Sengoda Gounder Educational and Charitable Trust Vs ITO (Madras High Court)
Petitioners, M/s. Sengoda Gounder Educational & Charitable Trust and its trustees, faced prosecution u/s 276B r/w 278AA before the Judicial Magistrate, Coimbatore. The allegation was that while running Sri Shakthi Institute of Engineering & Technology, they deducted tax at source but failed to remit it to the Government account within prescribed time. The default continued for nearly seven months, whereas the law required remittance within 6–7 days.
Trust argued before the High Court that:
- Delay was neither wanton nor mala fide.
- The accountant in charge had gone on maternity leave, and in her absence proper instructions were not given.
- Taxes were eventually remitted in full, though belatedly.
- After the lapse, the Trust has been remitting TDS on time without further defaults.
Department opposed quashing, stressing that late remittance of TDS is a statutory offence and prosecution is warranted under sections 276B & 278AA.
High Court noted that:
- Delay was explained and unintentional, caused by staff absence.
- The default had been subsequently rectified by remitting the TDS with no loss to Revenue.
- Thereafter, the Trust had been compliant.
Given the bona fide explanation & corrective conduct, the Court held that continuing prosecution would be unjustified. The High Court quashed the criminal proceedings in C.C. Nos. 1752, 1753, 1754 & 1755 of 2020 before the Judicial Magistrate, Coimbatore. Connected miscellaneous petitions were also closed.
