INCOME TAX ACT, 1961

Section 276B

Prosecution - Offence under section 276B - Failure to deposit tax deducted in Government account -

During the course of survey, Department observed that assessee had deducted tax at source but had failed to remit the same to Central Government account. Assessees were sought to be prosecuted under section 276-B for failure to remit the tax deducted at source during the financial year 2010-2011 and 2011-2012 amounting to Rs. 1,57,85,655 and Rs. 1,35,54,167 respectively. Assessee contended that show-cause notice was issued in respect of nine companies whereas prosecution was launched only against the petitioners which was legally untenable. Held: There was nothing on record to show that remittances made by assessees have been brought to the notice of Central Government. Assessees had produced the copies of communication obtained from ACIT(TDS) along with challan details report for making payments. It reflects that a sum was remitted not by assessee, but by another company. Section provides for mandatory term of imprisonment coupled with fine in respect of the offences committed by a company. The contention of assessee was no more res integra in view of decision of Supreme Court in Standard Chartered Bank v. Directorate of Enforcement [(2005) 145 Taxman 154 (SC) : (2005) 275 ITR 81 (SC) : 2006 TaxPub(CL) 0129 (SC)], there was no immunity to companies from prosecution merely because the prosecution was in respect of offences for which punishment prescribed is mandatory imprisonment.

REFERRED : Standard Chartered Bank v. Directorate of Enforcement (2005) 145 Taxman 154 (SC) : (2005) 275 ITR 81 (SC) : 2006 TaxPub(CL) 0129 (SC) ACIT-II & Ors. v. Velliappa Textiles Ltd. & Anr. (2003) 263 ITR 0550 (SC) : 2003 TaxPub(DT) 1413 (SC) U/A 143 (1) Of The Constitution Of India (2002) 8 SCC 237 State of Rajasthan & Anr. v. Shamsher Singh 1985 (Suppl.) SCC 416

FAVOUR : Against the assessee

A.Y. :

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