Case Law Details
Suryodaya Infrastructure Pvt. Ltd. Vs ITO (TDS) (Bangalore District Court)
The issue under consideration is whether in case of default of TDS in company can the Managing Director of the company held responsible for the same?
In the present case, accused No.1 is a registered company and it is engaged in the business of infrastructure projects. Accused No. 2 is the Managing Director of accused No.1 company. Deducted TDS amount was Rs.60,78,468/- as per the TDS Returns filed by the accused No.1. Accused did not deposited the deducted TDS amount within time. But payment with interest was made on 31.3.2012. Thus there is delaying remittance of T.D.S. amount exceeding Rs.1,00,000/- (one lakh) thereby committed offence punishable U/s. 276B of Income Tax Act.
High Court states that company being accused No.1 is sentenced to pay fine of Rs.5,000/- (five thousand) for offence punishable U/s.276B of the Income Tax Act. Accused No.2 shall undergo rigorous imprisonment for a period of three months and to pay fine of Rs.5,000/-. In default of payment of fine, accused No.2 shall undergo simple imprisonment for a period of 30 days for the offence punishable U/s. 276B of the Income Tax Act and accused No.2 shall pay the fine imposed on accused No.1. Considering the fact that, TDS amounts with interest were deposited before initiation of criminal proceedings, financial constrains resulted in non-depositing the deducted TDS amount, no allegation against the accused No.1 about irregularity in paying taxes, trial court imposed minimum sentence permitted U/s.276B of the Income Tax Act 1961. Order of sentence is reasonable, in accordance with law and hence, sustainable.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
Appellants in Crl.A.No. 1213/2017, and Crl.A.No. 1214/2017 filed these appeals U/s.381 of Cr.P.C., being aggrieved by the judgment of conviction and order of sentence passed in C.C.No.345/2014 dated 3.8.2017 on the file of Presiding Officer, Special Court for Economic Offences, Bengaluru. (herein after referred as impugned judgment and order).
2. These criminal appeals are filed by appellants against same respondent. Therefore, these criminal appeals are clubbed together for common discussion.
3. Parties to this appeal shall be referred to as per their ranking before the trial court for the purpose of convenience and for better appreciation of their contentions.
4. In the memorandum of appeal, appellants submitted that, trial court failed to consider the fact that, transaction not established the ingredients of offence alleged. Burden of proof is not discharged by the department. Trial court failed to appreciate the fact that, complainant required to establish that the accused was duty bound to follow the Law relating to Tax Deducted at Source (TDS). Further, complainant shall proved that, the accused violated the provisions. Trial court failed to consider the fact that, complainant not established the fact that, the appellant company is assessee under TDS. It is not proved that, the appellant is required to produce quarterly statement, receipt of TDS. Complainant failed to prove that, appellants not produced annual TDS returns. Trial court failed to consider the fact that, Ex.P.1 to Ex.P.6 is not sufficient to convict the appellants. Trial court failed to consider the fact that, no Books of Accounts of the accused/appellants was examined. Trial court failed to consider the fact that, ingredients of offence alleged against the accused/appellants is not proved. Contents of documents produced by the prosecution is not proved.
Contents of Ex.P.2, Ex.P.4, Ex.P.5 are not proved. Non-compliance of chapter- 17(B) of Income Tax Act is not proved. Appellant is entitled for acquittal. For the said reasons, appellants prayed to interfere into the impugned judgment and order and set aside the same.
5. Along with memorandum of appeals, appellants produced certified copy of impugned judgment and order of conviction.
6. Respondents appeared through their counsel.
7. Heard arguments on both sides. T.C.R. were called for reference in these appeals.
8. Now, the points arising for determination are as follows:
1. Whether in the light of evidence and material brought before the court, trial court is justified in convicting accused/appellants for the offence punishable U/s. 276B of the Income Tax Act and sentencing them for the said offence?
2. Whether interference of this court is necessitated?
3. What Order?
9. It is answered for the aforesaid points are held as under:-
Point No.1 In the Affirmative
Point No.2: In the Negative
Point No.3:As per final order below, for the following:-
REASONS
10. POINTS NO. 1 & 2:- These two points are taken together for common discussions.
11. Brief facts of the case of the complaint as under;
Accused No.1 is a registered company and it is engaged in the business of infrastructure projects. Accused No.2 is the Managing Director of accused No.1 company. Deducted TDS amount was Rs. 60,78,468/- as per the TDS Returns filed by the accused No.1. Accused did not deposited the deducted TDS amount within time. But payment with interest was made on 31.3.2012. Thus there is delaying remittance of T.D.S. amount exceeding Rs.1,00,000/- (one lakh) thereby committed offence punishable U/s. 276B of Income Tax Act.
12. Perused the entire order sheets, complaint filed U/s.200 of Cr.P.C., for the offence punishable U/s. 276B of Income Tax Act, sworn statement affidavit of the complainant, plea of accusation, examination-in-chief evidence of complainant by way of affidavit, contents of the exhibited documents Ex.P.1 to Ex.P.6, statement of accused U/s.313 of Cr.P.C. There is no procedural defect of any nature while conducting trial relating to private complaint registered for the offence punishable U/s. 276B of Income Tax Act.
13. Income Tax officer was examined as Pw.1 by reiterating the allegations made in the complaint. Thereafter, cognizance was taken agaisnt the accused persons. Summons was issued to accused persons. Accused appeared before the court and enlarged on bail. Charges read over and explained to the accused persons which accused persons denied and hence, claimed to be tried.
14. To prove the ingredients of the charge against accused U/s. 276B of Income Tax Act 1961, complainant examined as Pw.1 and got exhibited 6 documents. Contents of Ex.P.1/Sanction letter, Ex.P.2 is Summary of Date and Amounts, Ex.P.3 and Ex.P.4 are copies of Notices, Ex.P.5/.Reply to Ex.P.3 and Ex.P.4, Ex.P.6 is the complaint.
15. Defence set up by the accused in this case is that, no notice in accordance with law was issued to the accused persons before initiating proceedings against them. Further, it is the defence of the accused that, particular offence is not stated in the notice.
16. Trial court considered the contents of Ex.P.3 Show Cause Notice dated 13.11.2013 issued by the complainant to the accused callinig explanation for not furnishing proceedings. Hence, defence set up by the accused was not sustained in the trial court. Another defence set up by the accused is that, deduction of TDS amount with interest was remitted by the accused prior to initiation of criminal proceedings was also not accepted by the trial court, for the reason that, an amount of tax deduction has to be deposited within given time and late deposit is not a ground to get exemption from criminal prosecution as per Section 276 B of Income Tax Act. Plea of the ac that, there was no intention to evade tax is also not a defence in the matter of violation of provision of Income Tax Act. Complaint made by the Income Tax Department against appellants is for violation of Section 276B of Income Tax Act 1961 seeking punishment for non-payment of deducted sum of TDS amount. Section 200A of Income Tax Act 1961 made the aforesaid Act punishable U/s.276B of the Income Tax Act 1961. Section 194-C(1) of the Income Tax Act 1961 mandates deduction of certain percentage of amount payable under contract between the contractor and specified person. Trial court examined the aspect of according sanction for prosecution. Further trial court examined whether prior notice is mandatory to initiate proceedings for offence punishable U/s. 276B of the Income Tax Act 1961. Further trial court tested the submission made by the appellants that deducted TDS amount with interest was remitted earlier to the initiation of criminal proceedings. Further trial court weighed contention raised by the appellants on the point of absence of mens-rea in commission of offence punishable U/s. 276B of the Income Tax Act 1961. Reasons assigned by the trial court for not accepting the aforesaid contentions raised by the appellants are well
reasoned, supported by the law laid down by the higher courts.
17. Trial court elaborately discussed on the point of “reasonable cause” submitted by the appellants to escape from the penal consequences provided U/s. 278AA of the Income Tax Act 1961. In this appeals also appellants not produced any material to accept that there was a reasonable cause for not depositing deducted TDS amount by the appellants as alleged in the complaint.
18. Income Tax Act 1961 is a law enacted with an object to make certain defaults in payment of deducted tax amount punishable without any mens-rea to evade tax.
19. Perused the allegations made in the memorandum of appeals. Compared the same with the reasons assigned by the trial court to arrive for the conclusion that, accused No.1 and 2 committed offence punishable U/s. 276B R/w.Sec.278(B) of Income Tax Act. Convicting the accused No.1 and 2 who are persons in-charge of the conducting business of accused No.2 company. Reasons assigned by the trial court to acquit accused No.3 is in accordance with law and hence acceptable. There are no acceptable grounds in the memorandum of appeal to interfere into the well
reasoned, legally sustainable impugned judgment and order of conviction.
20. So far as quantum of punishment is concerned, company being accused No.1 is sentenced to pay fine of Rs. 5,000/- (five thousand) for offence punishable U/s. 276B of the Income Tax Act. Accused No.2 shall undergo rigorous imprisonment for a period of three months and to pay fine of Rs.5,000/-. In default of payment of fine, accused No.2 shall undergo simple imprisonment for a period of 30 days for the offence punishable U/s. 276B of the Income Tax Act and accused No.2 shall pay the fine imposed on accused No.1. Considering the fact that, TDS amounts with interest were deposited before initiation of criminal proceedings, financial constrains resulted in non-depositing the deducted TDS amount, no allegation against the accused No.1 about irregularity in paying taxes, trial court imposed minimum sentence permitted U/s. 276B of the Income Tax Act 1961. Order of sentence is reasonable, in accordance with law and hence, sustainable.
21. There is no merit in the appeals. Order under appeals is sustainable in law. Hence, interference of this court is not necessary. Accordingly, point No.1 is answered in the affirmative and point No.2 in the Negative.
22. POINT NO.3 :- In view of findings on the above points No.1 and 2, these criminal appeals are devoid of merits and same are liable to be dismissed by confirming impugned judgment of conviction and order of sentence. Hence, following order is made:
ORDER
Invoking provisions of Section 386 of Cr.P.C., Crl.A.No.1213/2017, and Crl.A.No.1214/2017 filed U/s.381 of Cr.P.C. are dismissed.
Consequently, impugned judgment of conviction and order of sentence dated 3.8.2017 passed in C.C.No.345/2014 on the file of Presiding Officer, Special Court for Economic Offences, Bengaluru is hereby confirmed.
Appellant/accused No.2 is hereby directed to appear before Trial Court to deposit the fine amount imposed upon him and fine amount imposed on accused No.1 company and to serve the sentence.
Office is hereby directed to send back T.C.R. along with certified copy of common Judgment, forthwith.
Keep original copy of judgment in Crl.A.No.1213/2017 and copy thereof in Crl.A.No.1214/2017.
(Dictated to the Judgment Writer, script typed by her and corrected, signed and then pronounced by me in the open court on this the 7th day of July, 2020.)
(RAJESHWARA)
LXIV ADDL.CITY CIVIL & SESSIONS JUDGE,
(CCH-65), BENGALURU CITY.
Common Judgment pronounced in the open court Vide separate judgment
ORDER
Invoking provisions of Section 386 of Cr.P.C., Crl.A.No.1213/2017, and Crl.A.No.1214/2017 filed U/s.381 of Cr.P.C. are dismissed.
Consequently, impugned judgment of conviction and order of sentence dated 3.8.2017 passed in C.C.No.345/2014 on the file of Presiding Officer, Special Court for Economic Offences, Bengaluru is hereby confirmed. Appellant/accused No.2 is hereby directed to appear before Trial Court to deposit the fine amount imposed upon him and fine amount imposed on accused No. 1 company and to serve the sentence.
Office is hereby directed to send back T.C.R. along with certified copy of common Judgment, forthwith.
Keep original copy of judgment in Crl.A.No.1213/2017 and copy thereof in Crl.A.No.1214/2017.
