2018 (4) TMI 574 - HC - Income Tax

Court stays criminal case due to delayed TDS payment, ensures fair process

M/s Microtek Education Society Through Its General Secretary And Another Versus Union of India Through Anjani Kumar Income Tax Officer

The court stayed further proceedings in a criminal case against M/s. Microtek Education Society and its General Secretary for delayed TDS payment under ... TDS not paid to the credit of Central Government within the prescribed time limit and was deposited after due date - offences punishable under Sections 276B & 278 B - Submission is that the applicants in continuation to their business, have always deposited TDS to the credit of Central Government within time except for financial year 2009-10 and 2010-11 and hence, the action taken by the opposite party on the basis of technical grounds is actually the harassment of bonafide tax payers - Held that:- Contentions raised at the bar require detailed hearing on law and facts both. Notice on behalf of opposite party No.1 has been accepted by learned AGA. Issue notice to the opposite party no.2 returnable within four weeks. Opposite party no.2 may file counter affidavit within three weeks after the service. Learned AGA may also file counter affidavit within the same period. Rejoinder affidavit may be filed within two weeks thereafter. List this matter immediately after expiry of the aforesaid period before the appropriate Bench. Proceedings under Sections 276B & 278 B shall remain stayed. Issues:Challenge to summoning order under Sections 276B & 278 B of Income Tax Act, 1961 for delayed TDS payment.Analysis:The judgment pertains to a criminal misc. application under section 482 of Cr.P.C. filed by M/s. Microtek Education Society and its General Secretary against the summoning order dated 11.8.2017 passed by the Special C.J.M., Varanasi, and the criminal proceedings of Complaint Case No. 2396 of 2017. The applicants are being prosecuted for offenses under Sections 276B & 278 B of the Income Tax Act, 1961 for not depositing tax deducted at source (TDS) within the prescribed time limit. The applicants argue that the delay in TDS deposit was due to the General Secretary's personal circumstances, specifically his brother's chronic illness, which led to mental distress and prevented him from ensuring timely TDS deposit. The applicants emphasize that they have consistently deposited TDS on time except for the relevant financial years. They allege that the prosecution is based on technical grounds and lacks application of mind, portraying it as harassment of genuine taxpayers. The applicants also highlight the delayed initiation of proceedings after six years and assert malafide intentions behind the prosecution.The court acknowledged the need for a detailed examination of both legal principles and factual aspects raised by the parties. Notice was issued to the opposite party for response, with directions to file counter affidavits within specified timelines. The court ordered a stay on further proceedings of the criminal case until the next listing date. The judgment reflects a balanced approach, considering the contentions of both parties and ensuring a fair opportunity for all sides to present their arguments. The court's decision to stay the proceedings indicates a cautious approach to prevent any potential misuse of the legal process and safeguard the rights of the applicants pending a thorough examination of the case.