Delhi District Court
B. L. Kashyap & Sons Ltd vs Income Tax Office (Ito) on 23 April, 2018
1
IN THE COURT OF SH.NARINDER KUMAR
SPECIAL JUDGE2:NDPS ACT
(CENTRAL DISTRICT):TIS HAZARI COURT:DELHI
Decided on: 23.04.2018
CR No. : 240/18 of 03.04.2018
1. B. L. Kashyap & Sons Ltd.
Through DK Sharma
R/o 409, 4th Floor,
DLF TowerA,
Jasola, New Delhi.
2. Vineet Kashyap
S/o Late Sh. Bihari Lal Kashyap
R/o 223, Sukhdev Vihar,
New Delhi.
..Petitioners
Versus
Income Tax Office (ITO)
Through
ACIT Cir73(1)
Income Tax Department, Laxmi Nagar
District Centre,Delhi110092
.....Respondent
2
JUDGMENT
Petitioners herein are accused before learned Trial CourtAdditional Chief Metropolitan Magistrate in complaint case No.511807/16. Vide impugned order dated 11.12.2017, Learned Addl. Chief Metropolitan Magistrate has been of the view that there is sufficient material on record to frame charge against both of them, having contravened with under Section 276B of Income Tax Act read with section 278B of Income Tax Act (hereinafter referred to as "the Act").
Charge was actually framed on 15.01.2018. Framing of the charge has also been challenged by filing present petition.
2. In brief, the accusation levelled by the complainantrespondent herein against the two petitioners is that they failed to deposit with the Government, amount to the tune of Rs.13,43,06,629/ deducted by way of TDS, for the financial year 2012 3 13 within the prescribed period.
3. In the impugned order dated 11.12.2017, Learned Trial court has referred to provisions of Section 192 and Section 207 of the Act as well as Income Tax Rules, 1962, and then observed that accusedpetitioners did not deposit TDS in the government account within the prescribed period of one week from the date of deduction.
Learned Trial court has also referred to settled legal proposition as to the factors to be taken into consideration at the time of framing of charge. Learned Trial Court has rejected the contention raised by Learned Counsel for the petitioners that this is a case where malicious prosecution has been lodged even though the petitioners showed that they had reasonable cause in nondeposit of TDS within the prescribed period .
In the impugned order dated 11.12.2017, Learned Trial Court, while making reference to provisions of Section 278 E of the Act observed that 4 bonafide of such a defaulter or ignorance regarding nondeposit of TDS cannot be decided at the time of framing of charge, the reason being that it is only after trial that it can be decided if there was any bonafide reason for nondeposit of TDS within stipulated period.
While referring to the statement of CW1 recorded in cross examination, that prosecution for the offence u/s 276B was based on system generated report, which is different from Survey Report, Learned Trial Court took into consideration the testimony of CW1 that before sending the proposal for sanction, he had examined all documents including Ex.CW1/DA to DD.
4. Ld. Counsel for petitioners submitted that as per provisions of Section 278 AA of the Act notwithstanding anything contained in the provisions of Section 276A, 276B or Section 276B, no person is liable to be punished for any failure referred to in these provisions, if he proves that there was 5 reasonable cause for such failure and that in view of the material submitted by the petitioner company to the competent authority, it can safely be said that this is a case where the petitioners have reasonable cause for nondeposit of TDS for the financial year 201213.
The contention is that in this situation, no sanction could be granted by the Commissioner of Income Tax for prosecution for an offence u/s 276B read with Section 278B of the Act.
Further, it has been submitted that while according sanction Ex.CW1/2, Commissioner of Income Tax did not take into account two notices dated 30.12.2013 and 20.02.2015 and reply dated 15.01.2014, 10.4.15, 07.01.16 and 29.01.16 and as such Learned Trial Court should have passed order of discharge of petitioners, instead of framing of charge against them.
Court does not find any merit in the contention raised by Learned Counsel for the petitioners that this is a case where Commissioner of 6 Income Tax accorded sanction without application of mind.
In support of his submission Ld. Counsel has referred to decisions in :
1. Greatway (P) Ltd. And Ors. Vs. Assistant Commissioner of Income Tax, (1993) 76 Comp Cas 259 (P&H);
2. Sonali Autos Private Limited Vs. The State of Bihar and Ors., (2017) 298 CTR (Pat) 91;
3. Income Tax Officer Ward C, Bhanbad Vs. M/s Taurus Equipments (P) Ltd. Jharia and Others, 1978 SCC OnLine Pat 196;
4. M/s Banwarilal Satyanarain and Others Vs. The State of Bihar and another 1989, SCC OnLine Pat 137;
5. Ashutosh Verma Vs. CBI, 2014 SCC OnLine DEL 6931;
6. S.G.Kale Vs. Union of India, 2001 SCC OnLine Raj 497;
7. Sri B.S.Yeddyurappa Vs. The Principal 7 Secretary to His Excellency the Governor of Karnataka, 2015 SCC OnLine KAR 5567;
8. Income Tax Officer Vs. Roshni Cold Storage (P.) Ltd., MANU/TN/1501/1998;
9. Sequoia Construction Co. P.Ltd. and Others Vs. P.P.Suri, ITO, Central Circle XX, New Delhi, MANU/DE/0549/1984.
5. On the other hand, Learned Counsel for complainantrespondent has rightly submitted that initially proceedings are conducted by the Assessing Officer u/s 2(35) of the Act and subsequently matter is referred to the Commissioner of Income Tax for the purpose of launching of prosecution and that in this case, initially two notices dated 30.12.13 and 20.02.15 were issued by the Assessing Officer for the purpose of Section 2(35) of the Act, and not for the purpose of launching of prosecution.
Further, it has rightly been submitted that while granting sanction, Commissioner of Income Tax takes into consideration the material collected, reply 8 by the opposite party to the notice issued by the Commissioner of Income Tax, to find out if sanction is or is not to be granted.
Ld. Counsel rightly submitted that in this case, from Sanction Ex.CW1/2, it can safely be said that notice dated 4/8.3.16 was issued by Commissioner of Income Tax and in response thereto, the petitioner submitted reply dated 29.03.16 and further that after considering all the facts put forth before Commissioner of Income Tax, sanction Ex.CW1/2 was legally granted.
Undisputedly, show cause notice dated 4/8.3.15 was the notice issued by the Commissioner of Income Tax on the basis of record made available to him. In response, petitioner submitted reply dated 29.03.2016. With this reply, various Annexures were submitted. Commissioner of Income Tax went through and considered material put forth in the reply and the Annexures. This sanction order begins with the sentence reports generated from ITDC system perused 9 by the Commissioner of Income Tax. On examining all this, the Commissioner of Income Tax found that payment of TDS was not made within the time limit prescribed u/s 200 (1) of the Act, which violation attracted provisions of Section 276B of the Act. Having so satisfied the Commissioner of Income Tax granted sanction for prosecution of the company and Sh. Vinit Kashyap, the Officer managing the business activities of the company.
In S.G. Kaley's case (Supra), Hon'ble Court observed that absence of reasonable cause or excuse on the part of the assessee became an essential ingredient of the offence and further that, if material available on record about sufficient and reasonable cause was already on record, the same became integral part to be considered before sanction could have been issued.
This decision is not applicable to the facts of the present case as herein the Commissioner of Income Tax prima facie considered the entire material 10 put up on behalf of the petitioners in reply to the notices and only thereafter, granted the sanction on his satisfaction regarding violation of the requisite provision of law.
For the same reason, decision in B.S.Yeddyurappa vs. The Principal Secretary to His Excellency the Governor of Karnataka's case (supra) does not come to the aid of accusedpetitioners at this stage.
In the circumstances, it cannot be said that there was no sufficient material with the Commissioner of Income Tax to sanction prosecution.
6. As regards reasonable cause for failure referred to in Section 278 AA, as rightly pointed out by Ld. Counsel for complainant, as per provisions of Section 276E now accused/petitioner, would get an opportunity to prove their defence at the appropriate time.
In Sequoia Construction Co. P.Ltd. and Others case, the Commissioner of Income Tax found 11 that there was sufficient good cause with the assessee not to deposit TDS. This case is distinguishable on facts.
Roshni Cold Storage's case (Supra) also does not come to the aid of the accusedpetitioners as that was the decision rendered after trial/leading of the evidence by the parties.
7. A perusal of the complaint filed by the complainant would reveal that the complainant specifically alleged the violation on the part of the petitioners, giving all the necessary facts, and as such court does not find any merit in the contention raised by Learned Counsel for petitioners that requisite facts were not pleaded in the complaint.
In Ashutosh Verma's case, the point of suppression of documents by the prosecution by withholding of vital evidence from court came up for consideration. The decision does not come to the aid of the accusedpetitioner.
Decision in Greatway's case is not 12 applicable as that was a case relating to Assessment Year 197879 to 198283, whereas Section 276B was amended in September 1986.
In Sonali Autos case, the reasonable cause was over sight on the part of the accountant in not depositing the requisite amount. Present case is not a case of over sight.
In M/s Taurus Equipments case, there was no allegation in the complaint or any evidence on record if the respondents had acted without any reasonable cause or excuse. In present case, Commissioner of Income Tax observed that the company defaulted with deliberate intention of using government money for its own purpose and malafide on its part was there beyond reasonable doubt. Therefore, decision in M/s Taurus Equipments case does not come to the aid of the accused.
In M/s Banwari Lal's case,it was observed if the prosecution itself failed to prove that failure was without any reasonable cause or excuse, there could 13 have been no occasion for the accused to prove that there was reasonable cause for such failure. In present case, with the framing of the charge, the prosecution shall firstly lead evidence to prove its case about failure / violation on the part of petitioners and only thereafter accused shall get an opportunity to prove that there was a "reasonable cause" for such failure. Therefore, decision in Banwari Lal's case also does not come to the aid of the accused.
8. In view of the above discussion, court does not find any illegality or infirmity in the impugned order or in framing of the charge against two petitioners. As a result, revision petition is dismissed.
Parties to appear before Learned Trial Court on 04.05.2018.
9. Trial Court Record be returned. File of revision petition be consigned to Record Room.
Announced in the open Court Digitally signed
by NARINDER
on 23rd day of April, 2018 NARINDER
KUMAR
KUMAR
Date:
2018.04.26
16:42:09 +0530
(NARINDER KUMAR)
SPECIAL JUDGE, NDPS - 02 (CENTRAL)
TIS HAZARI COURTS, DELHI