Delhi District Court
Ito vs M/S. Vij Construction Pvt. Ltd. on 5 September, 2018
IN THE COURT OF SH. PAWAN SINGH RAJAWAT
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts):CENTRAL
TIS HAZARI COURTS, DELHI
CC No.530665/2016
ITO vs M/s. Vij Construction Pvt. Ltd.
JUDGMENT
(a) Name of complainant : Income Tax Office through Sh. Narinder Juyal, ITO.
(b) Name, parentage, residence : 1) M/s. Vij Construction Pvt. Ltd.
of accused 6/3, Kalkaji Extn.,
New Delhi-110019
2) Sh. Vinod Vij, Director
M/s. Vij Construction Pvt. Ltd.
6/3, Kalkaji Extn.,
New Delhi-110019
(c) Offence complained of/ proved : U/s 276B r/w Sec. 278-B of
Income Tax Act,1961.
(d) Plea of accused : Pleaded not guilty
(e) Final order : Convicted.
(g) Date of such order : 05.09.2018
Date of Institution of complaint : 11.03.2016
Arguments heard/order reserved : 08.08.2018
Date of Judgment : 05.09.2018
ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 1 of 10
Brief statement of the reasons for the decision:-
1. The complainant through Sh. Narender Juyal, Income Tax Officer, filed the present complaint in discharge of official duties against accused no. 1 company and accused no. 2 Sh. Vinod Vij being its Director for the offence punishable u/s 276-B r/w 278B of the Income Tax Act (for short the 'Act'), 1961 pertaining to Financial Year (for short FY) 2009-10.
2. Succinctly, the facts of the case are that accused no.1, a private limited company, had deducted certain TDS amounts for the relevant Assessment Year in accordance with the provisions of the Act but not deposited the same with the Government account within prescribed time. Hence, present complaint.
3. The pre summoning evidence was dispensed with as complainant was a government servant and filed complaint in discharge of official duties in terms of section 200 Cr.P.C.
4. The accused were summoned, accused no. 2 Vinod Vij Director of accused no.1 company appeared before the court and copy of complaint and of documents were supplied to the accused and the matter was fixed for pre-charge evidence.
5. Sh. Narender Juyal, ITO examined as CW1 in pre-charge evidence and deposed on the lines of facts as alleged in the complaint. He has proved his complaint as Ex.CW1/1, sanction order as Ex.CW1/2, details of late deposit of TDS as Ex. CW-1/3, show cause notice U/s 2(35) of the IT Act dt. 21.03.2014 as Ex. CW-1/4, order U/s 2(35) dt. 03.04.2014 as Ex. CW-1/5. He further stated that ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 2 of 10 before granting sanction U/s 279(1) of the IT Act, CIT had issued notices dated 25.07.14 and 08.09.14 as Ex. CW-1/6 and he further proved list of witnesses as Ex. CW-1/7. During cross examination in post charge evidence he has stated that the complaint is not clarifying whether the deducted TDS was finally deposited or not and stated that the complaint is for late deposit of TDS. He denied the suggestion that the factum of deposit of TDS was not brought in the notice of sanctioned authority. He stated that accused have been served with show cause notice under Section 279(1) of Income Tax Act before launching the prosecution. He also admitted that no copy of dispatch register is placed on judicial file and register does not contain address of complaint. He further stated that there is no proof of receipt of notice under Section 2(35) of Income Tax Act placed on record. However, he denied the suggestion that no notice was sent to or received by accused. He denied the suggestion that Ex.CW1/4 and Ex.CW1/5 does not bear signature of Chand Singh Sarsar. He shows his ignorance as to whether accused has informed about the illness of his wife as a circumstance which resulted in TDS default.
6. After hearing arguments, charge for offence 276-B r/w 278-
B of the I.T. Act was framed against accused no. 1/company as well accused no.2 on 17.01.2017.
7. After post charge evidence, statements of accused no.1 company (through accused no. 2) as well as of accused no. 2 were recorded u/s 313 Cr.P.C. read with section 281 Cr.P.C separately. In the statement, accused denied the allegations and submitted that accused have been falsely implicated in this case. In his statement accused no. 2 stated that the delay in deposit occurred due to his ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 3 of 10 wife's illness and TDS was deposited later on.
8. I have heard the arguments on behalf of both the parties and gone through the record of the case. I have also gone through the relevant provisions of Income Tax Act, 1961.
9. Relevant provisions of section 276B & 278B of the Act are reproduced below for reference:-
[276B. Failure to pay tax to the credit of Central Government under Chapter XIID or XVIIB. - If a person fails to pay to the credit of the Central Government, - the tax deducted at source by him as required by or under the provisions of Chapter XVIIB; or the tax payable by him, as required by or under, - sub-section (2) of section 115-O; or the second proviso to section 194B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine] [278B. Offences by companies.- (1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
10. It is argued on behalf of the complainant that the case has been proved beyond reasonable doubt against the accused person in view of the testimony of CW1. He submits that the order U/s 2(35), sanction order and the documents pertaining to TDS default were proved by the complainant witnesses. He prays for conviction of the accused.
11. On the other hand, Ld. Counsel for accused argued that ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 4 of 10 complaint is filed with inordinate delay which is prejudice the rights of accused. He further argued that complainant has failed to serve notice under Section 2(35) of the Income Tax Act and since Chand Singh Sarsar was not examined, the complaint is faulty. He also argued that since the sanctioning authority was not examined, therefore, the sanction order has not been proved. He also argued that accused has been able to show reasonable cause of the delay in deposit of TDS amount as provided U/s 278AA of the Act and therefore, complaint should be dismissed and accused be acquitted.
12. Whether accused no. 2 is the Principal Officer of accused no. 1: Section 2(35) of the Act deals with expression 'principal officer'. Relevant para of section 2(35) of the Act is reproduced below:
"(35) 'principal officer', used with reference to a local authority or a company or any other public body or any association of persons or any body of individuals, means-
the secretary, treasurer, manager or agent of the authority, company or association, or body, or any person connected with the management or administration of the local authority, company, association or body upon whom the [Assessing Officer] has served a notice of his intention of treating him as the principal officer thereof'.
Section 200(1): Any person deducting any sum in accordance with (the foregoing porvisions of this Chapter) shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.
(2) Any person being an employer, referred to in sub-section (1A) of Section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs.
(3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in subsection (1A) of Section 192 shall, after paying the tax deducted ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 5 of 10 to the credit of the Central Government within the prescribed time, (prepare such statements for such period as may be prescribed) and deliver or cause to be delivered to the prescribed incometax form and verified in such manner and setting forth such particulars and within such time as may be prescribed.
Relevant para of section 204 is reproduced as under:-
"Section 204: Meaning of "persons responsible for paying"
* * *
(iii) In the case of credit, or, as the case may be, payment of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof".
13. The complainant has averred that accused no. 2 is the Director of accused no. 1 and therefore he is liable to be prosecuted for delay in deposit of TDS amount. CW1 categorically stated in his evidence that Sh. Vinod Vij is the Principal Officer of accused company and has proved notice under section 2 (35) of Income Tax Act Ex. CW-1/5 issued to Mr. Vinod Vij. The order under section 2(35) of Income Tax Act, 1961 Ex. CW-1/7 was passed holding that accused Vinod Vij as Principal Officer being connected with management or administration of the deductor-assessee for the purpose of initiating proceedings under provisions of 276 B of Income Tax Act. No suggestion have been put to the witness that Vinod Vij is not the principal officer of accused no.1. The arguments of ld. Counsel for accused that the show cause notice has not been served upon the accused is humbly rejected as CW-1 during cross examination has categorically stated that Ex.CW1/4 was served upon the accused. He also produced the dispatch register showing the dispatch of show cause notice at serial no. 36 in the said dispatch register and the ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 6 of 10 copy of dispatch register was proved as Ex.CW1/R1. The duly certified copy of the delivery register maintained by the complainant was also proved as Ex.CW1/R2 showing the delivery to the accused through speed post. He has also stated that he can bring record of service of Ex.CW1/4. However, same was not requisitioned by the ld. Counsel for the accused despite the offer of CW-1. Apart from putting suggestion to CW-1 regarding non delivery of the show cause notice, no positive evidence has been led by the accused to show such non delivery. It is not the case of accused that the address 6/3, Kalkaji Extension, New Delhi does not belongs to him or same is incorrect. The argument that the previous ITO Sh. Chand Singh Sarsar was not examined and hence the Ex.CW1/4 is not proved is also rejected as CW-1 has categorically stated that he identifies the signatures of Sh. Chand Singh Sarsar being his predecessor in office. It is not the case of accused that Sh. Narender Juyal, ITO was not the successor of Sh. Chand Singh Sarsar and they have not seen their handwriting and signature during the official work. Hence, it is proved that accused no. 2 Sh. Vinod Vij was duly served with the show cause notice under Section 2(35) of the Income Tax Act and therefore he is the officer in default of accused no.1 who was responsible for timely deposit of TDS amount.
14. Whether there was due sanction for the present prosecution: CW-1 has proved the show cause notice Ex. CW-1/6. He also proved the sanction order dt. 15.10.2014 which is Ex.CW1/2 and also office order dated 18.02.2016. In the sanction order it is clearly mentioned that there was deliberate intention of default of accused no. 1 within the meaning U/s 200 of the Act. It is further mentioned that accused no. 2 Sh. Vinod Vij was managing the business activities of accused no. 1 at the relevant time. The ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 7 of 10 argument of ld. Counsel that the sanction order is faulty is humbly rejected as the sanction order mentions in detail the default and the responsibility of accused no.2 being the Principal Officer. CW-1 has stated that he has worked with Sh. Avdesh Kumar Mishra and identifies his handwriting and signatures. The office order dated 18.02.2016 was issued by Sh. Avdesh Kumar Mishra which reconfirmed the sanction order dated 15.10.2014 passed by his predecessor. The office order dated 18.02.2016 mentions in detail the reasons for issuance of such order inter alia mentioning that there was a change in the ward number and also change of ld. Counsel for complainant which requires issuance of the said order. The accused has only challenged the proving of the Ex.CW1/2 i.e. Sanction order on the grounds that its executor was not examined by the complainant. However, CW-1 in his cross examination has explained that prior to passing of the sanction order dated 15.10.2014, show cause notices dated 25.07.2014 and 08.09.2014 which were Ex.CW1/6 (colly) were issued to the accused. However, accused for reasons best known choses not to file in the reply to the said show cause notices. The CW-1 also stated that the officer order dated 18.02.2016, only clarifies that complaint is to be preferred by the AO of Ward No. 78(3) as mentioned from point X to X1 and the officer order is in continuation of the sanction order. He is specifically stated that due to transfer of his predecessor Chand Singh Sarsar, he has put the file before CIT for sanction owing to which order dated 18.02.2016 was passed. The sanction order was passed in the official capacity by the then CIT and the accused just not disputed the passing of said order. CW-1 has also stated that while granting sanction, the list of witnesses and list of documents alongwith all documents were produced before the Sanctioning Authority. The sanction order has not been challenged by the accused. CW-1 has ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 8 of 10 explained the process of sanction and same has not been challenged. Hence, it is proved that there was due sanction for launching of the present prosecution.
15. Whether there was delay in deposit of TDS amount:
As per the Income Tax Act, the TDS amount deducted in a month should have been deposited on or before 7 th of the subsequent month. As per Ex. CW-1/3 running from page no. 8 to 10, the accused no. 1 has committed default in timely deposit of TDS amount of Rs.59,86,954/-. It is noted that the delay in deposit of TDS is ranging from 2 to 5 months. The accused have not disputed that there was delay in deposit of TDS amount. However, it is claimed that the delay was not deliberate due to illness of wife of accused no.2.
16. Section 278 AA of Income Tax Act provides notwithstanding anything contained in provisions of Section 276A, 276AB or 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.
17. The onus is upon the accused to show that there was reasonable cause for the delay in deposit of TDS. To show the same accused has not examined any defence witness. No witness has been examined by the accused to show the alleged illness of wife of accused no.2. The accused despite opportunity, has not produced any medical record showing the illness of the wife. Moreover, accused no.2 has not produced anything to show that due to such illness of his wife, he has not carried out any official work of accused no.1. I am satisfied that there was delay in deposit of TDS and accused has ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 9 of 10 failed to discharge the burden of showing reasonable cause for the default in deposit of TDS amount. The accused also failed to rebut the presumption U/s 278 E of the Act.
18. Undisputedly, the tax deducted at source by the accused no.1 company was not deposited within prescribed period. The offence u/s 276B of Income Tax Act is complete when the tax deducted at source is not deposited in time. Company can not be allowed to take unfair advantage and use the tax amount so deducted for any other purposes. In view of the aforesaid discussions and facts and circumstances of the case, it is held that the prosecution has proved its case against accused persons beyond reasonable doubt. Accordingly, accused no.1 M/s Vij Constructions. and accused no. 2 Vinod Vij are held guilty for the offence u/s 276B r/w Sec. 278B of the Act for deducting TDS for the financial year 2009-10 and not depositing the same in the Government account within prescribed period.
19. Copy of the judgment be given free of cost.
(PAWAN SINGH RAJAWAT) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI Announced in Open Court on 05th of September, 2018.
ITO vs M/s Vij Construction Pvt. Ltd. CC No. 530665/16 10 of 10