TAX ACT, 1961

Section 276B Section 278B

Prosecution - Offence under section 276B - Assessee, a partnership firm, failed to deposit TDS amount on stipulated time -

Assessee, a partnership firm, deducted TDS amount but failed to credit the same within stipulated time but deposited with certain delay along with interest in terms of section 201(A) to the account of Central Government of India. A show cause notice was issued and served upon firm and its principal officer for launching prosecution under section 276B read with section 278B. Assessee contended that as TDS amount had been deposited along with interest there was no occasion to initiate prosecution under sections 276B and 278B. Hence, this petition.Held: While passing sanction under section 279(1), the sanctioning authority had not considered the CBDT Instructions, Bearing F. No. 255/339/79-IT (Inv.) dt. 28-5-1980 issued in this regard. Moreover, after receiving deducted amount with interest, prosecution launched against petitioners, which was not in accordance in law. If the petitioners failed to deposit the amount in question within the stipulated time, i.e., by the 7th day of the subsequent month, it was required to launch the prosecution immediately, which was not done in the cases in hand. Accordingly, entire criminal proceedings and cognizance orders were quashed.

Relied:Sonali Autos (P) Ltd. vs. State of Bihar, 2017 TaxPub(DT) 2065 (Pat-HC) and Distinguished: Shaw Wallance & Co. Ltd. v. CIT & Ors. (No. 1) (2003) SCC Online Cal 787 : 2003 TaxPub(DT) 1316 (Cal-HC).

REFERRED : ITO vs. Sultan Enterprises & Ors. (2001) SCC Online Bom 1219 : 2002 TaxPub(DT) 1030 (Bom-HC), Bee Gee Motors and Tractors & Anr. v. ITO (1995) 82 Taxman 493 (P&H-HC) : 1996 TaxPub(DT) 234 (P&H-HC) and Vinar & Company vs. ITO & Ors. (1990) SCC Online Cal 367 : 1992 TaxPub(DT) 208 (Cal-HC).

FAVOUR : In petitioner's favour.

A.Y. :

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