Delay in depositing the TDS amount by seven days: whether prosecution attracted even if the same is deposited before the issuance of receipt
Income tax law provides for prosecution for delay in deposits of TDS. Here was one such case wherein prosecution proceedintg was initiated by revenue for delay in deposit of TDS.
The case details is as under:
JHARKHAND HIGH COURT
M/S FUSION ENGINEERING PRODUCTS PVT. LTD.
VERSUS
UNION OF INDIA
INCOME TAX DEPARTMENT
THROUGH SHRI KOLLURU SRINIVAS, INCOME TAX OFFICER (TDS WARD) , JAMSHEDPUR AND GAUTAM MUKERJEE, RATAN DAS, JYOTIRMOY GHOSH VERSUS UNION OF INDIA, INCOME TAX DEPARTMENT THROUGH SHRI KOLLURU SRINIVAS, INCOME TAX OFFICER (TDS WARD) ,
JAMSHEDPUR,.- Cr. M. P. No. 1664 of 2015 Cr. M. P. No. 810 of 2016
Dated.- October 11, 2023
Let us have a short overview of the case:
On prosecution proceeding initiated, the Petitioner Company submitted that there was delay in depositing the TDS amount of Rs.2,89,844/- for the Financial Year 2011- 2012 and assessment year 2012-2013.
As per the case of the prosecution disclosed in the prosecution complaint filed by Income Tax Officer (TDS Ward), Jamshedpur, the amount had been deposited after the stipulated time of seven days of the following month.
The main plea of the petitioner is that the entire TDS amount has been deposited even before the issuance of receipt of notice.
The delay was not intentional since 1991 BIFR proceeding was pending against the company and due to industrial sickness of the company, the TDS amount could not be deposited within the stipulated time.
Learned counsel for the petitioner in support of her submission has relied upon the judgment reported on 2022 SCC Online Jhar 537 wherein the criminal prosecution has been quashed on similar fact situation and the SLP has been dismissed by the Hon’ble Supreme Court. Reliance is also placed in the judgment passed in W.P.(Cr.) No.577 of 2022 by this Hon’ble High Court in the case of M/s A. M. Enterprises and Anr. vs. The State of Jharkhand and Anr.
It is submitted that there is inordinate delay of six years in issuing the show cause notice. The TDS amount was already deposited in the year 2009 whereas the show cause notice was issued in the year 2014.
Revenue relied on the judgment of Madhumilan Syntex Ltd. v. Union of India, (2007) 11 SCC 297.
On above submission the High court has held as under:
- The Income Tax Department in the counter-affidavit has not disputed that the TDS amount has been deposited, although after a delay of 12 months.
- This Court is of the view that pendency of BIFR proceeding against the company due to industrial sickness of the company, delay in deposit of the TDS amount within the stipulated time was a reasonable cause.
- In view of the reasonable cause, Section 278 AA of the Income Tax will apply.
- Under the aforesaid facts and circumstance, the impugned order as well as the entire criminal proceeding is quashed against the petitioners named above.
Criminal miscellaneous petitions are allowed.
