TDS prosecution guidance under section 276B may bar complaint where default is minor and tax is later deposited.

Failure to deposit tax deducted at source within time is treated as complete for section 276B, and mens rea is not described as a necessary ingredient. The note also states that departmental prosecution instructions limit action where the default is not substantial and the tax is later deposited. Because the tax had been deposited before prosecution was considered and the delay was not large, the commentary indicates that discretion should have been exercised in line with the circular, making the complaint vulnerable to quashing. Remand was said to serve no useful purpose on those facts.

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Issues: Whether the applicant's conviction under section 276B of the Income-tax Act was liable to be quashed in view of the delayed deposit of tax deducted at source, the departmental circular/instructions, and the surrounding circumstances of the case.

Analysis: The offence under section 276B was held to be complete on failure to deposit tax deducted at source within time, and mens rea was not treated as a necessary ingredient. At the same time, the relevant departmental instructions stated that prosecution should not normally be launched where the default was not substantial and the tax had been deposited in the meantime. Since the tax had been deposited before prosecution was considered, the delay was not substantial, and the amount involved was not large, the authorities ought to have exercised their discretion in accordance with the circular. The conviction and concurrent refusal to interfere were therefore found unsustainable, and remand was declined as no useful purpose would be served.

Conclusion: The conviction under section 276B was quashed and the applicant was acquitted.

Ratio Decidendi: Where tax deducted at source has been deposited before prosecution is launched or considered, and the default is not substantial, the departmental instructions governing prosecution should guide the exercise of discretion, and a complaint may be liable to be quashed.

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