No immunity from prosecution u/s 276B merely because TDS was deposited belatedly

Assessee cannot be granted immunity from prosecution u/s 276B for late deposit of TDS merely because ultimately TDS was deposited belatedly – Delhi High Court

In a recent judgment, Hon’ble Delhi High Court has held that an assessee cannot be granted immunity from prosecution under section 276B for late deposit of TDS merely on the ground that ultimately TDS was deposited in Govt. account albeit belatedly.

ABCAUS Case Law Citation:
4938 (2025) (12) abcaus.in HC

In the instant case a Petition was filed by the assessee praying for quashing of the Complaint Case initiated for the offences under section 276B read with section 278B and 278E of the Income Tax Act 1961 (‘the Act’) and the summoning order passed by the Trial Court qua the Petitioner.

A compliant under section 200 of the CrPC was filed by Deputy Commissioner of the Income Tax Department alleging that accused Petitioner was the Managing Director and other accused who was CEO and Director and thus were the Principal Officers/Directors of the Accused Company during the relevant Assessment Year.

It was the case of the Department that Accused Company had made payments to various persons and had deducted TDS of more than Rs. two crores but the said amount of TDS was not deposited into the Government treasury within the stipulated time limit as per the Act.

The Hon’ble High Court observed that Petition had been filed under Section 528 of BNSS (Section 482 Cr.P.C.) at a pre-trial stage, where questions of disputed fact, in absence of evidence of unimpeachable character to the contrary, cannot be inquired into or adjudicated upon. At the stage of cognizance, the Court is required only to examine whether prima facie ingredients of the offence are disclosed, and not to enter into a detailed scrutiny of sufficiency or reliability of evidence.

The main defence taken by the Petitioner was that as per the replies of the co accused, it stood admitted that the co-accused was CEO and Director of the Company at the relevant time, and was solely responsible for managing affairs of the company and deducting and depositing TDS.

The Hon’ble High Court noted that the Sanction order had recorded that both the co-accused and the Petitioner were Principal Officers/Responsible Officers of the accused/Company. Also, the Petitioner was a holder of almost 99% of shares and also the responsible person during relevant Financial Year.

The Hon’ble High Court further noted that co-accused (CEO and Director) had also filed a separate reply, alleging that 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 Hon’ble High Court observed that both the accused had accused each other for the default and none had provided any reason for the actual cause of delay in the TDS deposits. Therefore, the veracity of the allegations raised by both the directors and the liability of the Petitioner, become 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 it is also well-settled that subsequent payment does not obliterate criminal liability unless the statute so provides.  The assessee cannot be granted immunity from prosecution merely on the ground that ultimately TDS was deposited in Govt. account albeit belatedly. 

The Hon’ble High Court opined that all the allegations raised, i.e. deduction of TDS by the company, delay in deposit of the deducted amount into the Government account, the role of the petitioner as a person in charge and responsible for the conduct of the company’s business, and the absence of any documentary material establishing a reasonable cause for delay, were disputed factual matters which must be tested at trial through evidence and cross examination. 

The Hon’ble High Court held that at this stage, the petitioner cannot be said to have produced material of such sterling and unimpeachable quality that merits the quashing of the summoning orders and consequential proceedings thereof.  It will be open to the petitioner to justify the arguments taken by him during the course of the trial.

Accordingly, the Petition was disposed.

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