Fortune Infovision Pvt. Ltd. Vs CIT (Rajasthan High Court)
The Rajasthan High Court quashed a prosecution sanction order against Fortune Infovision Pvt. Ltd., an e-commerce company, for a delay in depositing Tax Deducted at Source (TDS). The company had delayed depositing TDS for the assessment year 2014-15, but eventually paid the dues along with 18% interest, albeit after a delay of up to ten months. The company explained that the delay was due to late submission of bills by major e-commerce platforms like Amazon, Naaptol, and eBay, which hindered the timely calculation and deduction of TDS.
Despite this explanation, the Commissioner, Income Tax (TDS), Jaipur, sanctioned prosecution proceedings against the company and its directors, citing the Supreme Court’s ruling in Madhumilan Syntex Ltd. & Ors. The Rajasthan High Court, however, emphasized that prosecution should not be initiated merely because it is legally permissible, but only when the assessee’s conduct is malicious or contumacious, referencing the Hindustan Steel Ltd. case. The court noted that the company had voluntarily deposited the TDS with interest before the show-cause notice was issued, and the explanation regarding late bill submissions was neither doubted nor rejected. The court concluded that the delayed compliance alone did not warrant prosecution, and thus, set aside the impugned order.
