Punjab-Haryana High Court
Bee Gee Motors And Tractors And Anr. vs Income-Tax Officer on 29 March, 1995
Equivalent citations: [1996]218ITR155(P&H)
JUDGMENT V.K. Bali, J.
1. By this order two connected Criminal Miscellaneous Petitions Nos. 16346-M of 1993 and 16349-M of 1993 are being disposed of as common questions of law and facts are involved in both the cases.
2. The facts have, however, been culled out from Criminal Miscellaneous No. 16346-M of 1993 (Bee Gee Motors and Tractors v. ITO). The Income-tax Officer of Ward-3, Bathinda, instituted a complaint (annexure 'P-2') against Messrs. Bee Gee Motors and Tractors under Section 276B read with Section 194A/200 of the Income-tax Act, 1961, and Rule 30 made thereunder read with Section 278B of the Income-tax Act, 1961 (hereainafter referred to as "the Act"). The core of allegations made in the complaint are that the petitioners did not deduct the income-tax at source for the years 1982-83 and 1983-84, thus making themselves liable for punishment under Section 276B of the Act. It is, however, not disputed that the petitioners later did deduct the required tax on February 20, 1985, and deposited the same on the same date. It is also not disputed that by the time tax was deducted and deposited as referred above, no prosecution had so far been launched against the petitioners. In fact, the complaint aforesaid came to be filed by the Income-tax Officer on January 31, 1991, i.e., after a period of about eight years from the date of default. In so far as defaults for the years 1983-84 are concerned, it is again the conceded position that the deductions were made on February 19, 1988, and the tax was deposited in the same year and the prosecution came to be launched later in point of time.
3. Mr. Mittal, learned counsel appearing, for the petitioners, vehemently contends that in view of the instructions (annexure 'P-3') issued by the Government of India, Ministry of Finance, Central Board of Direct Taxes, dated May 28, 1980, the prosecution under Section 276B should not normally be proposed when the amount involved and/or the period of default, is not substantial and the amount in default has also been deposited in the meantime to the credit of the Government. He contends that these instructions are binding and in view thereof, the petitioners are entitled to acquittal and that being so, it shall be an exercise in futility to carry on with the trial, the conclusion and result whereof is obvious.
4. Mr. Sawhney, learned senior standing counsel for the Department, has, however, joined issue with the petitioners' counsel and contends that the instructions in question cannot possibly replace the provisions of the statute and once the relevant provisions of the statute provide punishment, the Departmental instructions have to give way. He further contends that it is in the discretion of the officer concerned depending upon the facts and circumstances of each case whether the prosecution should be launched or not.
5. Before any comments on the merits of the points canvassed by learned counsel for the petitioners are made, it shall be useful to see the relevant instructions. The same read thus :
"The prosecution under Section 276B should not normally be proposed when the amount involved and/or the period of default is not substantial and the amount in default has also been deposited in the meantime to the credit of the Government. No such consideration will, of course, apply to levy of interest under Section 201(1A)."
6. The words "not normally" precede the words "be proposed when the amount involved and/or the period or default is not substantial and the amount has also been deposited in the meantime to the credit of the Government". It is true that the word "normally" does not mean that it is necessary or incumbent upon the authorities concerned so as not to launch proceedings under Section 276B but when the conditions for exempting the assessee from prosecution as spelled out in the instructions are available, in the considered view of this court it will not be open for the authorities then also to have discretion in the matter as otherwise, the authorities concerned may exempt an assessee from prosecution in one set of circumstances and to prosecute another assessee in the same or identical facts. That would undoubtedly be violative of Article 14 of the Constitution of India. The argument of Mr. Sawhney with regard to discretion of the officer concerned can be accepted only to the extent that as to what facts constitute the discretion for launching the prosecution and what facts would entail exemption from prosecution shall always depend upon the facts of each case with regard to the amount involved or the period of default. That is always in the discretion of the authorities concerned which, of course, again is to be used in a judicious manner. In so far as the first contention of Mr. Sawhney that it is the provisions of the statute which shall have precedence and not the instructions is concerned, suffice it to say that the court does not find any inconsistency or contradiction in the relevant provisions of the statute and the instructions quoted above. The relevant provision of the statute no doubt talks of prosecution but the instructions in the considered view of the court provide an exception in limited matters and that too where the conditions precedent in the instructions are available or in existence. Mr. Sawhney relied upon Jagmohan Singh v. ITO [1992] 196 ITR 473 (P & H); Madura Chit and Investments Pvt. Ltd. v. ITO [1994] 208 ITR 228 (Mad) and Kerala Financial Corporation v. CIT [1994] 210 ITR 129 (SC). These judgments are for the proposition that where there is conflict between the provisions of the statute and the rules or the rules and the instructions, it is provisions of the statute and the rules that would prevail and not the instructions. There cannot be any quarrel with the proposition as enunciated in the aforementioned judgments. It is no doubt true that the assessee is liable for punishment if he makes a default in deposit of tax. As mentioned above, the instructions deal with the situation in which the Department in its discretion may not launch the prosecution.
7. Having held that even on the lads and circumstances of this case, it is the discretion of the authorities to apply the instructions quoted above this court would have normally sent this case to the authorities concerned for consideration but the fact that a very insignificant amount of Rs. 9,428 in one case and an even lesser amount in another case is involved as also that the prosecution came to be launched after a number of years when the default was committed or even from the date when the tax was deposited as also that the matter is pending since 1993 in this court only it will serve no useful purpose in remitting the case to the authorities concerned.
10. These petitions arc, thus, allowed and the complaint against the petitioners in each case is quashed.