Sonali Autos Private Limited Vs State of Bihar (Patna High Court)
The Patna High Court has quashed a criminal prosecution initiated against Sonali Autos Private Limited and its directors for a delay in depositing Tax Deducted at Source (TDS). The court, exercising its powers under Section 482 of the Code of Criminal Procedure, set aside an order by the Special Judge, Economic Offences, Patna, that had taken cognizance of an offense under Section 276B of the Income Tax Act, 1961.
The prosecution stemmed from a complaint filed by the Deputy Commissioner of Income Tax, TDS Circle, Patna. The complaint alleged that Sonali Autos Private Limited failed to deposit TDS amounting to ₹1,43,029/- to the credit of the Central Government for the financial year 2009-2010. This delay was reported as 481 days without any stated reasonable cause. The complaint further implicated the company’s directors, stating they had full knowledge of the non-payment and thus committed an offense under Section 276B read with Section 278B of the Income Tax Act. The Commissioner of Income Tax (TDS), Patna, had accorded sanction for the prosecution under Section 279(1) of the Act.
Sonali Autos Private Limited, engaged in the motor vehicle business, argued that the sanction for prosecution was mechanical and contrary to instructions issued by the Central Board of Direct Taxes (CBDT). The company explained that in the financial year 2009-2010, they had duly deducted TDS of ₹1,43,029/- under Sections 194A and 194H of the Act on interest and commission payments. However, due to an oversight by their accountant, the sum could not be deposited within the specified time limit.
