Delhi District Court
Ito vs Ms Vasari India Pvt Ltd on 21 April, 2025
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IN THE COURT OF MAYANK MITTAL
ADDL. CHIEF JUDICIAL MAGISTRATE (Spl. Acts)
CENTRAL, TIS HAZARI COURTS, DELHI
CC No. : 521470/2016
CNR No. : DLCT02-003564-2014
Date of Institution : 11.07.2014
Name of the complainant : Income Tax Office
its registered office Through Sh. Raj Kumar
ITO, Ward - 51 (3), Laxmi Nagar,
Delhi.
Name of accused : 1. M/s Vasari India Private Limited
26 Peeli Kothi, Khanpur, New
Delhi-110062
2. Sh. Bhagwan Dass Mohani,
Director,
B-19, East of Kailash, New Delhi
(Proceeding abated vide order
dated 09.01.2019)
Offence complained of : U/s. 276B & 279(1) r/w section
278E of The Income Tax Act, 1961.
Date of Judgment : 21.04.2025
Plea of accused : Pleaded not guilty
Final Judgment : Convicted
Brief facts and reasons for decision of the case:-
1 The present complaint u/s 276B/279(1) read with Section 278E of
the Income Tax Act for the F. Y. 2009-10 has been filed by the
complainant who was Income Tax Officer, Ward-51(3) and incharge
of TDS Assessment of M/s Vasari India Private Limited at the
relevant point of time, under the Income Tax Laws, in discharge of
official duties as per the Sanction / Authorization accorded u/s
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279(1) of the Income Tax Act by Sh. Jayant Diddi, Commissioner of
Income Tax, TDS-II, Delhi directing the present assessing officer
Ward-51 (3) to file the present complaint.
2 That on the basis of the report generated from the ITD system, it is
revealed that the accused had deducted tax at source under various
sections of TDS amounting to Rs.20,73,744/- during the relevant
financial year to be deposited into the government account within
the stipulated period i.e. on or before seven days from the end of the
month in which the deduction is made as per the provisions of
Income Tax Act r/w Rule 30 of the Income Tax Rules. That a show
cause notice for F. Y. 2010-11 u/s 2 (35) of the Income Tax Act was
issued to Accused No.2, dated 21.03.2014 of the intention of
treating him as Principle officer of M/s M/s Vasari India Private
Limited for the relevant financial year. In response to the show
cause notice, however, no reply to notice under Section 2(35) of the
Income Tax Act was filed on behalf of accused. After perusing the
records and the show cause notice u/s 2(35) of the Income Tax Act,
an order u/s 2(35) of the Income Tax Act dated 31.03.2014 was
passed holding Sh. Bhagwan Dass Mohani, Director, as Principal
Officer for the relevant financial year as he was connected with
management / administration of the deductor company i.e. accused
No.1 and thus, was the person responsible and incharge of day to
day affairs of the company. That a proposal dated 01/04.03.2014 for
launching of prosecution was referred to the Commissioner of
Income Tax (TDS-II), New Delhi. Thereafter, sanction u/s 279(1)
of the IT Act dated 12.05.2014 was issued/granted. That the tax
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deducted at source by the deductor from the deductee's account was
the trust money with them and they were the custodian of the said
amount for and on behalf of Govt. of India. The accused has thus
committed the offence punishable u/s 276B r/w 278B/278E of the
Income Tax Act.
3 Vide summoning order dated 11.07.2014 the accused were
summoned. Upon appearance, copy of complaint and supporting
documents were supplied to the accused persons.
4 Prior to delving into the contentions advanced on behalf of the
parties, let us briefly discuss the testimonies of witnesses examined
in complainant's evidence:-
4.1 CW-1 Sh. Raj Kumar, ITO deposed that he was posted as
ITO, Ward 51(3), Income Tax Department. That during posting
he had jurisdiction on the case of M/s Vasari India Pvt. Ltd. and
had filed a complaint against M/s Vasari India Pvt. Ltd. and its
director Sh. Bhagwan Dass Mohnani for the financial year 2010-
11 U/s 276-B & 279(1) r/w 278-B of the IT Act. That complaint
Ex. CW 1/1 was signed by CW-1 at point A. The said complaint
was filed by CW-1 in discharge of his official duties after
accorded sanction order U/s 279(1) dated 12.05.2014 Ex. CW
1/2 from his then commissioner of Income Tax Mr. Jayant
Diddi, CIT(TDS)-02 and identified his signature at point A as he
had seen him writing and signing in his official capacity being
worked with him. That CW- 1 had issued a show cause notice
U/s 2(35) of I.T. Act dated 21.03.2014 Ex. CW 1/3 to the
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accused and also exhibited the copy of dispatch register showing
the entry No. 15 dated 22.03.14 CW-1/4. That he had sent the
proposal dated 01-04/03/14 Ex. CW 1/5 to the CIT(TDS)-02 for
according necessary sanction for launching prosecution against
the accused. That an order u/s 2(35) dated 31.03.14 Ex. CW 1/6
against accused No. 2 director of accused No.1/company as
principal officer for the relevant financial year was passed by
CW-1. and same was personally served to accused Bhagwan
Dass Mohanani and in support of service of order under Section
2(35) of the Indian Evidence Act exhibited the dispatch register
showing the entry No.13 dated 02.04.14 Ex. CW-1/7. That on
verification, it transpired that the accused company through its
Director/Principal officer i.e. accused No. 2 had deducted an
amount of Rs.20,73,744/- Tax at source but had not deposited the
same to the Government account within the stipulated period as
per the provisions of the IT Act r/w Rule 30 of the Income Tax
Rules and had used the said money for the business/personal
purposes, which was a trust money with the accused persons.
That by not deposited the same to the government account
within stipulated time, accused No.1 and accused No. 2 have
committed offence punishable U/s 276-B & 279(1) r/w 278-B of
the I.T. Act.
4.1.1During his cross examination it is stated by CW-1 that he was not aware whether the OL has a requisite access to the documents/records pertaining to accused No.1 with respect to F.Y. 2009-10. It is admitted by witness that OL is not personally liable for the said offence with respect to the CC No. 52147/2016 5 of 11 default alleged in the complaint. However, voluntarily stated that the company as it was then being run by now deceased Director No.2 was responsible for the said offence and prior to filing the complaint an order under Section 2(35) Ex. CW 1/6 of the Income Tax Act was duly passed and accordingly CW-1 had forwarded the prosecution proposal against the accused company and its then Director responsible for the affairs of the company after holding him as Principal Officer. It is admitted by CW-1 that there was no occasion for the OL to respond to or be served with notice under Section 279(1) or 2(35) of The Income Tax Act for the alleged offences / prosecution. However, voluntarily stated that at the relevant time the company was not in liquidation neither any such submission was brought to my notice by the assessee / its Director. It is denied by CW1 that the company has not defaulted in the matter of deduction and deposit of TDS during F.Y. 2009-10 and F.Y. 2010-11 and further voluntarily stated that the company through its then accused Director has committed the statutory default and its then Director being responsible for the affairs of the company during the relevant period rendered themselves to be punished for the offence under Section 276B of The Income Tax Act. It is further denied by witness that he deposed falsely.
(4.1.1.i ) In pursuance to order dated 26.10.2024 CW-1 recalled for further examination : - CW-1 deposed that inadvertently a wrong TRACES report was filed before this court showing mismatched figures as per the complaint . The CC No. 52147/2016 6 of 11 department had filed an application to place on record the correct TRACES report and exhibited same Ex. CW 1/8 and also filed a certificate under Section 65B of the Indian Evidence Act in support of TRACES Report Ex. CW 1/9. (4.1.1.ii ) During cross examination CW-1 stated that he had joined the Income Tax Department in the year 1988 and retired on 30.06.2023. That CW-1 is the complainant in the present case and aware about the facts of the case. That at the time of filing of complaint, he was not aware, if a liquidator was appointed by hon'ble High. That no response was filed by the accused persons. It is admitted by witness that accused No.2 was Incharge of day to day operations of accused No.1 company prior to the accused No.1 company going into liquidation. It is admitted that the allegations / defaults mentioned in the complaint are prior to the company going into liquidation. That CW-1 was not aware about the details of the liquidator at the time of filing the complaint since no reply was filed by any of the accused persons. That he had no knowledge about the liquidation proceedings, hence, he did not issue any notice to the liquidator. It is denied by CW-1 that he stated falsely that he was not aware about the liquidation proceedings at the time of filing of present complaint. That accused persons did not fulfill his obligation to reply to the notices issued by the Income Tax Department.
5 Upon conclusion of CE, statement of AR of accused No.1 company u/s 313 Cr.P.C recorded on 03.08.2024 and 20.03.2025 (on re-examination of CW-1) and AR of OL of accused No.1 company has denied to lead defence evidence.
6 CC No. 52147/20167 of 11 7 Before proceeding with dealing with the facts of this case and submissions advanced by the learned counsel for each side, it is important to refer to the relevant provisions of the Act.
Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B. 276B. If a person fails to pay to the credit of the Central Government,--
(a) the tax deducted at source by him as required by or under the provisions of Chapter XVII-B; or
(b) the tax payable by him, as required by or under--
(i) sub-section (2) of section-115-O; or
(ii) 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.
278E. Presumption as to culpable mental state.-(1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
(2) For the purposes of this section, a fact is said to be proved only when the court believes it to exist beyond reasonable doubt and not merely when its existence is establish by a preponderance of probability."] 2(35) of Income Tax Act - "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 -
(a) the secretary, treasurer, manager or agent of the authority, company, association or body, or
(b) 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:
8 During arguments, it is submitted by Ld. SPP that present complaint was filed against the accused no. 1 company (which is now in liquidation) and its Principal Officer i.e. accused no. 2 (who has expired and proceedings against him has been abated) for non- deposition of TDS within time as per rules of Income Tax Act for financial year 2009-2010. It is submitted that there is no dispute with regard to delay in payment of TDS for the relevant year. It is CC No. 52147/2016 8 of 11 further submitted that complainant's witnesses have proved all the required documents in the post-charge evidence so as to prove the guilt of accused beyond reasonable doubt and nothing could come in their cross-examination to dilute the case of complainant.
9 Ld. Additional Standing Counsel for OL of accused no.1 has vehemently opposed the case of the complainant on two counts. Firstly, it is submitted that before filing the present complaint or initiating proceedings against accused no.1, the complainant has not obtained the permission/ leave of the Company Court in compliance of Section 446 of Companies Act, 1956, which was necessary to be obtained as on 24.10.2013, a winding up order was passed against accused no.1 company. It is further submitted that though appeal against the said order was allowed on 19.12.2014 by Ld. Appellate Court, however, vide order dated 02.12.2015, the order dated 24.10.2013 was revived. It is submitted that in this situation, it was necessary for complainant to take permission/leave from the Ld. Company Court before filing of the present complaint on 12.05.2014 or immediately after the Ld. Appellate Court has revived the winding up proceedings against accused no.1 company on 02.12.2015. Ld. ASC has relied upon judgment of Shiam Lal Diwan v. Official Liquidator U.P. Oil Mills Co. (1925) I.L.R., 47 All, 669, Harihar Nath and Ors v. State bank of India and Others (2006) 4 Supreme Court Cases 457 and In re, Catmoss Retail Pvt. Ltd. 2024 SCC OnLine Del 7765, Ajay Kumar Radheyshyam Goenka vs. Tourism Finance Corporation of India Ltd., (2023) 10 SCC 545 and P. Mohanraj v. Shah Bros. Ispat (P) Ltd., (2021) 6 SCC 258 to support his contentions in this regard. Secondly, it is CC No. 52147/2016 9 of 11 submitted by Ld. ASC that no prosecution can be filed under Section 276B of Income Tax Act merely for delay in deposition of TDS, if the same has been deposited later on along with interest and penalty. Ld. ASC has relied upon judgment of Dev Multicon P. Ltd. v State of Jharkhand (2023) 333 CTR 516 : 2022 SccOnline Jhar 537, ASSISTANT COMMISSIONER OF INCOME TAX vs. M/S AT DEV PRABHA (TV) & ORS. [SPECIAL LEAVE PETITION (CRIMINAL) Diary No(s). 3073/2023] decided on 20.03.2023, Hemant Mahipatray Shah and another vs. Anand Upadhyay and Anr. (2024 SCC Online Bom 2618) to support his contentions.
10 From the consideration of arguments and written submissions as well as from the perusal of record, it is noted that parties are not at dispute that the accused no. 1 company has deposited the TDS belatedly though the same was deposited along with interest and penalties. The Court has to decide whether the permission from the Ld. Company Court was required as submitted by ld. ASC before filing of present complaint and also whether the offence under Section 276B is made out by mere delay in depositing the TDS.
11 As far as the issue of liquidation of accused no. 1 company and obtaining of permission from Ld. Company Court is concerned, it is noted that at the time of filing of present complaint, the order of winding up of accused no.1 company was not in existence as same was set-aside by ld. Appellate Court. Though, the order of Ld. Company Court was revived by Ld. Appellate Court, however , the provisions of law requiring the stay of proceedings does not require the stay of proceedings which are criminal proceedings. The Court CC No. 52147/2016 10 of 11 is in complete agreement with the position of Official Liquidator explained by Hon'ble Apex Court and Hon'ble High Court of Delhi as well as Hon'ble High Court of Allahabad in judgments relied upon by ld. ASC that Official Liquidator is neither the agent of the debtors nor creditors and that Official Liquidator is the officer of Court. However, as and when liquidation of company is ordered, the Official Liquidator represents the company/its Board of Directors in all the matters concerning the company. The provisions of Companies Act i.e. Section 446 of Companies Act, 1956 and the provisions of IBC, requires the stay of civil proceedings and legal proceedings which are similar to the civil proceedings. In fact, ld. ASC has referred to para no. 17 of judgment of Hon'ble Apex Court in Ajay Kumar Radhey Shyam Goenka (Supra), wherein Hon'ble Apex Court itself has observed that 'a bare reading of section 14 IBC would make it clear that the nature of proceedings which have to be kept in abeyance do not include criminal proceedings, which is the nature of proceedings under section 138 of the N.I. Act.' As there is no doubt that present proceedings filed under section 276B of Income Tax Act are criminal proceedings as such and no doubt has ever been raised in the present case regarding the nature of proceedings, the Court does not found any material in the submissions advanced on behalf of OL of accused no.1 that proceedings in the present case could not have been continued except with the permission of the Ld. Company Court.
12 Before discussing the applicability of section 276B of Income Tax Act with regard to the cases where TDS has been deposited with delay, though along with interest and penalties, it is noted that in the CC No. 52147/2016 11 of 11 case at hand it is admitted position between the parties that TDS was deposited with delay though along with interest/penalties. The perusal and consideration of the case law relied upon by ld. ASC reveals that all these cases pertain to situations, where the accused have approached the Hon'ble High Courts for quashing of proceedings filed against them on the ground of violation of certain guidelines of CBDT, either regarding delay in filing the prosecution, the amount of default or any other such guidelines. The Hon'ble Courts have considered the violation of guidelines of CBDT in filing the prosecution and accordingly, quashed the proceedings against the accused. In the case in hand, Ld. ASC has not pointed out violation of any guidelines of CBDT in filing the present complaint by the department against the accused persons. In such scenario the case law relied upon by Ld. ASC referred to earlier do not come to the rescue of accused and section 276B of Income Tax Act applies in the case at hand, where the accused no. 1 company has deposited the TDS belatedly though along with interest/penalties.
13 In view of above discussion, the accused no.1 company represented through OL is convicted for offence under Section 276B/279 r/w 278E of Income Tax Act, 1961. Digitally signed MAYANK by MAYANK MITTAL Announced in Open Court MITTAL Date: 2025.04.21 17:13:52 +0530 on 21st April 2025 MAYANK MITTAL ACJM (Special Acts), CENTRAL TIS HAZARI COURTS DELHI This judgment consists of 11 pages and each and every page of this judgment is signed by me.
CC No. 52147/2016