Revisional scrutiny of cognizance orders and reasonable cause for delayed TDS deposit can bar mechanical prosecution.

An order taking cognizance and issuing process is an intermediate order, not a purely interlocutory one, where setting it aside would terminate the prosecution, so it is open to revision under criminal procedure law. In prosecutions for delayed deposit of TDS, the statutory penal scheme must be read with the reasonable-cause exemption; where the record showed deposit with interest and delay attributable to COVID-19 disruption, a mechanical rejection of that explanation reflected non-application of mind. On those facts, initiation of prosecution on the impugned cognizance order was not properly sustained.

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Issues: (i) Whether the revision against the order taking cognizance and issuing process was maintainable. (ii) Whether the order taking cognizance was vitiated for non-application of mind in view of the pleaded reasonable cause for delayed deposit of TDS.

Issue (i): Whether the revision against the order taking cognizance and issuing process was maintainable.

Analysis: An order taking cognizance and issuing summons is not a purely interlocutory order if setting it aside would terminate the prosecution. Such an order falls within the category of an intermediate order and is amenable to revisional scrutiny under the revisional provisions of the criminal procedure law.

Conclusion: The revision was maintainable.

Issue (ii): Whether the order taking cognizance was vitiated for non-application of mind in view of the pleaded reasonable cause for delayed deposit of TDS.

Analysis: The statutory scheme for failure to deposit tax deducted at source provides penal consequences, but the statutory exemption for reasonable cause must be read with the penal provision. The record showed that the deducted TDS had been deposited with interest, the delay was attributable to the admitted COVID-19 disruption, and the sanctioning authority had rejected that explanation in a mechanical manner without properly addressing the pleaded reasonable cause. In such circumstances, the initiation of prosecution could not rest on a proper application of mind to the governing statutory framework.

Conclusion: The cognizance order was vitiated and liable to be set aside.

Final Conclusion: The prosecution could not be sustained on the facts found by the Court, and the impugned cognizance order was interfered with in revision.

Ratio Decidendi: A cognizance order that, if set aside, would terminate the prosecution is an intermediate order revisable by the High Court, and prosecution for delayed TDS deposit cannot be mechanically launched where the admitted facts disclose reasonable cause within the statutory exemption.

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