Delhi District Court
Ito vs M/S. Brahmaputra Infrastructure Ltd. on 3 May, 2019
IN THE COURT OF SH. PAWAN SINGH RAJAWAT
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts):CENTRAL
TIS HAZARI COURTS, DELHI
CC No.538694/2016
ITO vs M/s. Brahmaputra Infrastructure Ltd.
JUDGMENT
(a) Name of complainant :Income Tax Office through Sh. Kumar Ashutosh, ITO.
(b) Name, parentage, residence: 1) M/s. Brahmaputra
of accused Infrastructure Ltd.
A-7, Mahipalpur, NH-8
NH-8, Mahipalpur Crossing,
New Delhi.
2) Sh. Sanjeev Kumar Prithani
Director,
C/o M/s Brahmaputra
Infrastructure Ltd.
A-7, Mahipalpur, NH-8
NH-8, Mahipalpur Crossing,
New Delhi.
(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 : Accused no.1,
M/s. Brahmaputra
Infrastructure Ltd.
(Convicted)
Accused no.2,
Sanjeev Kumar Prithani
(Acquitted)
(f) Date of such order : 03.05.2019
ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 1 of 21
Date of Institution of complaint : 23.08.2016
Arguments heard/order reserved : 16.04.2019
Date of Judgment : 03.05.2019
Brief statement of the reasons for the decision:-
1. The complainant through Sh. Kumar Ashutosh, Income Tax Officer, filed the present complaint in discharge of official duties against accused no. 1 company and accused no. 2 Sh.
Sanjeev Kumar Prithani, 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) 2012-
13.
2. Succinctly, the facts of the case are that accused no.1, a 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 Sh.
Sanjeev Kumar Prithani, 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 ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 2 of 21 fixed for pre-charge evidence.
5. Sh. Kumar Ashutosh, ACIT, 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, list of witnesses as Ex. CW-1/3, details of late deposit of TDS is Ex. CW-1/4, show cause notice under section 2(35) of the Act is Ex. CW1/5 (colly), replies of show cause notice is Ex. CW1/6 and order under section 2(35) of the Act as Ex. CW1/7 alongwith copy of receipt of speed post as Ex. CW1/8. He stated that on verification it transpired that accused company through accused no. 2 had deducted amount of Rs. 2,62,23,210/- but had not deposited the same to the government account within the stipulated period. He further deposed that proposal for launching of prosecution dated 16.05.2016 was sent by Sh. Ashish Chaursiya to the CIT which is Ex. CW-1/9. He further proved show cause notices u/s 279(1) of the I.T. Act dated 24/26.05.2016 as Ex. CW-1/10, its replies as Ex. CW-1/11 . He further deposed that after considering the replies to the show cause notices U/s 279(1) and after perusing the records, CIT has granted sanction Ex. CW-1/2 for launching of prosecution against the company. During cross examination, he stated that he had verified all relevant records before filing of the complaint and accused no.2 Joint Managing Director of accused no.1 was presumed to be Principal Officer and in- charge of affairs of accused company. He further stated that on the basis of reply filed on behalf of accused no.1 Ex. CW1/2, accused no.2 was considered as joint managing director of the ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 3 of 21 company. He admitted that he is not aware who had signed the TDS return as same is not on record. He also admitted that he had also not verified apart from the ITD generated default summary as to the factum of delay in default in delay in deposit of TDS. CW-1 also claimed that all directors are presumed to be actively participating in the affairs of company. He denied the suggestion that he had concealed the information in the complaint. In his further cross examination in his post charge evidence. He admitted that he had not filed the TDS return with the complaint. But voluntarily stated that all relevant information is available in the default summary. He denied the suggestion that averment in the para3 of the complaint are false and Mr. Rose T John was the person responsible for deduction and deposit of TDS. He also denied the suggestion that accused no.2 is not responsible for deduction and deposit of TDS. However, he admitted that reply of accused no.2 which is available at page no. 113 to 115 in the complaint was considered before filing of the prosecution. He also admitted order under section 2(35) was passed against Sh. Manoj Kumar Prithani, Sh. Sanjeev Kumar Prithani, Sh. Suneet Kumar Todi and Sh. Sanjay Kumar Mozika but sanction was granted only against the Sanjeev Kumar Prithani. He failed to give reasons for sanction not been granted against other directors. He denied the suggestion that TDS return is the only document to infer delay in deposit of TDS. He stated that he is not aware what all documents were put up before commissioner for grant sanction under section 279 as proposal was sent by his predecessor.
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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 20.04.2018.
7. In post charge evidence, CW-1 i.e. complainant was recalled and cross examined by Ld. Defence counsel. After closing of post charge evidence the matter was adjourned for statement of accused.
8. 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 late receipt of payment from customers i.e. government department. He also stated that the company was maintaining accounts on accrual basis and tax is deductible as and when expenses are accounted for and does not raise presumption of having paid the amount to payee. He denied that notice under section 2(35) of the Act and show cause for prosecution was issued to him be principal officer of the company. He also claimed that the prosecution was filed without verifying the TDS return or conducting any enquiry/investigation. Accused no.2 also claimed that his duties in the company is to look after execution and development of new technologies as he is bachelor of engineering. He also ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 5 of 21 claimed that default occurred due to non payment or delayed payment of the work executed as infrastructure project there is long gestation period and there were numerous litigation at the instance of government or the other parties.
9. In support of claim and contentions, accused no.1 examined Sh. Rajesh Gupta as DW-1. He stated that he was working as vice president, HR, and Legal of accused no.1. He stated that accused no.1 during execution of contract raises running bills according to percentage of work completed and due to long gestation period, the final bill is raised only on completion of the contract and payments are released after various inspections which takes longer time. He claimed that due to this the company faced crunch in working capital having spiraling effect in overall payments towards creditor as well as statuary dues including TDS and service tax. He also claimed that during F.Y. 2012-13 there was general recession in the economy resulting into severe financial crunch due to non payment which was the primary cause of delayed payments towards statutory dues. He also stated that accused company had taken credit facilities which were exhausted. He also stated that complaint was filed without verifying the TDS return and without considering the replies filed before the assessing officer explaining the reasonable cause of delay in deposit of TDS. He also stated that Mr. Rose T. John who was working as Manager Account is the person responsible for deduction, collection and deposit of TDS for the year F.Y. 2012-13 and document in this regard were not considered before filing of the ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 6 of 21 complaint. He relied upon various documents Ex. DW1/1 to Ex. DW1/7. During cross examination conducted by Ld. SPP for complainant he stated that accused no.2 was Non-Executive Director as per Ex. DW1/5 wherein Form 32 wherein, he has been designated as non Executive Director w.e.f 23.10.2009. He admitted that payments were disbursed to all directors but with a delay due to financial constraints. He also admitted that cash and bank balance have increased three fold during F.Y. 2012-13 in comparison to F.Y. 2011-12. However, he voluntarily claimed that this balance does not reflect the status of entire year. He also admitted that remuneration of directors and staff salary almost doubled for F.Y. 2012-13 in comparison to F.Y. 11-
12. He also admitted that accused no.2 has been shown as Joint Managing Director in the balance sheet and audit report for the F.Y. 2012-13. He also admitted that the name of accused no.2 appears as personal guarantor in the Union Bank of India, Axis bank and Corporation Bank. He denied the suggestion that accused no.2 alongwith other three directors out of 13 directors were incharge and at the helm of affairs of accused no.1 during the financial year.
10. Accused no.2 examined himself as competent witness in terms of section 315 Cr.PC as DW-2. He stated that he is a B.Tech graduate and appointed on board of director of accused n.1 for looking after business development and project execution. He stated that during F.Y. 2012-13 Manoj Kumar Prithani was the Managing Director, Sanjay Kumar Mozika, Director, Sunit Kumar Sodi-Director, Mr. Mukesh Aggarwal-
ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 7 of 21 Director, Mr. Satish chandra Gupta-Independent Director, Mr. Viresh Shanker Mathur- Independent Director, Mr. Om Kumar- independent Director and Mr. Kulandhar Sharia- was Independent Director. He stated that he was only looking after the tendering process, networking and liasoning with stakeholder. He stated that he never actively participated in financial affairs of accused no.1 including deduction, collection of deposit of TDS or complying with provision of Income Tax Act. He stated that Rose T. John as told to him by the company was working as Manager-Account and was solely and exclusively responsible for financial affairs of the company including deduction and deposit of TDS. He stated that Rose T. John was only reporting to him in relation to the work being looked after by him and not in respect of TDS or Financial matter. He stated that Rose T. John was also reporting to other director or their respective area of operation. He stated that his reply dated 29.01.2016 and 21.042016 was not considered before filing of the complaint. He stated that the default occurred due to severe financial stringencies and there was no willful default on the part of the company. He had mentioned in detail his scope of work and responsibility in the company which pertains to business development and project execution only. During cross examination, he stated that since he was non executive director he was not aware about the availability of funds qua accused no.1. He denied the suggestion that he was directly involved in the affairs of the company and therefore he is not bringing the minutes of board meeting. He stated that he was not drawing any remuneration from the company. He ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 8 of 21 denied the suggestion that Rose T. John manager had informed the department that he was reporting to him.
11. 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.
12. 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.
13. 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.
14. On the other hand, ld. Counsel for accused argued that ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 9 of 21 complaint is not maintainable as the record of TDS return is not brought to show the alleged default and the person responsible for such alleged default but has exclusively relied on the stated report generated from ITD system (Ex. CW1/4). He also argued that Ex. CW1/4 is a computer generated document and the complainant has failed to prove its authenticity, its source of receipt so much so that the document is only a certified true copy and the original thereof has not been placed on record for verification. He also pointed out that based on this reply of Mr. rose T. John, on 10.03.2016 show cause notice under section 2(35) of the Act were issued to all the named directors, Mr. Manoj Kumar Prithani, Mr. Sanjeev Kumar Prithani, Mr. Sanjay Mozika, Mr. Sunnet Kumar Todi and reply was filed by all directors, however, the complainant has deliberately concealed the same from this Hon'ble court which have been exhibit in defence as Ex. DW1/12, Ex. DW1/13 and DW1/14. He also argued that the complaint is conspicuously silent about the role played by all the four directors to whom the show cause notice were issued under section 2(35) of the Act and in para 4 of the complaint sole reliance has been placed on order dated 16.05.2016(Ex. CW1/7) passed under section 2(35) in the case of the accused no.2. He also pointed out that complainant has not made any independent inquiry in the present case and has solely relied upon the information provided to him i.e. alleged TDS default summary Ex. CW1/4. He also argued that as per appointment letter of accused no.2 Ex. DW1/15 his designation in the accused no.1 company was changed from whole time working director to Non-Executive Director with effect from ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 10 of 21 05.10.2009 and therefore, he was a non-executive director during the relevant F.Y. 2012-13 and hence, not a Principal Officer.
15. He also relied upon the judgment of Hon'ble Kerala High Court in the case titled as 'Income Tax Officer Vs. K. L. Joseph and Ors' reported as [1971 82 ITR (SN2) 43].
16. He also argued that cross examination and material placed on record proves beyond reasonable doubt that there is no evidence to substantiate the allegations made in para 7 of the complaint or the averments made in para 8(a) of the sanctions Ex. CW1/2 and the same are arbitrary, whimsical, and, therefore, the sanction granted are contrary to the provisions of and the accused are liable to be acquitted. z
17. Whether accused no. 2 Sanjeev Kumar Prithani was the Principal Officer and person responsible for deduction and deposit of TDS: 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 ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 11 of 21 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 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".
18. The complainant has claimed that his predecessor had issued show cause notice under section 2(35) of the Income Tax Act to Sh. Manoj Kumar Prithani, Sh. Sanjeev Kumar Prithani, Sh. Suneet Kumar Todi and Sh. Sanjay Kumar Mozika who had filed their reply Ex. CW1/6. He further claimed that by the order dated 16.05.2016 under section 2(35) has declared the Sh. Manoj Kumar Prithani, Sh. Sanjeev Kumar Prithani, Sh. Suneet Kumar Todi and Sh. Sanjay Kumar Todi as the principal Officer(s) ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 12 of 21 of accused no.1.
19. CW-1 also stated that the proposal for launching prosecution was put before CIT concerned who had issued the show cause notice under section 279(1) of the Income Tax Act to the above named directors vide Ex. CW1/10(colly) and the reply is Ex. CW1/11, wherein it is mentioned that for all TDS purpose Mr. Rose T. John was responsible person who was reporting to Mr. Sanjeev Kumar Prithani, Joint Managing Director of the company and seeking his instructions as to when required and, therefore, Sanjeev Kumar Prithani being Joint Managing Director of the company is considered Principal Officer of accused no.1.
20. However, during the cross examination, he stated that he is not aware about any document in internal record of the complainant showing Sh. Sanjeev Kumar Prithani as Joint Managing Director. CW-1 was also admitted that since TDS return is not filed on record, therefore, he cannot say who had signed the same. He also admitted that he had not verified the record apart from the ITD generated default summary. CW-1 was also claimed that under section 2(35) of IT Act all Directors are presumed to be actively participating in the affairs of the company. He admitted that he has not filed the copy of TDS return with the complaint. He also admitted that he had not personally verified the record of ROC before the notice under section 2(35) were issued. He denied the suggestion as per record Mr. Rose T. John was the person responsible for the ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 13 of 21 deduction and deposit of TDS. CW-1 has not stated that the copy of TDS return is not in their record but for reason unknown the same is not filed with the complaint to show the signatory to the said return which may show the responsibility of the person for the present prosecution.
21. Admittedly, the notice under section 2(35) weres issued to Sh. S.K. Todi, Manoj Kumar Prathani, Sanjay Kumar Mozika and Sanjeev Kumar Prathani and they were held to be responsible for affairs of accused no.1 as per Ex. CW1/7. However, all above directors in their reply categorically claimed that Mr. Rose T. John, Manager account was the person responsible during the financial year 2012-13 for deduction and deposit of TDS. While passing of the order under section 2(35), it is mentioned that in response to summons under section 131 of Act and letter dated 29.02.2016 filed on 01.03.2016 Mr. Rose. T. John has admitted that he is the person responsible for deduction and deposit of TDS. However, it has been mentioned that there is deliberate attempt on the part of the management to shift the burden of default on Mr. Rose T John which cannot pass the test section 2(35) of the Act. However, the basis of arriving such findings is missing in the order Ex. CW1/7.
22. The provision under section 2(35) is two fold. Apart from the management of a company, the other individuals namely secretary, treasurer, management or agent can also be considered as Principal Officer. Mr. Rose T. John was admittedly the Manager Account having the power of issuance of cheques.
ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 14 of 21 As per the TRACES module, login is provided to a company which is used for giving the details of the person responsible for deduction and deposit of tax. Copy of the said TRACES login showing the person responsible is not filed with the complaint, despite the accused has taken categorically stands and put suggestion to the complainant witness that accused no.2 is not person responsible for deduction and deposit of tax. The complain has chosen not to lead evidence to show that it was accused no.2 who has been mentioned in the TRACES module login as the person responsible for the affairs of accused company. The complainant has filed the default summary which was stated to be generated from the TRACES module, the default summary does not mentions the name of the person who was responsible for deduction and deposit of tax.
23. Even the sanction order is faulty as it does not give complete facts and only mentions the show cause notice under section 279 (1) of the Act served upon against the accused no.2 only apart from the company and not to the other directors upon whom also the said show cause notice was served individually as reflected in Ex. CW1/10. For reasons best known sanctioning authority has deliberately not mention the said details and has only relied upon the partial averment in the reply filed on behalf of the company wherein it is mentioned for all TDS purpose Mr. Rose T John was the person responsible who was reporting to Sanjeev Kumar Prithani. In one hand, the complainant is negating the responsibility of Mr. Rose T John towards deduction and deposit of TDS whereas on ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 15 of 21 the other hand after relying upon the reply filed on behalf of the accused no.1 wherein it is Rose John was the person responsible who was reporting to Sh. Sanjeev Kumar Prithani it choses to prosecute accused no.2. No opportunity has been given to accused no.2 to negate such claim of accused no.1.
24. In Kalanithi Maran Vs. Union of India (2018) 92 Taxmann.com 308 Madras, while dealing with a case related to Non-Executive Chairman of the company, Hon'ble Madras High Court observed that the main criteria for treating a person as a Principal Officer was that he should have been in-charge of the management, administration and day-to-day affairs of the company. In para 9.1, It was observed as under: -
"It is pertinent to note that the 2nd
respondent has not produced any material
to establish that the petitioner was
responsible for the day-to-day affairs of the company. In the absence of any material, the 2nd respondent should not have come to the conclusion that the petitioner is the Principal Officer. The reasoning given by the 2nd respondent are without any materials to substantiate the same. Unless the 2 nd respondent make out a prima facie case against the petitioner of his liability and obligation as Principal Officer in the day-to- day affairs of the company as Chairman-
cum-director of the company, under section ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 16 of 21 278 B of the Income Tax Act, the petitioner could not be prosecuted for the offence committed by the company. In the absence of any material, the show cause notice itself, prima facie disclosing the responsibility of the petitioner for running of the day-to-day affairs of the company process, could not have been issued against him. The petitioner cannot be made to undergo the ordeal of a trial unless it could be prima facie disputed that he was legally liable for the failure of the company in paying the amount deducted to the credit of the company. Otherwise, it would be a travesty of justice to prosecute the petitioner and ask him to prove that the offence is committed without his knowledge. A mere allegation that the petitioner is incharge of the conduct of the company is not sufficient to hold that the petitioner is the Principal Officer. There should be credible material to show his active involvement in the conduct and management and business of the company"
25. Thus, even a chairman or director, because of such status alone, would not be liable for prosecution unless it is shown that he is connected with the management or ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 17 of 21 administration of the company or that he is in-charge of and responsible for, the conduct of the business of any such company. Here, accused no.2 is a non-executive director as per Ex. DW1/15. No material was annexed with the complaint to indicate that he was concerned with the management or administration of the company or that he was the person responsible for deduction and/or deposit of TDS. His such role was inferred because complainant and sanctioning authority assumed him to be involved in day-to-day financial affairs of the company. Thus, the very premise, on which prosecution has been launched qua him, is evidently erroneous and mistaken one. Though sec. 278E of Income Tax Act talks about presumption of culpable mental state but before invoking the same, prosecution is duty bound to prove the basic and foundational facts. Here, as already noticed above, foundation of the prosecution is faulty. There is nothing in the complaint or the documents annexed with the complaint which may even remotely suggest that accused no.2 was the person responsible for the day-to-day affairs of the accused company or was concerned with its management or administration.
26. 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-1/4 running from page no. 11 to 80, the accused no. 1 has committed default in timely deposit of TDS. It is noted that the delay in deposit of TDS is ranging from 6 to 14 months. The accused have not disputed ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 18 of 21 that there was delay in deposit of TDS amount. However, it is claimed that the delay was not deliberate due to acute financial crises, shortage of orders, non release of funds from vendors and other government departments.
27. 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.
28. 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 examined DW-1 who has brought on record the annual report of accused no.1 for the FY 2012-13 which is Ex.DW1/1. He was brought the details of contracts, cases filed audited financial statement, details outstanding amounts, details of credit facilities and reply filed before the assessing officer which are Ex. DW1/1 to Ex.DW1/12. I have gone through the same. I am satisfied that there was delay in deposit of TDS and accused no.1 has 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.
29. 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 ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 19 of 21 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. However the complainant has failed to bind accused no.2 as the person responsible for deduction and deposit of TDS as it neither produce the tax return, TRACES login or other material to show the liability of accused no.2 towards the default.
30. 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 no.1 M/s Brahmaputra Infrastructure Limited beyond reasonable doubt but the accused no.2 Sanjeev Kumar Prithani deserves benefit of doubt in view of the material lacunae in the complaint and the evidence led with respect to his vicarious liability in relation to accused no.1. Moreover, accused no.2 has demonstrated by affirmative evidence that offence was committed without his knowledge as he was not looking after the deduction and deposit of TDS in terms of proviso of section 278 B of the Income Tax Act.
31. Accordingly, accused no.1 M/s Brahmaputra Infrastructure Ltd. is held guilty and convicted for the offence u/s 276B r/w section 278 B of the Income Tax Act for deducting TDS for the financial year 2012-13 and not depositing the same in the Government account within prescribed period.
ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 20 of 21
32. Copy of the judgment be given free of cost.Digitally signed by
PAWAN PAWAN SINGH
SINGH RAJAWAT
Date: 2019.05.04
RAJAWAT 16:40:39 +0530
(PAWAN SINGH RAJAWAT)
ACMM(Special Acts) CENTRAL
TIS HAZARI COURTS DELHI
Announced in Open Court
on 03rdof May, 2019.
ITO vs M/s Brahmaputra Infrastructure Ltd. & Anr. CC No. 538694/16 21 of 21