ITO Vs MKY Constructions Private Limited (Delhi High Court)
Delhi High Court held that penalty imposed under section 276B of the Income Tax Act is liable to be set aside on account of section 278AA of the Income Tax Act as reasonable cause shown. Accordingly, petition by revenue dismissed.
Facts- The petitioner is the Income Tax Officer, New Delhi. The petitioner alleged that the respondent company had deducted TDS but failed to deposit the same with the Central Government within the prescribed period.
Admittedly, the defaults were later remedied by depositing the amount which was deducted as Tax Deducted at Source with interest in the Government Treasury; however, the department proceeded with prosecution on the ground of initial failure. By order dated 28.02.2019, the learned Trial Court framed charges for offence u/s. 276B r.w.s 278B and 278E of the IT Act. After considering the evidence and the material on record, the learned Trial Court dismissed all three complaints and acquitted the respondents.
Conclusion-Held that th at the default was not deliberate but compelled by external financial constraints is neither perverse nor legally infirm. Rather, it reflects a balanced application of the statutory framework that distinguishes between culpable inaction and excusable delay backed by bona fide efforts at compliance.
