Bangalore District Court
The Income Tax Department vs Bob Tech Solutions Pvt. Ltd on 28 August, 2024
KABC090000622021
Presented on : 31-03-2021
Registered on : 08-04-2021
Decided on : 28-08-2024
Duration : 3 years, 4 months, 28 days
BEFORE THE SPECIAL COURT FOR ECONOMIC
OFFENCES: AT BENGALURU
Dated this the 28th day of August 2024
:Present:
Sri. VISHWANATH C GOWDAR., B.A.L., LL.M.,
Presiding Officer,
Special Court for Economic Offences,
Bengaluru City
C.C. No.38/2021
Complainant: The Income Tax Department,
The Income Tax Officer (TDS),
Wad-1(1)
Bengaluru.
(Reptd. By Sri. CB., Advocate (Spl. P.P)
V/s.
Accused : 1. M/s. Bob Tech Solutions Private Limited,
#13, 3rd Floor,
100 Feet Ring Road,
JP Nagar 6th Phase,
Above Federal Bank,
Opp: Shell Petrol Bunk,
Bengaluru - 560 078.
Reptd. by its Ex-Managing Director
2 C.C. No.38/2021
2. Sri. Narasimha Raju Gadiraju,
Ex-Managing Director,
M/s. Bob Tech Solutions Private Limited,
#13, 3rd Floor,
100 Feet Ring Road,
JP Nagar 6th Phase,
Above Federal Bank,
Opp: Shell Petrol Bunk,
Bengaluru - 560 078.
(Reptd. By Sri. SA., Advocate)
:JUDGMENT:
The instant case emanates from the complaint filed by the complainant alleging that, the accused Nos.1 & 2 have committed offences punishable U/s.276B r/w Section 278B of Income Tax Act, 1961 (hereinafter referred to as "the IT Act").
2. The complainant's case in nutshell is as under:
The accused No.1 is a private limited company, engaged in the business of contract staffing. The accused No.2 is claimed to be the Ex-Managing Director of the accused No.1 company, responsible for day to day conduct and business of accused No.1/company at the relevant period of time i.e., for the financial year 2013-14. The Assessing Officer of the complainant Department issued the notice U/s.2(35) of the IT Act treating the accused No.2 as the Principal Officer of the accused No.1/company.3 C.C. No.38/2021
3. It is further complainant's case that, the accused No.1 company deducted the TDS in the financial year 2013- 14 on various heads under Sections 192, 194C, 194I and 194J of the Act and defaulted in remitting the said TDS to the Central Government account within stipulated period of time as contemplated under Rule 30 of the IT Rules for the tune of Rs.37,03,136/-. The Commissioner of Income Tax issued show cause notice dated 10.02.2017 to accused Nos.1 & 2. The accused No.1 company submitted their response by way of reply dated 23.11.2017. The accused No.1 company being statutorily bound to remit the amount deducted as TDS, the accused No.2 being responsible for the every act of the accused No.1 company, have contravened Section 278B and 276B of the IT Act respectively. The complainant has further alleged that, the accused No.1 company being represented by its Principal Officer i.e., accused No.2 having failed to comply with the statutory provisions as mentioned supra without any justifiable cause have committed the offences punishable U/s.276B r/w 278B of the IT Act. Hence, this complaint.
4. Upon receiving the complaint, the sworn statement of the complainant was dispensed pursuant to the complainant being public servant as contemplated U/s.200(a) of Cr.P.C. Thereafter, the cognizance of the offences punishable U/s.276B r/w 278B of the IT Act has been taken and process has been issued to the accused Nos.1 & 2.
4 C.C. No.38/20215. The accused Nos.1 & 2 being served with the summons, accused No.2 appeared through his counsel and has been enlarged on bail, pursuant to the bail application being made by the accused No.2. After having recorded Evidence before Charge as contemplated U/s.244 of Cr.P.C., in so far as the complainant witnesses on having heard before the charge, the charge has been framed and read over and explained to the accused No.2, he pleaded not guilty and claimed to be tried on his behalf as well as on behalf of accused No.1 company.
6. The complainant has examined two witnesses on its behalf as PW's-1 & 2 and got marked in all 10 documents as Ex.P-1 to Ex.P-10 and got closed its side of evidence. The statement of the accused No.2 was recorded U/s.313 of Cr.P.C., he denied the incriminating materials in the testimonies of the complainant witnesses and got examined himself as DW-1 and not chosen to get marked any documents on his behalf and got closed their side of evidence.
7. Heard the arguments canvassed by the learned Spl. PP for the complainant and learned counsel for accused No.2 as well as the counsel for accused No.1 company. The accused No.2 has submitted written arguments along with case law compilation.
8. On considering the complaint, evidence on record and arguments addressed by the either parties, the following points would arise for the determination of this court namely:
5 C.C. No.38/20211) Whether the complainant proves beyond all reasonable doubts as to the accused No.2 being the Ex-Managing Director of the accused No.1 company, being in-charge of day to day conduct of the accused No.1 company in the financial year 2013-14, pursuant to being Principal Officer U/s.2(35) of the IT Act has contravened the provisions of IT Act and defaulted in remittance of TDS being deducted in the financial year 2013-14 to the tune of Rs.37,03,136/- to the credit of Central Government within stipulated period and thereby accused No.2 has committed an offence punishable U/s.276B of the IT Act, 1961?
2) Whether the complainant further proves beyond all reasonable doubts as to the accused No.1 company has contravened the Rule 30 of the IT Rules and provisions of IT Act and defaulted in remittance of TDS being deducted in the financial year 2013-14 to the tune of Rs.37,03,136/- to the credit of Central Government within stipulated period and thereby accused No.1/company has committed an offence punishable U/s.278B of the IT Act, 1961?
3) What order?
9. The findings of this court on the above said point is as under:
Point No.1: In the Negative
Point No.2: In the Negative
Point No.3: As per final order
for the following:
REASONS
10. Point Nos.1 & 2: These points are taken up together for discussion as the said points are inter-linked to each 6 C.C. No.38/2021 other and also in order to avoid repetition of facts, pursuant to the facts and circumstances are arising out of the allegations being interconnected to accused, as morefully set out in the complaint in the case on hand.
11. It is the case of the complainant that, the accused No.2 being the Ex-Managing Director of accused No.1 company is responsible for day to day affairs and business of accused No.1 company being statutorily bound to remit the TDS deducted under the various heads, though deducted the TDS, failed to remit the the same within the stipulated period of time as contemplated under rule 30 of the IT Rules to the credit of Central Government and thereby committed default as contemplated U/s.201(1) and 201(1A) of the Act for the tune of Rs.37,03,136/-.
12. The complainant in order to establish the guilt of the accused Nos.1 & 2 beyond reasonable doubts, got examined himself arrayed as CW-1 as PW-1. The said PW-1 has reiterated the complaint averments as to default by the accused No.1 company, so also, the default by the accused No.2 by virtue of being the Ex-Managing Director, who was responsible for the day to day affairs of accused No.1 company in the financial year 2013-14 and thereby the accused No.2 being guilty of having committed the offences punishable U/s.276B r/w Section 278B of the IT Act, for non- remittance of the TDS pertaining to the financial year 2013- 14 to the tune of Rs.37,03,136/-. The said PW-1 also accounted as to the accused No.2 being the Principal Officer 7 C.C. No.38/2021 is very much liable to be prosecuted for the offence set out in the complaint. He has further deposed regarding sanction being accorded by the Sanctioning Authority to prosecute the accused.
13. In support of his oral testimony, the PW-1 has produced and got marked in all 10 documents as Ex.P-1 to Ex.P-10. Ex.P-1 is the complaint filed by the complainant U/s.200 of the Cr.P.C., alleging the accused persons having committed offences punishable U/s.276B r/w Section 278B of the IT Act. Ex.P-2 is the original sanction order dated 22.11.2019 passed by the Commissioner of Income Tax, TDS, permitting the prosecution of the accused Nos.1 & 2 for the offences alleged in the complaint for default pertaining to the financial year 2013-14. Ex.P-3 is the attested copy of notice dated 10.01.2017 issued to the accused No.2 U/s.2(35) of the IT Act, wherein, the accused No.2 is put on notice to be held as "Principal Officer" of accused No.1 company. Ex.P-4 is the attested true copy of speed post acknowledgment pertaining to Ex.P-3. Ex.P-5 is the attested true copy of system generated notice dated 30.11.2016 addressed to accused No.1 company to furnish the details on 15.12.2016. Ex.P-6 is the attested copy of reply dated 27.12.2016 made by accused No.1 company in response to Ex.P-5. Ex.P-7 & Ex.P-8 are the attested true copies of show cause notices dated 10.02.2017 issued by CIT (TDS), Bengaluru addressed to accused Nos.2 & 1. Ex.P-9 is the attested true copy of adjournment petition dated 23.11.2017, wherein, the 8 C.C. No.38/2021 Advocate for accused No.1 company sought for accommodation by adjourning the hearing date scheduled on 23.11.2017. Ex.P-10 is the computer generated TDS statement pertaining to accused No.1 company.
14. PW-1 has been subjected to cross-examination by the counsel for the accused, wherein, he has pleaded ignorance regarding the accused No.1 company being dissolved pursuant to order of Hon'ble NCLT, Bengaluru with effect from 24.01.2024. It is categorically admitted regarding the TDS pertaining to financial year 2013-14 being duly paid by the accused No.1 company before the demand being raised by the Department and the last remittance was on 24.07.2014. It is also admitted regarding the accused No.1 company having paid the necessary interest for delayed remittance of TDS. The witness has also admitted regarding the reply dated 23.11.2017 by accused No.1 company in response to show cause notice issued by CIT as per Ex.P-8. The photocopy of the reply dated 23.11.2017 is marked as Ex.D-1 by way of confrontation.
15. It is admitted regarding there is no any order as per Section 201(1) & 201(1A) of the Act being passed with respect to the subject financial year. It is also admitted regarding no any reference with respect to penalty proceedings being mentioned in complaint as well as in sanction order. It is also conceded regarding the documents pertaining to service of Ex.P-7 not being submitted before this court. The PW-1 has 9 C.C. No.38/2021 pleaded ignorance regarding the accused No.2 being Managing Director of accused No.1 company at the relevant period of time and it is also admitted regarding no any documents being submitted before this court to show accused No.2 being Managing Director of accused No.1 company. He has also pleaded ignorance regarding the various Departments of accused No.1 company handling various responsibilities viz., finance, administration, HR and other Departments. He has also pleaded ignorance regarding accused No.1 company facing financial difficulties in the financial year 2013-14.
16. CW-2 i.e., the then ITO, TDS, Ward-1(2), Bengaluru is examined as PW-2. This witness has accounted as to having issued the notice U/s.2(35) of the Act as per Ex.P-3 to the accused No.2 for having defaulted in remittance of TDS within statutory period with respect to the financial year 2013-14. Further regarding the Ex.P-3 being duly served on accused No.2. The witness has identified her signature on Ex.P-3, the same is marked as Ex.P-3(a).
17. PW-2 has been subjected to cross-examination by the counsel for the accused, wherein, she has categorically admitted as to she has not produced any documents to show accused No.2 being Managing Director of accused No.1 company during the financial year 2013-14. It is also admitted as to accused No.2 resigned to his post on 10.06.2015 as per the covenants of Ex.P-6. It is also accounted as to the three Directors of accused No.1 company 10 C.C. No.38/2021 during the financial year 2013-14 have been notified with notice U/s.2(35) of the Act. It is also admitted regarding after the submission of TDS returns by paying the TDS dues, the relevant information will be reflected in the TRACES portal with respect to the defaulter.
18. CW-3 was dropped at the instance of the complainant Department pursuant to the memo submitted as to CW-3 unable to be present before this court on account of her ill-health vide order dated 11.04.2023.
19. The accused No.2 got examined himself as DW-1 and deposed as to he was one amongst the several Directors of the accused No.1 company. He has also accounted as to having tendered his resignation to his directorship of accused No.1 company on 10.06.2015. He has specifically deposed that he was not responsible and in-charge of day to day affairs of accused No.1 company, as such claimed he is not Principal Officer. It is also deposed as to accused No.1 company was following mercantile system of accounting and the entries were made on the accrual basis and not on actual payment basis. It is categorically deposed as to the complainant Department has not passed order U/s.201(1) & 201(1A) of the IT Act and no any penalty proceedings has been passed against the accused No.1 company with respect to the subject financial year. It is also deposed as to there are qualified persons appointed in the accused No.1 company to take care of statutory compliance including TDS 11 C.C. No.38/2021 deductions and payments. It is accounted regarding the accused No.1 company facing financial difficulties and a sum of Rs.1,13,05,980/- of accused No.1 company being deducted as TDS by various assesses on account of having engaged service of accused No.1 company.
20. DW-1 has been subjected to cross-examination by the Spl. PP for the complainant, wherein, it is deposed as to himself was one of the Director of accused No.1 company during the financial years 2013-14 and 2014-15. The other suggestions as to Ex.P-3 was duly served on him has been specifically denied by the witness. The other suggestions as to he was the person responsible/in-charge of the day to day affairs of the accused No.1 company during the financial year 2013-14 has been specifically denied by the witness.
21. The learned Spl. PP relying upon the oral and documentary evidence emphatically argued that, the delay in remittance of TDS for the financial year 2013-14, being subsequently remitted by accused No.1 company will not absolve the accused No.2 from his responsibility by virtue of being the Principal Officer of the accused No.1 company U/s.2(35) of the IT Act. It has been also highlighted that, the defence urged by the accused as to the accused No.1 company following mercantile system of accounting, the said company being under financial crisis in itself will not be the justifiable ground in order to hold the accused Nos.1 & 2 as not guilty under the provisions of IT Act. The Spl. PP has 12 C.C. No.38/2021 vehemently argued that, the default in complying the terms of the show-cause notices as per Ex.P-3, Ex.P-5, Ex.P-7 and Ex.P-8 respectively, the same being replied evasively by the accused precludes from denying themselves being not the Principal Officer U/s.2(35) of the IT Act and amongst these arguments, it has been sought to convict the accused Nos.1 &
2.
22. The counsel for the accused No.1 vehemently argued that the instant case will not survive against the accused No.1 company pursuant to the order of the NCLT, Special Bench, Bengaluru dated 24.01.2024, wherein, accused No.1 company has been dissolved with effect from 24.01.2024. As such, it is argued that the accused No.1 company cannot be made liable in the case on hand. The memo submitted along with the copy of the order dated 24.01.2024.
23. The counsel for the accused No.2 profusely argued that, the accused Nos.1 & 2 remitted the TDS to the account of Central Government account before the demand being raised by the complainant Department and only after the remittance of TDS along with interest, the complainant has come up with the instant case only on account of delayed remittance being reflected in TRACES portal. It is also emphasized as to as per the definition of Section 276B of the IT Act, there is only an act of failure to pay is covered and payment made belatedly or voluntarily by the assessee is not covered. It is also argued as to there is no any order passed 13 C.C. No.38/2021 by the complainant Department U/s.201(1) of the IT Act and Section 201(1A) of the IT Act and thereby the alleged offences cannot be invoked in the case on hand. It is also highlighted there is no any penalty proceedings being initiated against the accused U/s.201 r/w Section 221 of the IT Act. Further, the accused No.2 having established following Mercantile System of accounting is very much entitled to benefit U/s.278AA of the IT Act as the accused No.2 has substantiated reasonable cause in non-remittance of TDS. It is also vehemently argued that the complaint being lodged after the lapse of 30 days of order of sanction being passed is contrary to SOP of the complainant Department, as such, the complaint is not maintainable against the accused. It is also highlighted regarding the cross-examination of the PW-2, wherein, she has admitted Ex.P-6 is not in response to Ex.P-3. It is also argued as to Ex.P-1 & Ex.P-2 are silent as to how the accused No.2 is responsible for the day to day conduct of the accused No.1 company. It is also emphasized regarding Ex.D-1, very much substantiates the contention of the accused No.2 as to not being Principal Officer of accused No.1 company. In support of the aforesaid arguments, the counsel for the accused has relied upon compilation of judgments containing 30 decisions. Amongst these arguments, sought to acquit the accused No.2.
"Evaluation and Analysis of Evidence"
24. On over all examination of the complaint, evidence on record and arguments as well as written arguments 14 C.C. No.38/2021 submitted by accused No.2, this court certainly as to consider the involvement of accused No.2 in the day to day affairs of accused No.1 company and the accused No.1 company having defaulted in remittance of TDS amount though it was deducted under the various heads as stated in the complaint. Thereby accused No.2 being vicariously liable for the act of the accused No.1 company on account of being the then Managing Director of the said accused No.1 company.
25. An anxious examination of the complaint, the evidence on record so also the documents relied upon by the complainant, except oral testimonies of PW's-1 & 2, there is no any iota of evidence or documents to establish the accused No.2 being the Principal Officer U/s.2(35) of the IT Act. Per contra, the accused No.2 has got examined himself as DW-1 and specifically contended as to he was not responsible for day to day affairs of accused No.1 company and the said accused No.1 company having several Directors and having tendered his resignation to accused No.1 company on 10.06.2015. Pursuant to the accused No.2 having denied his role in the day to day affairs of the accused No.1 company, in absence of cogent evidence to demonstrate as to accused No.2 being the Managing Director being responsible for day to day affairs, the court cannot solely rely upon Ex.P-3 & Ex.P-7 i.e., show cause notices addressed to accused No.2. It is relevant to note that, accused No.2 has very much demonstrated his contention to the satisfaction of this court by adducing oral and documentary evidence.
15 C.C. No.38/202126. Furthermore, PW-2 the ITO attached to complainant Department, who issued the notice U/s.2(35) of the IT Act as per Ex.P-3 has categorically admitted in the cross- examination as to she has not produced any documents to show the accused No.2 being Managing Director of accused No.1 company during the financial year 2013-14. The testimony of the PW-2, who categorically admits the notice U/s.2(35) of the IT Act being issued to all the three Directors of accused No.1 company, creates a cloud of suspicion as to the very claim of complainant Department regarding accused No.2 being the Principal Officer. In view of the specific contention of accused No.2 as to there being several Directors. That apart, this view of the court is very much supported by the decision of Hon'ble Apex Court in the case of National Small Industries Corporation Limited V/s. Harmeet Singh Paintal and another reported in (2010) 3 SCC 330 . So also, in the decisions reported in:
1. (1996) 218 ITR 606 (Ker) in case of M.A. Unneerikutty V/s. Deputy. CIT
2. (1991) 188 ITR 376 (Mad) in the case of Sheetal N Shah V/s. ITO
3. (2003) 131 Taxmann.100 in case of Homi Phiroze Ranina V/s. State of Maharastra.
4. (2018) 92 Taxmann.com 308 in case of Kalanithi Maran V/s. Union of India
5. (2019) 111 Taxmann.com 210 in the case of A. Harish Bhat V/s. ACIT 16 C.C. No.38/2021
27. The arguments of the Spl. PP as to accused No.2 has replied to Ex.P-3 as per Ex.P-6 will not hold the water as the PW-2 has categorically admitted as to Ex.P-6 not being in response to Ex.P-3. The testimony of the PW-2 is very much covered U/s.114 of the Indian Evidence Act. This view of the court supported by decision reported in 91 ITR 18 (SC) in the case of Pullangode Rubber Produce Company V/s. State of Kerala.
28. Furthermore, the complainant is bound to establish due service of Ex.P-3 on accused No.2. The PW-2 has admitted as to Ex.P-3 was sent to accused No.2 after his resignation. That being the case, the very service of notice U/s.2(35) of the IT Act cannot be held to be complied by the complainant. This view of the court is supported by the following decisions:
(1) Anish Modi V/s. Union of India in Crl. Writ Petition No.3962/2022 dated 20.12.2023 (2) (1984) 16 Taxmann 286 (Mad) in the case of M.R. Pratap V/s. V.M. Muthuramalingam (3) (1992) 64 Taxmann 421 (P & H) in the case of Greatway Pvt. Ltd., V/s. ACIT (4) (1999) 106 Taxmann 318 (Mad) in the case of ITO V/s. Roshni Cold Storage Pvt. Ltd.,
29. It is also justifiable to consider the specific defence of the accused No.2 as to the Section 276B of the IT Act only contemplates "fails to pay" wherein the overall meaning on plain reading of aforesaid provision contemplating "total or complete failure to pay" but "not failure to pay within the 17 C.C. No.38/2021 prescribed time". This contention of accused No.2 in the background of accused No.1 in having remitted the TDS with interest U/s.201(1A) of the Act prior to demand being raised by the complainant Department with respect to default in remittance of TDS, certainly inclines the court to accept the arguments as advanced by the counsel for accused in so far as aforesaid interpretation of Section 276B of the Act. This view of the court is supported by the following authorities viz., (1) (2007) 162 Taxmann.337 (SC) in the case of CIT V/s. Tara Agencies (2) (2007) 2 SCC 230 in the case of Raghunath Rai Baraja and another V/s. Punjab National Bank and others (3) (1996) 1 SCC 108 in the case of State Level Committee and another V/s. Morgardshammar India Ltd., (4) (2000) 7 SCC 463 in the case of State of Maharashtra and another V/s. Santhosh Shankar Acharya (5) (2001) 247 ITR 36 (SC) in the case of Federation of Andhra Pradesh Chambers of Commerce and Industry V/s. State of Andhra Pradesh (6) (2002) 7 SCC 273 in the case of Union of India V/s. Hansoli Devi (7) (2003) 2 SCC 577 in the case of Narisuddin V/s. Sita Ram Agarwal (8) ILR 2003 KAR 3834 in the case of C. Raghuram Reddy V/s. The Commissioner of Commercial Taxes in Karnataka (9) (1972) 2 Taxman 541 (SC) in the case of CIT V/s. A.N. Aravinda Reddy 18 C.C. No.38/2021 (10) (2019) 112 Taxman.com 220 (Kar) in the case of Dr. Viloo Patell V/s. Income Tax Department (11) Crl. M.P. No.2941/2018 in the case of M/s. Dev Multicom Pvt. Ltd. V/s. State of Jharkhand and others (12) 154 ITR 172 in the case of Asst. Collector of Central Excise V/s. Dunlop India Ltd., and others (13) (2011) 271 ELT 492 (SC) in the case of Shankar Raju V/s. Union of India
30. Further defence urged by the accused No.1 company as to the complaint is contrary to SOP, wherein, it stipulates 30 days to lodge the complaint from the date of sanction and sanction order suffers from discrepancy in so far as which limb of Section 276B(a) of the IT Act has been contravened, certainly on an anxious examination of the SOP as extracted in written arguments very much contemplates within 30 days of receiving the approval U/s.279(1) of the IT Act, the complaint should be lodged. In the case on hand, the order of sanction as per Ex.P-2 was passed on 22.11.2019, the complaint has been lodged by the Income Tax Officer, (TDS), Ward-1(1), Bengaluru on 31.03.2021. This very much transpires that, the complaint in the case on hand has been lodged very much after lapse of 30 days as contemplated under SOP. Furthermore, the sanction as per Ex.P-2 is also silent as to contravention with respect to particular limb of Section 276B(a) of the Act and so also the show cause notices as per Ex.P-3 & Ex.P-6 are very much silent in these aspects. That being the case, the accused No.2 is very much entitled to 19 C.C. No.38/2021 benefit in so far as the violation of SOP by the complainant and also with respect to the sanction order not being disclosing the contravention.
31. The accused No.1 company also cannot be prosecuted pursuant to non-initiation of penalty proceedings, as contended by the accused No.2 also holds the field. In the case on hand, the accused No.1 company having remitted arrears of TDS along with interest U/s.201(1A) of the IT Act is very much justified to claim the accused No.1 not being treated by the complainant Department as the assessee in default and not having initiated the penalty proceedings. Though, it is not mandated under the Act, with respect to the penalty proceedings being pre-requisite to initiate prosecution, the very approach of the complainant Department in not having initiated penalty proceedings inclines the court to hold that accused No.1 company and accused No.2 cannot be made liable U/s.276B and Section 278B of the IT Act respectively.
32. The other important defence set out by the accused No.1 company as to accused No.1 company following Mercantile System of Accounting, wherein, the entries are made on accrual basis and not on the actual payment basis. As such, TDS returns were prepared on accrual basis, though there were no actual payments and deductions as shown in the books of accounts. This aspect is very much forthcoming from the testimony of DW-1, which has withstood the test of cross-examination.
20 C.C. No.38/202133. It is also relevant to note that the accused No.1/ company has pleaded financial distress, the same is very much forthcoming in the reply as per Ex.D-1. The examination of Ex.D-1 very much strengthens the contention of the accused No.2 as to accused No.1 company being under financial crunches the relevant year i.e., during the financial year 2013-14. Thereby, this court is inclined to hold there was a reasonable cause to accused No.1 company as contemplated U/s.278AA of the IT Act. This view of the court is supported by decision of the Hon'ble High Court of Delhi reported in (1986) 158 ITR 496 (Del) in the case of Sequoia Constructions Company V/s. P.P. Suri, ITO. So also, in the following authorities viz., (1) 118 Taxman.433 Delhi in the case of Woodward Governors India Pvt. Ltd., V/s. CIT.
(2) (2002) 257 ITR 677 (MP) in the case of ITO V/s. Nanak Singh.
34. It is also pertinent to consider as to the Ex.P-10 and other documents relied upon by the complainant Department being produced before this court by printing the copies of the said documents are not accompanied by the Certificate mandated U/s.65B of the Indian Evidence Act. The Hon'ble Apex Court has very much laid down the principles while considering the evidence forthcoming from electronic source. That being the case, Ex.P-10 and other documents sourced from the on-line data available with the complainant Department cannot be looked into by this court. This view of the court is supported by the following authorities viz., 21 C.C. No.38/2021 (1) (2014) 10 SCC 473 in the case of Anwar P.V. V/s. P.K. Basheer (2) (2020) 7 SCC 1 (SC) in the case of Arjun Pandit Rao Khotkar V/s. Kailash Kushanrao Gorantyal and others.
:CONCLUSION:
35. It is settled position of law that, the complainant is bound to demonstrate the guilt of the accused beyond all reasonable doubts without giving a scope or room for doubts in so far as the complainant's case. The complainant has very much failed to establish the crucial aspect of the accused No.2 being the Principal Officer of accused No.1 company as contemplated U/s.2(35) of the IT act. The testimony of the complainant/PW-1 as well as PW-2 has also not withstood the test of cross-examination in so far as the accused No.2 being solely responsible for the day to day affairs of accused No.1 company. That being the case, this court is justified to hold that, the complainant has miserably failed to bring home the guilt of the accused No.2 beyond all reasonable doubts. Per contra, the accused No.2 has probabalized his defence discussed morefully supra. It is needless to point out that, the complainant's case is tainted with substantial improvements, omissions and contradictions.
36. Without prejudice to the aforesaid observation, the accused No.1 company having been dissolved with effect from 24.01.2024 cannot be considered and appreciated by this court, pursuant to the offence alleged is with respect to 22 C.C. No.38/2021 financial year 2013-14. Hence, the arguments of the counsel for the accused No.1 company i.e., liquidator will not hold any water.
37. In light of the discussion made supra, pursuant to the complainant having miserably failed to bring home the guilt of the accused No.2, by virtue of being Managing Director of accused No.1 company in the subject financial year, the accused No.1 company being juristic person, in absence of convincing and positive evidence incriminating accused No.1 company having defaulted in compliance of Rule 30 of the IT Rules by remitting the deducted TDS amount under the various heads within statutory period cannot be made liable to having committed the offence U/s.278B of the IT Act. Moreover, the accused No.2 having demonstrated the reasonable cause as contemplated U/s.278AA of the IT Act, the accused No.1 company is very much entitled to the benefit U/s.278AA of the Act. This view of the court is very much supported by the decision of Hon'ble High Court of Rajasthan in S.G. Kale V/s. Union of India reported in (2001)118 Taxman 349 (Raj).
38. In light of the reasons assigned supra, this court without any hesitation proceeds to answer Point Nos.1 & 2 in the Negative.
23 C.C. No.38/202139. Point No.3: In view of the above findings of this court on Point Nos.1 & 2, this court proceeds to pass the following:
ORDER By exercising the power conferred under section 248(1) of Cr.P.C., the accused Nos.1 & 2 are acquitted of the offences punishable under section 276B r/w Section 278B of the Income Tax Act, 1961.
Consequently, accused Nos.1 & 2 are set at liberty.
The corresponding bail bonds of accused No.2 stands canceled.
(Dictated to the Stenographer directly on computer, typed by him, corrected and then pronounced by me, in open court on this the 28th day of August 2024) (VISHWANATH C GOWDAR) Presiding Officer, Spl. Court for Economic Offences, Bengaluru City.24 C.C. No.38/2021
:ANNEXURE:
List of the witnesses examined on behalf of the Complainant:
PW-1 : K.V. Pushparaj
PW-2 : Smt. Clarette Sunderrajan
List of the Documents exhibited on behalf of the Complainant:
Ex.P-1 : Original Complaint
Ex.P-2 : Original Sanction Order
Ex.P-3 : Attested copy of Notice U/s.2(35) of IT Act
Ex.P-4 : Attested copy of Speed Post
Acknowledgment
Ex.P-5 : Attested True copy System Generated Notice
Ex.P-6 : Attested True copy of Reply
Ex.P-7 & 8 : Attested True copies Show Cause Notices
Ex.P-9 : Attested True copy of Adjournment Petition
Ex.P-10 : Computer Generated TDS Statement
List of witnesses examined on behalf of the Accused:
DW-1 : Narasimha Raju Gadi Raju List of Documents examined on behalf of the Accused:
Ex.D-1 : Photocopy of Reply
Presiding Officer,
Spl. Court for Economic Offences,
Bengaluru City.
25 C.C. No.38/2021
28.08.2024
Complt: Sri. CB
A: 1 & 2: SA
For Judgment Accused No.1 company
Accused No.2 present.
Judgment pronounced in the open court
(vide separate order)
ORDER
By exercising the power conferred under section 248(1) of Cr.P.C., the accused Nos.1 & 2 are acquitted of the offences punishable under section 276B r/w Section 278B of the Income Tax Act, 1961.
Consequently, accused Nos.1 & 2 are set at liberty.
The corresponding bail bonds of accused No.2 stands canceled.
PRESIDING OFFICER.26 C.C. No.38/2021