Case Law Details
Golden Gate Properties Ltd Vs DCIT (Karnataka High Court)
Section 278AA makes it clear that in order to get over the penal consequences that follow on account of non-payment of tax deducted at source, it is open for the accused persons to come clean of the said charge by showing reasonable cause for failure to deposit the said amount. In the light of this provision, contentions urged by the learned counsel for the petitioners cannot be accepted. Since the material placed on record prima facie discloses that the petitioners have deducted tax at source but failed to credit the same to the account of the Central Government within the prescribed time, the petitioners cannot escape from the rigour of Section 276B of the Act.
The alternative argument canvassed by the learned counsel for the petitioners that without determining the penalty, the respondent was not entitled to resort to criminal prosecution of the petitioners under Section 276B of the Act, also cannot be accepted for the reason that the petitioners/accused have not disputed their liability. The question of determining the liability and consequent imposition of penalty would arise only in case of dispute with regard to the liability to remit the deducted tax. In the instant case, the facts alleged in the complaint clearly indicate that the amount was credited subsequent to the survey. As a result, even this defence is not available to the petitioners.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
Prosecution has been launched against the petitioners by the Income Tax Department for the alleged offences punishable under Sections 276B read with Section 278B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
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The Sec 276B says if a person fails to pay the tax deducted at source as required or under the provisions Chapter XVII-B, he shall be liable to imprisionment.
Here the emphasis of this setion is on the failure to pay. The words used is “fails to pay”. That means the TDS has not been paid, if the accusd pays theTDS, whether in time or delayed he becomes “Not failed to pay” which is opposite of “fails to pay”. With payment the prosecution u/s 276B should not apply. But I do not see this argurment by learned advocates of accused. I do not know why this not explored.