Allegations of delay in TDS deposit, role of person responsible are disputed factual matters which must be tested at trial through evidence and cross examination.
In a recent judgment, Hon’ble Supreme Court has dismissed assessee’s SLP against High Court order that allegations regarding deduction of TDS, delay in TDS deposit into the Government account, role of person in charge and responsible are disputed factual matters which must be tested at trial through evidence and cross examination
ABCAUS Case Law Citation:
5085 (2026) (03) abcaus.in SC
In The instant case, the CIT(TDS) had passed order for launch of prosecution u/s 278B and 278E of the Income Tax Act, 1961 (the Act) for delay in deposit in TDS.
The Trial Court taking cognizance of the complaint filed by the Income Tax Department issued summoning order to all the accused persons. One of the accused filed a Writ Petition before the High Court for quashing of the complaint case as well as the summoning order.
The Petitioner/accused alleged that it was the CEO and Director of the Company at the relevant time, who was solely responsible for managing affairs of the company and deducting and depositing TDS. On the other hand, the other accused stated that at it was the Petitioner who was the Managing director cum-chairman of the company and was responsible for all the financial activities of the company.
The High Court held that the veracity of the allegations raised by both the directors and the liability of the Petitioner, becomes purely a factual issue, which can only to be decided after due consideration of evidence at the time of trial.
The Hon’ble High Court opined that even the explanation of financial difficulty or “reasonable cause”, leading to the delay in filing of the TDS, again becomes a triable defence, and cannot be adjudicated in the present proceedings.
The Hon’ble High Court further observed that the High Court can not appreciate the material and sit in appeal over the satisfaction recorded by the sanctioning authority and the Trial Court’s assessment at the stage of summoning. Interference for that purpose would amount to conducting a mini-trial at the threshold, which is impermissible. The Petitioner’s contentions raise triable issues of fact and credibility which must be adjudicated in the course of a trial where oral and documentary evidence can be tested.
Accordingly, the High Court dismissed the Petition. Not satisfied with the judgment of the High Court, the Department challenged it before the Hon’ble Supreme Court by way of filing a Special Leave Petition. However, the Apex Court dismissed the SLP with the following observations,
“Upon hearing learned counsel for the petitioner, we are not inclined to entertain this Special Leave Petition and the same is, accordingly, dismissed.”
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