High Court declined to quash proceedings u/s 276B r/w 278B for delay in deposit of TDS and delay in filing TDS returns.
In a recent judgment, the Madras High Court held that when substantial evidence was already on record, it cannot quash the proceedings under section 276B r/w 278B for non filing of the returns in time and delay in payment of TDS.
ABCAUS Case Law Citation:
4770 (2025) (10) abcaus.in HC
In the instant case, the Petitioner company had filed a Writ Petition seeking to quash the proceedings on the file of the Additional Chief Metropolitan Magistrate (ACMM) which had been filed by the Income Tax Department under Sections 276B r/w 278B of the Income Tax Act, 1961 (the Act) for non filing of the returns in time and delay in payment of TDS.
According to the petitioner, TDS had been fully paid along with interest. Due to various genuine reasons, viz., financial hardships and others, TDS had not been deposited in time. However, the same had been paid with necessary interest.
It was submitted that though the delay had been properly explained for the show cause notice, the same had not been properly considered.
It was further contented that there was no sanction as per law, in view of the lack of document identification number. It was pointed out that the Division Bench of the Court had held that unless the document contains identification number, the same cannot be used for any purpose. In such view of the matter, the sanction itself was not valid in the eye of law.
On the other hand, the Revenue opposed the Petition and submitted that Prosecution’s Witness had already been examined and cross examination had also been done by the Petitioner.
In view of the above, the Hon’ble High Court opined that at this stage, when substantial evidences were already come on record, the High Court cannot quash the proceedings. The contentions that non deposit of TDS within the period was not wilful or deliberate or there was no element of mens rea constitute criminal offence, shall be canvassed before the Trial Court. The petitioner was granted liberty to challenge the same before the Trial Court if the amount had been properly paid with interest.
Accordingly, the petition was dismissed.
However, the Hon’ble High Court directed that the Trial Court shall take note of the fact that before framing of charges at pre-cognizance stage, the accused was not given opportunity to cross examine the witnesses, which is a clear violation of procedure. While disposing of the case, this aspect should not affect the right of the accused.
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