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Delhi District Court

M/S Viraj Exports Pvt. Ltd vs Income Tax Office (Ito) on 12 March, 2018

                                 1 

        IN THE COURT OF SH.NARINDER KUMAR
             SPECIAL JUDGE­2:NDPS ACT
     (CENTRAL DISTRICT):TIS HAZARI COURT:DELHI

                                          Decided on: 12.03.2018


CA No. : 102/18 of 28.02.2018
         
M/s Viraj Exports Pvt. Ltd.,
7/8, Roop Nagar,
Delhi­ 110007
Also at:­
E­106, Nehru Vihar,
Delhi                                          .....Appellant

Versus

Income Tax Office (ITO)
Through
Sh. Narinder Juyal,
ITO Ward - 78 (3), 
Income Tax Department,
Laxmi Nagar, District Centre,
Delhi­110092                                   .....Respondent

                           JUDGMENT

Appellant  herein   has   been   facing   trial   before learned   Additional   Chief   Metropolitan   Magistrate   for   an offence under Section 276B read with Section 278B of Income Tax Act (hereinafter referred to as "the Act") on the accusation 2  that   after   deduction   of   Tax   Deducted   at   Source   for   the financial year 2010­2011, the said amount of Rs.20,21,653/­ was not deposited in  the  account of Government within the prescribed period.   Company M/s Viraj Exports Pvt. Ltd. was also held guilty for the offence under Section 276 B read with Section 278B of the Act vide judgment dated 10.01.2018.

2. On   the   point   of   sentence,   vide   order   dated 30.01.2018, Trial Court sentenced the company to pay fine of Rs.18,00,000/­. 

3. Learned   counsel   for   accused­appellant   company submits that amount deducted by way of "Tax Deduction at Source" by the said company could not be deposited within the stipulated period due to reasonable excuse and that the same was   deposited   afterward.     The   reasonable   excuse   was   that appellant company was under bad financial situation.

4. When court has inquired from learned counsel for accused ­appellant to find out any material to suggest that as to   by   which   date   company   suffered   losses   which   made   it unable   to   pay   to   the   credit   of   the   government.     Learned counsel   has   referred   to   balance   sheet   Ex   DW1/F   which   is 3  available in the schedule forming part of the accounts. 

On   the   other   hand,   learned   counsel   for complainant has referred to auditor's report dated 25.08.2012 wherein was specifically mentioned that the company had no accumulated loss and had not incurred cash loss in the current financial year and in the immediate preceding financial year. Faced with this report, learned counsel has submitted that the auditor's appears to have submitted this report in routine. 

5. In case this report was submitted by the submitted auditor was false and submitted in routine, accused company should have taken steps for its rectification.   It appears that no such steps were taken at any point of time. 

6. Learned   counsel   for   accused­appellant   has referred   to   provisions   of   Section   278AA   of   the   Act   and submitted that this is a case where there was reasonable cause on the part of the accused - appellant in non­payment of Tax Deduction at Source to the account of Central Government and as such impugned judgment of conviction deserves to be set aside.

Learned   counsel   submits   that   one   of   the companies,   liable   to   pay   about   Rs.12   crores   to   the   accused­ 4  appellant,   did   not   make   payment   of   dues,   was   declared insolvent.   In respect of his submission, learned counsel has referred   to   decision   in  Income   Tax   Officer   v.   Roshni   Cold Storage (P) Ltd. and Ors.  decided by Hon'ble Madras High Court on 20.07.1998.

It is true that where a defaulter in payment to the credit of the Central Government so far as Tax Deduction at Source   shows   some   reasonable   cause,   he   shall   not   be punishable for any failure referred to in Section 276B of the Act.  Herein appellant has not been able to establish that there was reasonable cause for such violation.

In   the   given   situation,   decision   in   Roshini   Cold Storage's   case   (supra),   cited   by   learned   counsel   for   the accused­appellant   does   not   come   to   the   aid   of   the   accused­ appellant. 

7. On   the   point   of   sentence,   learned   counsel   for accused­appellant submits that lenient view be  taken on the point of sentence as the company has been running into loss.

8. Keeping in view the amount of Tax Deducted at Source and period of delay in deposit thereof with the  Central Government,   court   does   not   find   any   ground   to   modify   the 5  impugned order on sentence, as regards amount of fine.

9. In   view  of   the   above   discussion,  Court  does  not find any merit in the appeal.  Same is hereby dismissed.

10. Trial Court Record be returned.  Appeal file be consigned to Record Room.

Announced in the open Court                      by NARINDER
                                                 KUMAR
                                      NARINDER
on 12th day of March, 2018            KUMAR      Date:
                                                 2018.03.14
                                                 12:42:52
                                                 +0530

                                (NARINDER KUMAR)
                     SPECIAL JUDGE, NDPS - 02 (CENTRAL)
                            TIS HAZARI COURTS, DELHI