K.P. Constructions Engineers and Contractors Vs ITO (Madras High Court)
Summary: The Madras High Court allowed a Criminal Original Petition seeking quashing of prosecution pending in CC No.7 of 2016 before the Additional Chief Judicial Magistrate, Madurai, for alleged failure to file the return of income for Assessment Year 2013-14. The prosecution had been launched against the petitioner partnership firm under Section 276CC of the Income Tax Act.
According to the prosecution, the firm had earned Rs.14,21,60,235/- under TDS-payment to contractor through specified entities under Section 194C, earned Rs.4,41,441/- through TDS from Tamilnadu Mercantile Bank under Section 194A and made a time deposit of Rs.2,46,67,915/-. It was required to file its return for Assessment Year 2013-14 on or before 30.09.2013 under Section 139(1), but failed to do so. A show-cause notice for initiation of prosecution under Section 276CC was issued on 29.04.2016, following which the complaint was filed.
The petitioner contended that the tax payable as per the return of income was Rs.25,96,576/-, whereas TDS of Rs.28,87,319/- was already available with the Department, resulting in a refund of Rs.2,90,740/-. During pendency of the prosecution, reassessment resulted in tax arrears of Rs.1,60,55,962/-. The petitioner challenged the additions, and ultimately the Income Tax Appellate Tribunal, by order dated 06.05.2026, directed deletion of the disputed additions. According to the petitioner, the reassessment additions therefore stood reconciled and deleted, restoring the position that TDS exceeded the tax payable.
