Case Law Details
Dev Multicom Private Ltd. Vs State of Jharkhand (Jharkhand High Court)
Introduction: The case of “Dev Multicom Private Ltd. Vs State of Jharkhand” in the Jharkhand High Court sheds light on the intricate relationship between Tax Deducted at Source (TDS) deposits, applicable interests, and their repercussions on criminal proceedings. This article provides a detailed analysis of the Court’s judgment and its broader implications.
1. Factual Matrix: The core of the matter revolves around the delayed deposit of TDS amounts by the petitioner. While these amounts were eventually deposited with interest, the Income Tax Department had initiated criminal proceedings against the petitioners.
2. The Role of CBDT Guidelines: Central to the Court’s decision was the CBDT instruction F. No. 255/339/79-IT (Inv.) dated 28.05.1980. The guidelines provide clarity on the circumstances under which prosecution should be initiated. Specifically, the guidelines suggest restraint when the amount or period of default isn’t significant and where the default amount has been credited to the Government.
3. A Comparative Analysis with Sonali Autos (P) Ltd.: Drawing parallels with the Patna High Court’s judgment in the Sonali Autos (P) Ltd. case, it becomes evident that non-adherence to the CBDT guidelines can form a basis for quashing criminal proceedings. The guideline’s reference in the said case underscores its legal weight and importance.
4. Timing and Reasonability: One of the key contentions was the timing of launching prosecution. The Court observed that the Department, after receiving the TDS with interest, initiated criminal action. It opined that had the action been immediate, circumstances would have been different. Additionally, the shield provided by Section 278(AA) of the Act, which offers relief if there’s a reasonable cause for failure, was highlighted.
5. Judgement’s Implications: By asserting that the continuation of proceedings would amount to an abuse of court processes, especially after the amounts were deposited with interest, the Jharkhand High Court sets a precedent. The Court emphasized the importance of proportionality and fairness in such proceedings.
Conclusion: The Jharkhand High Court’s decision in the case of Dev Multicom Private Ltd. elucidates the relationship between adherence to TDS deposit guidelines and the subsequent initiation of criminal proceedings. The ruling underscores the judiciary’s commitment to ensuring fairness and reasonability in the application of tax laws and highlights the significance of CBDT guidelines in influencing court decisions.
FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT
Heard Mr. Sumeet Gadodia, learned counsel appearing for the petitioners, learned A.P.Ps. for the State and Ms Amrita Sinha, learned counsel appearing for the O.P. No. 2 (Income Tax Department).
2. In all these petitions, common questions of facts are involved, as such, all the matters have been heard together with the consent of the parties and are being disposed of by this common order.
3. These criminal miscellaneous petitions have been filed for the following reliefs:-
(1) For quashing of the cognizance order dated 28.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 23 of 2018], as well as the entire criminal proceedings [in Cr.M.P. No. 2941 of 2018].
(ii) For quashing of the cognizance order dated 09.02.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioner for the offences under Section 276(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 01 of 2018] as well as the entire criminal proceedings [in Cr.M.P. No. 2942 of 2018].
(iii) For quashing of the cognizance order dated 27.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 22 of 2018] as well as the entire criminal proceedings [in Cr.M.P. No. 2943 of 2018].
(iv) For quashing of the cognizance order dated 28.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 24 of 2018] as well as the entire criminal proceedings [in Cr.M.P. No. 2944 of 2018].
(v) For quashing of the cognizance order dated 27.03.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 21 of 2018] as well as the entire criminal proceedings [in Cr.M.P. No. 2948 of 2018].
(vi) For quashing of the cognizance order dated 09.02.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Section 276(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 02 of 2018] as well as the entire criminal proceedings [in Cr.M.P. No. 2949 of 2018].
(vii) For quashing of the cognizance order dated 15.02.2018 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Section 276(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 05 of 2018] as well as the entire criminal proceedings [in Cr.M.P. No. 2950 of 2018].
(viii) For quashing of the cognizance order dated 16.12.2017 passed by the learned Special Judge, Economic Offences, Dhanbad, whereby cognizance has been taken against the petitioners for the offences under Sections 276(B) and 278(B) of the Income Tax Act, in connection with Economic Offence Case [C.O. No. 19 of 2017] as well as the entire criminal proceedings [in Cr.M.P. No. 2953 of 2018].
The aforesaid cases are now pending in the Court of learned
Special Judge, Economic Offences, Dhanbad.
4. The complaint was lodged by one Sandeep Ganguly, Assistant Commissioner, Income Tax Department, stating therein [in Cr.M.P. No. 2941 of 2018]:-
The prosecution case as narrated in the complaint case filed by one Sri Sandip Ganguly, in discharge of his official duty on the strength of sanction order and direction as well as authorization given by the Commissioner of Income Tax (TDS) has been filed for offence allegedly committed under section 276(B) and 278(B) of the Income Tax Act wherein it has been stated that the accused no.1 is a partnership firm having TAN-RCHA0613DG and is an assessee within the meaning of Income Tax Act under T.D.S. Ward Circle, I.T. Department, Dhanbad and the accused no.2 is the principal officer of accused no.1 having PAN-AYDPS0747D and was/ is quite aware of the day to day conduct of the business and entire business affairs of the accused no.1 and actively participating in the function and management of affairs of the accused no.1 and being a principal officer as per section 2(35) of the I.T. Act of the accused no.1 he was liable and responsible to the partnership firm for the conduct of the business of the partnership firm i.e. accused no.1 for each and every act done by him or by any other person of the partnership firm for and on the behalf of accused no.1.
It has further been alleged that accused no.2 for and on behalf of the accused no.1 is being a principal officer of accused no.1 deducted TDS amount, amounting to Rs.396310/- for the F.Y.2016-2017 but failed to credit the same to the account of Central Government of India, TDS Ward Dhanbad. To avoid repetition of the contents of the detail a list of details of PAN, payment date, due date, date of deposit, late payment, interest, date of deduction, period is attached.
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