Delhi District Court
Ito vs M/S Avtech Digital Equipment Pvt. Ltd & ... on 12 February, 2020
IN THE COURT OF SH. VIPLAV DABAS:
ADDL CHIEF METROPOLITAN MAGISTRATE (Spl. Acts): CENTRAL
TIS HAZARI COURTS: DELHI
CC No. 10531/17
ITO vs M/s Avtech Digital Equipment Pvt. Ltd & Another
JUDGMENT
(a)Date of institution of the case : 21.08.2017
(b)Name of complainant : Mr. Avinash Kumar Verma,
Income Tax Department.
Ward No. 73 (2),
Aayakar Bhawan,
Laxmi Nagar, Delhi.
(d)Name, parentage, residence : 1) M/s Avtech Digital
Equipments Pvt. Ltd.
A1/292, Safdarjag
Enclave, New Delhi110029.
2) Sh. Rajiv Puri
Director /Principal Officer
M/s Avtech Digital
Equipments Pvt. Ltd.
A1/292, Safdarjag
Enclave, New Delhi110029.
(e)Offence complained of/ proved : U/s 276B r/w section 278B of
the Income Tax Act
(f)Plea of accused : Pleaded not guilty
(g)Final order : Convicted
(h)Date of such order : : 12.02.2020
ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 1 of 13
Brief facts and the reasons for the decision:
1. The complainant Mr. A. K Verma, ITO Ward 73(2), Income Tax Department, has filed the present complaint against the aforesaid accused persons for the offences u/s 276B r/w section 278 B of Income Tax Act (hereinafter to be referred as the "Act").
2. Succinctly, the facts of the case are that accused no.1, a private limited company, had deducted certain TDS amounts for the relevant Assessment Years in accordance with the provisions of section 194C of the Act but has not deposited the same with the Government account within prescribed time which prompted the complainant to file present case. The recording of prosecution evidence was dispensed with as complainant filed the complaint in his capacity of public servant in discharge of official duty.
3. Considering the material filed and hearing the arguments, the accused persons were summoned by Ld. Predecessor Court.
4. Upon service of summons, accused no. 2 Rajiv Puri, Director of accused no.1 company appeared before the court for himself as well as the company and copy of complaint and documents were supplied to him and the matter was fixed for precharge evidence.
5. In order to substantiate the allegations against the accused, the prosecution examined Sh. Avinash Kumar, ITO, as CW1. He stated that during his posting he had jurisdiction on the case of M/s Avtech Digital Equipment Pvt. Ltd. He proved his complaint as Ex. CW1/1, the sanction ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 2 of 13 letter as Ex. CW1/2, Traces report for default summary containing the default committed by the accused in respect to the late deposit of TDS during the financial year 201213 for an amount of Rs. 30,73,624/ as Ex. CW1/3, an initial notice as Ex. CW1/4, the details of speed post bags dispatched on 20.08.2015 wherein notice Ex. CW1/4 was sent as Ex. CW1/5(OSR), show cause notice under Section 2(35) of the Act dated 28.01.2016 sent to accused no. 2 as Ex. CW1/6, details of speed post bags dispatched wherein notice Ex. CW1/6 was sent as Ex. CW1/7 (OSR), internet tracking report as Ex. CW1/8, another show cause notice under section 2(35) dated 19.02.2016 as Ex. CW1/9 (OSR), details of speed post bags dispatched wherein notice as Ex. CW1/9 was sent as Ex. CW1/10, internet tracking report as Ex. CW1/11, another show cause notice under section 2(35) dated 05.05.2016 as Ex. CW1/12 (OSR), details of speed post bags dispatched wherein notice as Ex. CW1/12 was sent as Ex. CW1/13(OSR) & reply to said show cause notice filed by the accused as Ex. CW1/14. He further deposed that after considering the reply, order under Section 2(35) of the I.T. Act dated 10.08.2016 was passed which is Ex. CW1/5(OSR) & the proposal sent through Joint Commissioner of Income Tax for according sanction to launch prosecution against the accused to the CIT (TDS) is Ex. CW1/16 (OSR). He further proved show cause notice under Section 279(1) of the I.T. Act dated 06.03.2017 as Ex. CW1/17, the details of speed post bags dispatched wherein notice Ex. CW1/17 was sent as Ex. CW1/18(OSR), tracking report generated through Internet as Ex. CW1/19, another show cause notice dated 21.03.2017 to the accused as Ex. CW1/20 and reply to the said show cause notice dated 20.03.2017 as Ex. CW1/21. This witness was not cross examined and right to cross examine was reserved for post charge evidence stage. Thereafter, pre ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 3 of 13 charge evidence was closed on behalf of the complainant department.
6. After hearing arguments on conclusion of precharge evidence, a charge for the offence punishable u/s 276B r/w section 278 B and section 278 E of the I.T.Act was framed against the accused persons to which they pleaded not guilty and claimed trial and the matter was fixed for post charge evidence.
7. In post charge evidence, CW1 i.e. complainant was recalled and this witness was not cross examined despite opportunity and matter was fixed for recording of statement of accused.
8. Statement of accused no.2 was recorded u/s 313 r.w Section 281 Cr.P.C for himself as well as for accused no.1 M/s Avtech Digital Equipment Pvt. Ltd In his statement, accused No. 2 stated that all TDS have been deposited and compounding application is pending which was to be decided in a weeks time. He further stated that delay occurred as there was a theft in their office of goods worth Rs. 1 to 1.25 Crores. Accused opted to lead defence evidence but no defence evidence was led and defence evidence was closed on submissions of Ld. Counsel or accused.
9. Thereafter, the matter was listed for final arguments and at this stage application u/s 311 Cr.P.C was moved on behalf of accused which was dismissed and final arguments were heard.
10. The Court has given thoughtful consideration to the submissions advanced on behalf of parties and gone through the records and written submissions filed on behalf of accused as well as the relevant provisions of the ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 4 of 13 Income Tax Act, 1961.
11. The relevant applicable provisions of Income Tax Act are reproduced herein below: [276B. Failure to pay tax to the credit of Central Government under Chapter XIID or XVIIB. If a person fails to pay to the credit of the Central Government, the tax deducted at source by him as required by or under the provisions of Chapter XVIIB; or the tax payable by him, as required by or under, subsection (2) of section 115O; or 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] 278B. Offences by companies. (1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
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 which respect to the act charged as an offence in that prosecution.
12. It is argued on behalf of the complainant that the case has been proved beyond reasonable doubt against the accused person in view of the testimony of witnesses. He submits that the order U/s 2(35), sanction order and the documents pertaining to TDS default were proved by the complainant witnesses and moreover, the said documents were neither rebutted at the ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 5 of 13 time of complainant evidence on behalf of accused despite opportunity and at the time of recording of statement of accused nor any positive evidence was led on behalf of the accused to challenge the said document and complainant's version. He prays for conviction of the accused.
13. On the other hand, Ld. Counsel for accused argued that complaint is filed without any notification authorizing Sh. Vipin Chandra to be sanctioned to prosecute the accused, that there is no document on record suggesting that Sh. Vipin Chandra has ever worked as CIT01, that there is no document on record authorizing Sh. Arun Kumar Sinha Income Tax officer Ward No. 73 (2) to file the abovementioned complaint and thus the complaint is without any authorization or sanction, that there is no authentic document to show that the alleged TDS was deducted by the accused company, that there is no statement of account reflecting the TDS amount deducted by the accused and bald enteries have been shown without any certificate u/s 65 B of the Indian Evidence Act, that no authentic document has been filed to show that Rajeev Puri is one of the Director or that he has ever undertaken that he is the concerned Principal Officer and the documents filed in this regard are forged and fabricated and that the complainant department has not shown the basis as to how it has arrived at the figure of the TDS which has not been deposited by the accused. It is further argued that in view of aforesaid reasons the present complaint is liable to be dismissed.
14. Whether accused no. 2 is the Principal Officer of accused no. 1:
Section 2(35) of the Act deals with expression 'principal officer'. Relevant para of section 2(35) of the Act is reproduced below: "(35) 'principal officer', used with reference to a local authority or a company or any other ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 6 of 13 public body or any association of persons or any body of individuals, means the secretary, treasurer, manager or agent of the authority, company or association, or body, or 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'.
Section 200(1): Any person deducting any sum in accordance with (the foregoing provisions of this Chapter) shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.
(2) Any person being an employer, referred to in subsection (1A) of Section 192 shall pay, within the prescribed time, the tax to the credit of the Central Government or as the Board directs. (3) Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in subsection (1A) of Section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time, (prepare such statements for such period as may be prescribed) and deliver or cause to be delivered to the prescribed incometax form and verified in such manner and setting forth such particulars and within such time as may be prescribed.
Relevant para of section 204 is reproduced as under: "Section 204: Meaning of "persons responsible for paying"
* * *
(iii) In the case of credit, or, as the case may be, payment of any other sum chargeable under the provisions of this Act, the payer himself, or, if the payer is a company, the company itself including the principal officer thereof".
15. The complainant examined Sh. Avinash Kumar, ITO, as CW1 who ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 7 of 13 stated that during his posting he had jurisdiction on the case of M/s Avtech Digital Equipment Pvt. Ltd. He proved his complaint as Ex. CW1/1, the sanction letter as Ex. CW1/2, Traces report for default summary containing the default committed by the accused in respect to the late deposit of TDS during the financial year 201213 for an amount of Rs. 30,73,624/ as Ex. CW1/3, an initial notice as Ex. CW1/4, the details of speed post bags dispatched on 20.08.2015 wherein notice Ex. CW1/4 was sent as Ex. CW1/5(OSR), show cause notice under Section 2(35) of the Act dated 28.01.2016 issued by Sh. Arun Kumar Sinha his predecessor to the Principal Officer of accused no.1 Company as Ex. CW1/6, details of speed post bags dispatched wherein notice Ex. CW1/6 was sent as Ex. CW1/7 (OSR), internet tracking report as Ex. CW1/8, another show cause notice under section 2(35) dated 19.02.2016 as Ex. CW1/9 (OSR) issued to Sh. Rajeev Puri Director M/s Avtech Digital Equipment Pvt Ltd of the intention to treat him as Principal Officer of the accused company, details of speed post bags dispatched wherein notice Ex. CW1/9 was sent as Ex. CW1/10, internet tracking report as Ex. CW1/11, another show cause notice under section 2(35) dated 05.05.2016 as Ex. CW1/12 (OSR) issued to Sh. Rajeev Puri Director M/s Avtech Digital Equipment Pvt Ltd of the intention to treat him as Principal Officer of the accused company, details of speed post bags dispatched wherein notice Ex. CW1/12 was sent as Ex. CW1/13(OSR) & reply to said show cause notice filed by the accused as Ex. CW1/14 wherein they have admitted accused no.2 to be the Principal Officer of the Company. He further deposed that after considering the reply, order under Section 2(35) of the I.T. Act dated 10.08.2016 wherein Sh. Rajeev Puri was held as Principal Officer was passed which is Ex. CW1/5(OSR) and that the proposal was sent through Joint ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 8 of 13 Commissioner of Income Tax for according sanction to launch prosecution against the accused to the CIT (TDS) & the said proposal is Ex. CW1/16 (OSR). He further proved show cause notice issued under Section 279(1) of the I.T. Act dated 06.03.2017 as Ex. CW1/17, the details of speed post bags dispatched wherein notice Ex. CW1/17 was sent as Ex. CW1/18(OSR) & the tracking report generated through Internet as Ex. CW1/19. He deposed that due to noncompliance of the said notice, another show cause notice dated 21.03.2017 was issued to the accused which is Ex. CW1/20 and reply to the said show cause notice dated 20.03.2017 was filed on behalf of accused which is Ex. CW1/21. CW1 correctly identified the signatures of Dr. Vipin Chandra CIT(TDS) and his predecessor Arun Kumar Sinha on the sanction and show cause notices by deposing that he has seen their signatures appearing on many official files during the course of their official duties.
16. It is clear from the bare perusal of the aforesaid documents that the same have been duly proved as per Section 279 (B) of the Income Tax Act by filing certified true copies. It is further observed that nothing has been done on behalf of accused to challenge the factum of affixation of the seal of the CIT, complainant etc on the various documents including the complaint which amounts to admission of the factum of due affixation of the said seal by the competent person holding the position / ranks as mentioned in the said seals. It is also not in dispute that the complainant is a Government Department and the officer involved in the present prosecution have acted in discharge of their public duties at the time of dealing with the documents pertaining to the present case. So, the presumption of the performance of the aforesaid official acts by the aforesaid officials in due course also arises which further fortifies the correctness of said acts.
ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 9 of 13
17. It is further observed that the aforesaid version of CW1 has gone unrebutted as neither any objection was raised qua the due authorization, competence and identity of the various authorities involved in the inquiry by whom the said documents were prepared as well as regarding the authenticity of the aforesaid documents nor the cross examination of CW1 was conducted by the accused despite opportunity in this regard. It is further clear from the aforesaid unrebutted testimony that the factum of filing of reply Ex. CW1/14 to the show cause notices Ex. CW1/9 & Ex. CW1/12 of the intention to treat accused no.2 as Principal Officer of the accused no.1 company is also established. Perusal of the said reply reveals that the accused no. 2 admitted himself to be the Principal Officer of the aforesaid company. It is settled proposition of law that facts admitted need not be proved, so no further proof is required for establishing the factum of accused no.2 being Principal Officer of the accused no.1 company.
18. It is further important to mention that at the time of recording of statement of accused, instead of denying or giving specific explanation to the aforesaid showcause notices and reply, the accused simply stated that the same to be a matter of record which implies that accused is not having anything to dispute the genuineness and authenticity of the aforesaid version mentioned in the said notices and reply.
19. It follows from the aforestated testimony of CW1, omissions and admissions made by the accused no.2 that accused no. 2 was aware about the financial aspects of accused no.1 and he cannot wash away his liability as being Director and Principal Officer of accused no. 1. Hence, it is proved that ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 10 of 13 accused no. 2 is the Principal Officer of accused no.1.
20. Whether there was delay in deposit of TDS amount: As per the Income Tax Act, the TDS amount deducted in a month should have been deposited on or before 7th of the subsequent month. As per unrebutted document Ex. CW1/3 running from page no. 14 to 28, qua details of default committed by accused, the accused no. 1 has committed default in timely deposit of TDS amount of Rs.3073624/. Perusal of the reply Ex. CW1/14 to the show cause notice Ex.CW1/9 and Ex. CW1/12 issued under Section 2 (35) reveals that the accused has not raised any objection qua the amount mentioned in the said show cause notices and have simply stated that the statutory compliances could not be complied due to disturbance in the business caused by the hospitalization of mother of the Director as well as suffering of financial loss on account of theft at their store in Noida in September 2009.
21. It is already clear from the discussion made in forgoing paragraphs that the complaint department has duly proved the said documents and accused has failed to rebut the same despite ample opportunity. The factum of accused being aware of the delay in depositing the aforesaid amount of TDS and admitting the delay in filing the TDS is further evident from the unrebutted show cause notices u/s 279 (1) Income Tax Act Ex. CW1/17 and Ex. CW1/20 which was duly replied by the accused vide Ex. CW1/21 wherein simple adjournment has been sought instead of denying the aforesaid quantum of TDS and the factum of delay as would have been done by reasonable bonafide person in similar circumstances, if there was any dispute qua the quantum of TDS collected and delay.
ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 11 of 13 So, relying upon the said document it is crystal clear that accused no. 1 through accused no.2 being its Principal Officer has deducted the tax at source amounting to Rs. 3073624 during the financial year 20122013 and the accused did not make the payment within the stipulated period.
22. Record shows that the delay was deliberate and not due to financial losses suffered by the company. Section 278 AA of Income Tax Act provides notwithstanding anything contained in provisions of Section 276A, 276AB or 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.
23. The onus is upon the accused to show that there was reasonable cause for the delay in deposit of TDS. However, accused neither cross examined the complainant witness nor led any positive evidence to substantiate that there was any reasonable cause for the delay in deposit of TDS. Mere avernments made in the reply to the show cause notice that due to disturbance in the business caused by the hospitalization of mother of the Director as well as suffering of financial loss on account of theft at their store in Noida in September 2009, statutory compliances could not be made, are of no consequence in the absence of any material to that effect, having been put to the CW1 at the time of cross examination as well as having been brought on record by leading defence evidence. So, bald defences not proved by either challenging the version of the complainant or by leading positive evidence, can not come to the rescue of the accused.
24. Undisputedly, the tax deducted at source by the accused no.1 company was not deposited within prescribed period. The offence u/s 276B of Income ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 12 of 13 Tax Act is complete when the tax deducted at source is not deposited in time. Company can not be allowed to take unfair advantage and use the tax amount so deducted for any other purposes. In view of the aforesaid discussions and facts and circumstances of the case, it is held that the prosecution has proved its case against accused persons beyond reasonable doubt. Accordingly, accused no.1 company M/s Avtech Digital Equipments Pvt Ltd & accused no.2 Rajiv Puri are held guilty for the offence u/s 276B r/w Section 278B of the Act for deducting TDS for the financial year 20122013 and not depositing the same in the Government account within prescribed period.
Announced in open Court on 12.02.2020 (VIPLAV DABAS) ACMM(Special Acts) CENTRAL TIS HAZARI COURTS DELHI ITO vs M/s Avtech Digital Private Limited & Another CC No. 10531/2017 Page No. 13 of 13