Bangalore District Court
The Deputy Commissioner Of Income Tax vs M/S.Hidusthan Infracon Pvt on 15 April, 2019
1 CC.No.96/2016
BEFORE THE SPECIAL COURT FOR ECONOMIC
OFFENCES: AT BANGALORE.
Dated this the 15th day of April 2019.
: Present:
Sri. SHANTHANNA ALVA M., B.A., LL.B.,
Presiding Officer, Special Court
for Economic Offences, Bangalore.
CC. No. 96-2016
Complainant: The Deputy Commissioner of Income Tax,
Income Tax Department, TDS Circle-1(1),
HMT Bhavan, Bangalore - 560022.
(By Sri. J.J.N. Advocate)
. Vs.
Accused: 1.M/s.Hidusthan Infracon Pvt., Ltd.,
826/A, 2nd Floor, 5th Main, Vijayanagar,
Bangalore - 560 040.
(Company registered under Companies Act,
Rep. by its Director - V.N.Lakshminarayana
2.V.N.Lakshminarayana, Director,
55 Years, M/s. Hidusthan Infracon Pvt.,
Ltd., 826/A, 2nd Floor, 5th Main,
Vijayanagar, Bangalore - 560 040.
(By A.1 & 2 Sri. S.S.H., Advocate)
JUDGMENT
1. The complainant/ Deputy Commissioner of Income Tax, Income Tax Department, TDS Cirlce-1(1), H.M.T. Bhavan, Bangalore, on the strength of sanction order dated: 25.02.2016 accorded by the Commissioner of 2 CC.No.96/2016 Income Tax (TDS), Bangalore u/s.279 of the Income Tax Act, 1961 (Herein after referred as the 'Act'), filed the complaint under Sec. 200 of Cr.P.C. alleging that accused No.1 committed the offence punishable u/s.276B of the Act and accused No.2 being the Director and Prl. Officer, he is vicariously liable for the offence committed by accused No.1
2. The complainant's case in brief is that the accused No.1 is the company i.e., M/s. Hindusthan Infracon Pvt., Ltd., Bangalore, engaged in the business of Real Estate. Accused No.2 is the Director of accused No.1 company and he has been treated as Principle Officer of accused No.1 vide notice dated:28.10.2014 issued u/s.2(35) of the Act. Accused No.1 company for the Financial Year 2013- 14 deducted the tax at source on various payments made by it such as rent, commission and salary, but failed to remit the tax deducted at source to the Central Government Account within stipulated period of time as contemplated under Rule. 30 of the Income Tax Rules. The complainant conducted the survey u/s. 133A of the Act in the premises of accused No.1 on 04.03.2014 and it 3 CC.No.96/2016 revealed that accused No.1 deducted the TDS amount of Rs.19,50,000/-. After survey, the Assessing Officer issued the show cause notice dated:20.03.2015 calling upon the accused to show cause as to why they should not be treated as an assessee in default u/s.201(1) of the Act. Accused issued the reply on 27.03.2015. Then, the Assessing Officer passed an order u/s.201(1) of the Act, by treating the accused No.1 company as an assessee in default for non-remittance of TDS of Rs.19,50,000/- for the Financial Year 2013-14. Accused had not remitted the TDS amount, hence the Commissioner of Income Tax (TDS) issued a show cause notice dated: 30.07.2014 to the accused calling upon to show cause as to why they should not be prosecuted for the offence punishable u/s.276B R/w.Sec.278 of the Act. Accused No.2 not replied to the notice and then, the Commissioner of Income Tax (TDS) after giving sufficient opportunity to the accused passed the order u/s.279 of the Act authorizing the complainant to prosecute the accused for the offence. 4 CC.No.96/2016
3. On presentation of the complaint, cognizance was taken and the case registered against accused No.1 and 2 for the offence punishable u/s. 276B, R/w.Sec.278B of the Act.
4. In response to the summons, the accused No.2 on his behalf and also on behalf of accused No.1 appeared through his counsel and enlarged on bail. Copies of the complaint and other documents were furnished to him. Thereafter, the evidence before charge was recorded as required u/s.244 of the Cr.P.C. and then on hearing the learned counsels of the complainant and accused, the charge was framed against accused No.2 on his behalf and also on behalf of accused No.1 for the offence punishable u/s. 276B, R/w. Sec.278B of the Act and read over to him. The accused No.2 pleaded not guilty for himself and also on behalf of accused No.1 and claimed to be tried.
5. To prove the charge leveled against the accused No.1 and 2, the complainant examined 2 witnesses as P.w.1 and 2 and got marked the documents Ex.p.1 to 10.
6. After closure of complainant's side evidence, the statement of accused No.2 on his behalf and also on behalf of accused No.1 were recorded as provided u/s. 313 of 5 CC.No.96/2016 Cr.P.C. The accused No.2 denied incriminatory evidence found against him and accused No.1. The accused not chosen to lead either oral or documentary evidence.
7. Heard the arguments of the learned counsels of the complainant and accused. Perused the complaint and the evidence on record. The points that arise for my consideration are:
Point No.1: Whether the complainant has proved that the accused No.1 company has deducted the tax at source amounting to Rs.19,50,000/- for the Financial Year 2013- 14, but failed to credit the same to the Central Government Account within the prescribed time and thereby committed the offence punishable u/s. 276B of the Act?
Point No.2: Whether the complainant has proved that the accused No.2 was in charge of and responsible for the conduct of the business of the accused No.1 Company during the relevant period, hence he is liable for the punishment for the offence punishable u/s.276B as provided u/s.278B of the Act?
Point No. 3: What order?
8. My findings on the above said points are as under:
Point No.1: In the Negative, Point No.2: In the Negative, Point No.3: As per the Final orders for the following:6 CC.No.96/2016
REASONS
9. Point No.1: The complainant come up with the case that accused No.1 company for the financial year 2013-14 deducted the tax at source amounting to Rs.19,50,000/-, but not deposited the deducted TDS within the time stipulated under Rule.30 of the Income Tax Rules. Accused No.1 denied the allegation and taken up the contention that deducted TDS was paid much earlier to the survey. In the complaint, it is stated that even after passing of order u/s.201 (1) of the Act, accused No.1 not remitted the deducted TDS. The complainant examined as P.w.1, in the cross examination stated that he does not know about the remittance of deducted TDS prior to the survey. P.w.1 further stated that it is not possible to say the TDS deducted on each head. P.w.1 also stated that he is not aware of the number of days delay in remitting the deducted TDS.
10. The Deputy Commissioner of Income Tax (TDS), Circle-16(2), Bangalore before examined as P.w.2- deposed that he conducted the survey in the premises and found that accused No.1 deducted the TDS, but not 7 CC.No.96/2016 remitted the same to the Government Account. Ex.p.4 is the preliminary survey report and wherein, it is stated that amount of Rs.19.5 laksh was deducted, but has not been remitted. The complainant not produced the TDS statement or any other documents to substantiate the non-remittance of the TDS. Ex.p.7 is the reply given by the accused No.1, wherein, accused No.1 asserted that the details for having permitted the deducted TDS is already furnished and that has been acknowledged on 12.11.2014. The complainant not produced the final survey report.
11. In the complaint, it is stated that accused No.1 was treated as assessee in default and then order u/s.201 (1) of the Act was passed. The complainant not produced the order said to be passed u/s.201 (1) of the Act. The charge under criminal proceedings has to be proved by producing the reliable evidence. Only on the basis of preliminary survey report and oral evidence of the officials, it cannot be held that the deducted TDS was not remitted within time. In the complaint, it is stated that even at the time of filing the complaint, the deducted TDS was 8 CC.No.96/2016 not remitted, but P.w.2, in his evidence stated that before issuing the show cause notice, the deducted TDS was remitted.
12. The complainant not produced the documents for having served the show cause notice. In the sanction order, it is stated that the record disclosed that deducted TDS was not remitted within stipulated time, but it is not stated that what are the other records made available. In the sanction, it is not stated that deducted TDS was remitted. This substantiates the argument of the Ld. Counsel of the accused that the sanctioning authority not applied its mind while according sanction. The complainant failed to produce reliable evidence to substantiate the charge that accused No.1 not remitted the TDS within stipulated period under Rule. 30 of the Income Tax Rules, after deduction the TDS. Accordingly, this point is answered in negative.
13. Point No.2: In the discussion made supra, it has been held that the complainant failed to prove that accused No.1 not remitted the deducted TDS within stipulated period. This being the case, holding that 9 CC.No.96/2016 accused No.2 vicariously liable for the offence punishable u/s.276B of the Act not arises. Even otherwise, there is no evidence to the effect that accused No.2 was in charge of deduction of TDS.
14. In the complaint, it is stated that accused No.2 is the Director and by issuing the notice u/s.2 (35) of the Act, he has been treated as Prl. Officer of accused No.1 company, hence he is vicariously liable for the offence committed by accused No.1. Only for the reason that accused No.2 is the Director of accused No.1 Company, he cannot be treated as Prl. Officer of accused No.1 company. It is argued that accused No.2 not replied to the notice issued u/s.2 (35) of the Act or show cause notices. The complainant not produced the evidence to show that the notices were actually served upon the accused No.2. This being the case, the assertion of the complainant that for non-replying the notice, adverse inference has to be drawn is not acceptable.
15. The burden of proving that accused No.2 is responsible for the day today affairs of accused No.1 Company and in charge of deduction of TDS. There is no 10 CC.No.96/2016 evidence in this regard. Thus, even if, it is held that accused No.1 committed the offence punishable u/s.276B of the Act, accused No.2 cannot be vicariously made liable for the offence committed by accused No.1. Accordingly, this point is answered in negative.
16. Point No.3: In view of my findings on points No.1 and 2, I proceed to pass the following:-
ORDER By exercising the power conferred u/s. 248 (1) of Cr.P.C. the accused No.1 and 2 are acquitted from the charge of offence punishable u/s. 276B of the Income Tax Act, 1961.
Bail bond of accused No.2 stand cancelled. (Dictated to the Stenographer, directly on computer, typed by her corrected and then th pronounced by me, in open court on this the 15 day of April - 2019.) PRESIDING OFFICER.11 CC.No.96/2016
ANNEXURE:
ON BEHALF OF THE COMPLAINANT: Witnesses:-
P.w.01 - O.M.Hariprasad Rao, P.w.02 - K.R.Narayana.
Documents:-
Ex.p.01 - Original Sanction, Ex.p.02 - C/c of Notice dated:28.10.2014, Ex.p.03 - C/c of Notice dated:28.10.2014, Ex.p.04 - C/c of Preliminary Survey Report, dated: 04.03.2014, Ex.p.05 - C/c of Show cause notice dated: 20.03.2015, Ex.p.06 - C/c of Notice dated:26.02.2015, Ex.p.07 - C/c of Reply dated:27.03.2015, Ex.p.08 - Copy of Show Cause Notice dated: 30.07.2014, Ex.p.09 - Copy of Show Cause Notice dated: 30.07.2014, Ex.p.10 - C/c of Postal Acknowledgement.
MATERIAL OBJECTS:- Nil.
ON BEHALF OF THE ACCUSED: Witnesses and Documents:- Nil (SHANTHANNA ALVA M.) PRESIDING OFFICER, SPL. COURT FOR ECONOMIC OFFENCES, BANGALORE.12 CC.No.96/2016