Income tax prosecution u/s 276B rws 278B – Trial Court directed to consider Immunity in terms of CBDT circular
In a recent judgment, the Hon’ble Allahabad High Court in a case of income tax prosecution u/s 276B r.w.s. 278B for late deposit of TDS has given liberty to assessee to raise the issue of immunity from prosecution in terms of CBDT circular before the Trial Court.
ABCAUS Case Law Citation:
4276 (2024) (10) abcaus.in HC
In the instant case, the applicant assessee had challenged the summoning order passed in by the Trial Court has issuing the summons to the applicant under Section 278B of the Income Tax Act, 1961 (the Act) read with section 276B of the Act for delay in deposit of Tax Deducted at Source (TDS).
The contention of the assessee/applicant was that the liability of paying the Tax Deducted at Source amount was admittedly paid belatedly together with interest to the department. Despite that upon a complaint being filed by the Income Tax Department under the aforesaid provisions, the trial Court had issued the summoning order.
The assessee placed reliance on the CBDT circular No. 25/2019 dated 09.09.2019 to contend that in terms of Clause 2 (1) of the said circular failure to pay tax to the credit of the central Government where the non payment of tax deducted at source is Rs. 25 Lakhs or below and the delay in deposit is less than 60 days from the due date, the said case shall not be processed for prosecution in normal circumstances.
The attention of the Hon’ble High Court was drawn to the judgment of the Hon’ble Jharkhand High Court which had considered the said circular and held that when the amount had already been deposited with interest as such, there cannot be any reason as to why the criminal proceedings should proceed.
Therefore, it was contended that once the applicants have already deposited the TDS amount along with the interest consequently, they would be entitled for the benefit of the aforesaid circular and the Trial Court has patently erred in issuing the impugned summoning order without considering this aspect of the matter.
On the other hand, the Department placed reliance on the judgment of the Apex Court to argue that the Hon’ble Supreme Court has held that once the statute requires to pay tax and stipulate period within which the payment is to be made, the payment must be paid within that period and if the payment is not made within that period there is default and an appropriate action can be taken under the Act.
It was contended by the Revenue once admittedly the applicants paid the TDS amount late as such, they are liable for the penal action as provided under the aforesaid provisions of the Act, and consequently, merely because they paid the interest for the delayed period, the same would not allow them to wriggle out of the strict provisions of the Act and the prosecution which has been lodged against them for non compliance of the aforesaid provisions of the Act.
It was also contended that the aforesaid circular may not come to rescue of the applicants inasmuch as the said circular would be applicable in normal circumstances but the applicants in the instant case were habitual defaulter who had repeatedly delayed payment of the TDS amount within the time stipulated.
At this stage, the Counsel of the applicants prayed that the application may be disposed of with liberty to the applicants to raise the aforesaid argument before the trial Court and the trial Court may be directed to consider the said objections in accordance with law. Revenue too had no objections to the aforesaid proposition,
Accordingly, the application was disposed of with the aforesaid liberty to the applicants.
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