Rahee Infratech Limited Vs Union of India & Ors. (Calcutta High Court)
The Calcutta High Court considered a writ petition challenging the validity of a sanction order dated 19.05.2025 issued under Section 279(1) of the Income Tax Act, 1961 for Assessment Year 2022-23, authorizing prosecution for delayed deposit of TDS. The petitioner contended that it had replied to the show cause notice, explaining that the delay of 1 to 446 days occurred due to reasonable cause and that the reply had not been considered before granting sanction. The Department submitted that a criminal complaint had already been filed and the prosecution was pending. The High Court held that its jurisdiction under Article 226 was not barred merely because prosecution had commenced. It found that the sanction order had been passed in a perfunctory manner without considering the petitioner’s reply or recording reasons for rejecting it. Accordingly, the Court quashed the sanction order and directed the authority to reconsider the reply, grant a hearing, and pass a reasoned order in accordance with law.
Core Issue: The principal issue before the Calcutta High Court was whether a sanction order under section 279(1) of the Income-tax Act for launching prosecution relating to delayed deposit of TDS could be sustained when the assessee’s detailed reply to the show-cause notice was not considered by the sanctioning authority. An ancillary issue was whether a writ petition under Article 226 of the Constitution was maintainable after prosecution proceedings had already been initiated.
