Bangalore District Court
In : M/S. Suryodaya vs In : The Income Tax Officer (Tds) on 7 July, 2020
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IN THE COURT OF THE LXIV ADDL.CITY CIVIL & SESSIONS
JUDGE (CCH-65) AT BENGALURU.
Dated this the 7th day of July , 2020
-: P R E S E N T :-
Sri. RAJESHWARA
B.A., L.L.M.,
LXIV ADDL.CITY CIVIL & SESSIONS JUDGE,
CCH-65, BENGALURU CITY.
CRIMINAL APPEAL NO.1213/2017,
AND
CRIMINAL APPEAL NO.1214/2017,
---
PARTIES IN CRL.A.NO.1213/2017:
APPELLANT IN : M/s. Suryodaya
Infrastructure Pvt.Ltd.,
(ACCUSED NO.1- IN No.387/1, 2nd Main Road,
TRIAL COURT) : HMT Layout, Anandnagar,
Bengaluru-560 024.
A Company registered under
the Companies Act and Rep.
By its Managing Director-
Shri. Venkateshwaralu.
(By Sri. Chaitanya U. Mudrabettu
and Shivaji H. Mane. Advocates)
V/s.
RESPONDENT IN : The Income Tax Officer (TDS),
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Income Tax Department,
(COMPLAINANT - IN Ward- 18(2),
TRIAL COURT) : Queens' Road,
Bengaluru-560 001.
PARTIES IN CRL.A.NO.1214/2017:
APPELLANT IN : Sri. Venkateshwaralu,
S/o. Puttaiah,
(ACCUSED NO.2- IN Aged about 54 years,
TRIAL COURT) : Managing Director,
M/s. Suryodaya Infrastructure
Pvt.Ltd., No.387/1,
2nd Main Road, HMT Layout,
Anand Nagar,
Bengaluru-560 024.
(By Sri. Chaitanya U. Mudrabettu
and Shivaji H. Mane. Advocates)
V/s.
RESPONDENT IN : The Income Tax Officer (TDS),
Income Tax Department,
(COMPLAINANT - IN Ward- 18(2),
TRIAL COURT) : Queens' Road,
Bengaluru-560 001.
COMMON JUDGMENT
Appellants in Crl.A.No.1213/2017, and
Crl.A.No.1214/2017 filed these appeals U/s.381 of Cr.P.C.,
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being aggrieved by the judgment of conviction and order
of sentence passed in C.C.No.345/2014 dated 3.8.2017
on the file of Presiding Officer, Special Court for Economic
Offences, Bengaluru. (herein after referred as impugned
judgment and order).
2. These criminal appeals are filed by appellants
against same respondent. Therefore, these criminal
appeals are clubbed together for common discussion.
3. Parties to this appeal shall be referred to as per
their ranking before the trial court for the purpose of
convenience and for better appreciation of their
contentions.
4. In the memorandum of appeal, appellants
submitted that, trial court failed to consider the fact that,
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transaction not established the ingredients of offence
alleged. Burden of proof is not discharged by the
department. Trial court failed to appreciate the fact that,
complainant required to establish that the accused was
duty bound to follow the Law relating to Tax Deducted at
Source (TDS). Further, complainant shall proved that, the
accused violated the provisions. Trial court failed to
consider the fact that, complainant not established the
fact that, the appellant company is assessee under TDS.
It is not proved that, the appellant is required to produce
quarterly statement, receipt of TDS. Complainant failed to
prove that, appellants not produced annual TDS returns.
Trial court failed to consider the fact that, Ex.P.1 to Ex.P.6
is not sufficient to convict the appellants. Trial court
failed to consider the fact that, no Books of Accounts of
the accused/appellants was examined. Trial court failed to
consider the fact that, ingredients of offence alleged
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against the accused/appellants is not proved. Contents of
documents produced by the prosecution is not proved.
Contents of Ex.P.2, Ex.P.4, Ex.P.5 are not proved. Non-
compliance of chapter- 17(B) of Income Tax Act is not
proved. Appellant is entitled for acquittal. For the said
reasons, appellants prayed to interfere into the impugned
judgment and order and set aside the same.
5. Along with memorandum of appeals,
appellants produced certified copy of impugned judgment
and order of conviction.
6. Respondents appeared through their counsel.
7. Heard arguments on both sides. T.C.R. were
called for reference in these appeals.
8. Now, the points arising for determination are
as follows:
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1. Whether in the light of evidence
and material brought before the
court, trial court is justified in
convicting accused/appellants for
the offence punishable U/s.276B of
the Income Tax Act and sentencing
them for the said offence?
2. Whether interference of this court is
necessitated?
3. What Order?
9. It is answered for the aforesaid points are held
as under:-
Point No.1 In the Affirmative
Point No.2: In the Negative
Point No.3: As per final order below,
for the following:-
REASONS
10. POINTS NO.1 & 2:- These two points are
taken together for common discussions.
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11. Brief facts of the case of the complaint as
under;
Accused No.1 is a registered company and it is
engaged in the business of infrastructure projects.
Accused No.2 is the Managing Director of accused No.1
company. Deducted TDS amount was Rs.60,78,468/- as
per the TDS Returns filed by the accused No.1. Accused
did not deposited the deducted TDS amount within time.
But payment with interest was made on 31.3.2012. Thus
there is delaying remittance of T.D.S. amount exceeding
Rs.1,00,000/- (one lakh) thereby committed offence
punishable U/s.276B of Income Tax Act.
12. Perused the entire order sheets, complaint
filed U/s.200 of Cr.P.C., for the offence punishable
U/s.276B of Income Tax Act, sworn statement affidavit of
the complainant, plea of accusation, examination-in-chief
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evidence of complainant by way of affidavit, contents of
the exhibited documents Ex.P.1 to Ex.P.6, statement of
accused U/s.313 of Cr.P.C. There is no procedural defect of
any nature while conducting trial relating to private
complaint registered for the offence punishable U/s.276B
of Income Tax Act.
13. Income Tax officer was examined as Pw.1 by
reiterating the allegations made in the complaint.
Thereafter, cognizance was taken agaisnt the accused
persons. Summons was issued to accused persons.
Accused appeared before the court and enlarged on bail.
Charges read over and explained to the accused persons
which accused persons denied and hence, claimed to be
tried.
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14. To prove the ingredients of the charge against
accused U/s.276B of Income Tax Act 1961, complainant
examined as Pw.1 and got exhibited 6 documents.
Contents of Ex.P.1/Sanction letter, Ex.P.2 is Summary of
Date and Amounts, Ex.P.3 and Ex.P.4 are copies of
Notices, Ex.P.5/.Reply to Ex.P.3 and Ex.P.4, Ex.P.6 is the
complaint.
15. Defence set up by the accused in this case is
that, no notice in accordance with law was issued to the
accused persons before initiating proceedings against
them. Further, it is the defence of the accused that,
particular offence is not stated in the notice.
16. Trial court considered the contents of Ex.P.3
Show Cause Notice dated 13.11.2013 issued by the
complainant to the accused callinig explanation for not
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furnishing proceedings. Hence, defence set up by the
accused was not sustained in the trial court. Another
defence set up by the accused is that, deduction of TDS
amount with interest was remitted by the accused prior
to initiation of criminal proceedings was also not accepted
by the trial court, for the reason that, an amount of tax
deduction has to be deposited within given time and late
deposit is not a ground to get exemption from criminal
prosecution as per Section 276 B of Income Tax Act. Plea
of the ac that, there was no intention to evade tax is
also not a defence in the matter of violation of provision
of Income Tax Act. Complaint made by the Income Tax
Department against appellants is for violation of Section
276B of Income Tax Act 1961 seeking punishment for non-
payment of deducted sum of TDS amount. Section 200A
of Income Tax Act 1961 made the aforesaid Act
punishable U/s.276B of the Income Tax Act 1961. Section
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194-C(1) of the Income Tax Act 1961 mandates
deduction of certain percentage of amount payable under
contract between the contractor and specified person.
Trial court examined the aspect of according sanction for
prosecution. Further trial court examined whether prior
notice is mandatory to initiate proceedings for offence
punishable U/s.276B of the Income Tax Act 1961. Further
trial court tested the submission made by the appellants
that deducted TDS amount with interest was remitted
earlier to the initiation of criminal proceedings. Further
trial court weighed contention raised by the appellants
on the point of absence of mens-rea in commission of
offence punishable U/s.276B of the Income Tax Act 1961.
Reasons assigned by the trial court for not accepting the
aforesaid contentions raised by the appellants are well
reasoned, supported by the law laid down by the higher
courts.
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17. Trial court elaborately discussed on the point
of "reasonable cause" submitted by the appellants to
escape from the penal consequences provided U/s.278AA
of the Income Tax Act 1961. In this appeals also
appellants not produced any material to accept that
there was a reasonable cause for not depositing
deducted TDS amount by the appellants as alleged in the
complaint.
18. Income Tax Act 1961 is a law enacted with an
object to make certain defaults in payment of deducted
tax amount punishable without any mens-rea to evade
tax.
19. Perused the allegations made in the
memorandum of appeals. Compared the same with the
reasons assigned by the trial court to arrive for the
conclusion that, accused No.1 and 2 committed offence
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punishable U/s.276B R/w.Sec.278(B) of Income Tax Act.
Convicting the accused No.1 and 2 who are persons in-
charge of the conducting business of accused No.2
company. Reasons assigned by the trial court to acquit
accused No.3 is in accordance with law and hence
acceptable. There are no acceptable grounds in the
memorandum of appeal to interfere into the well
reasoned, legally sustainable impugned judgment and
order of conviction.
20. So far as quantum of punishment is concerned,
company being accused No.1 is sentenced to pay fine of
Rs.5,000/- (five thousand) for offence punishable
U/s.276B of the Income Tax Act. Accused No.2 shall
undergo rigorous imprisonment for a period of three
months and to pay fine of Rs.5,000/-. In default of
payment of fine, accused No.2 shall undergo simple
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imprisonment for a period of 30 days for the offence
punishable U/s.276B of the Income Tax Act and accused
No.2 shall pay the fine imposed on accused No.1.
Considering the fact that, TDS amounts with interest
were deposited before initiation of criminal proceedings,
financial constrains resulted in non-depositing the
deducted TDS amount, no allegation against the accused
No.1 about irregularity in paying taxes, trial court
imposed minimum sentence permitted U/s.276B of the
Income Tax Act 1961. Order of sentence is reasonable, in
accordance with law and hence, sustainable.
21. There is no merit in the appeals. Order under
appeals is sustainable in law. Hence, interference of this
court is not necessary. Accordingly, point No.1 is
answered in the affirmative and point No.2 in the
Negative.
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22. POINT NO.3 :- In view of findings on the above
points No.1 and 2, these criminal appeals are devoid of
merits and same are liable to be dismissed by confirming
impugned judgment of conviction and order of sentence.
Hence, following order is made:
ORDER
Invoking provisions of Section 386 of Cr.P.C., Crl.A.No.1213/2017, and Crl.A.No.1214/2017 filed U/s.381 of Cr.P.C. are dismissed.
Consequently, impugned judgment of conviction and order of sentence dated 3.8.2017 passed in C.C.No.345/2014 on the file of Presiding Officer, Special Court for Economic Offences, Bengaluru is hereby confirmed.
Appellant/accused No.2 is hereby directed to appear before Trial Court to deposit the fine 16 Crl.A.No.1213/2017 & Crl.A.No.1214/2017 amount imposed upon him and fine amount imposed on accused No.1 company and to serve the sentence.
Office is hereby directed to send back T.C.R. along with certified copy of common Judgment, forthwith.
Keep original copy of judgment in Crl.A.No.1213/2017 and copy thereof in Crl.A.No.1214/2017.
(Dictated to the Judgment Writer, script typed by her and corrected, signed and then pronounced by me in the open court on this the 7th day of July, 2020.) (RAJESHWARA) LXIV ADDL.CITY CIVIL & SESSIONS JUDGE, (CCH-65), BENGALURU CITY. 17
Crl.A.No.1213/2017 & Crl.A.No.1214/2017 7.7.2020 Common Judgment pronounced in the open court Vide separate judgment ORDER Invoking provisions of Section 386 of Cr.P.C., Crl.A.No.1213/2017, and Crl.A.No.1214/2017 filed U/s.381 of Cr.P.C. are dismissed.
Consequently, impugned judgment of conviction and order of sentence dated 3.8.2017 passed in C.C.No.345/2014 on the file of Presiding Officer, Special Court for Economic Offences, Bengaluru is hereby confirmed.
Appellant/accused No.2 is hereby directed to appear before Trial Court to deposit the fine amount imposed upon him and fine amount 18 Crl.A.No.1213/2017 & Crl.A.No.1214/2017 imposed on accused No.1 company and to serve the sentence.
Office is hereby directed to send back T.C.R. along with certified copy of common Judgment, forthwith.
Keep original copy of judgment in Crl.A.No.1213/2017 and copy thereof in Crl.A.No.1214/2017.
LXIV ADDL.CITY CIVIL & SESSIONS JUDGE, (CCH-65), BENGALURU CITY.
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