TaxTMI 
TaxTMI 
2019 (5) TMI 1329
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....f Chapter XVII-B of the Act. The Assessing Officer issued show cause notices dated:06.02.2013 (Financial Year 2010-2011), dated:11.07.2014 for each Financial Years from 2011-2012 to 2013-2014, calling upon the accused-Company to show cause as to why prosecution should not be launched against them. Since there was no reply from the accused, the Assessing Officer issued another notice dated 04.09.2013. The accused failed to respond to the said notice also. Since there was no compliance by the accused-company and the accused deliberately failed to give satisfactory reply, the Commissioner of Income Tax (TDS) after giving sufficient opportunity to the accused, passed an order under Section 279 of the Act authorizing the complainant namely, Sri.O.N.Hariprasad Rao, Assistant Commissioner of Income Tax, TDS Circle 2(1), H.M.T Bhavan, Bengaluru, to prosecute the accused for the offence punishable under Section 276B read with Section 278B of the Act. 3. Heard learned counsel for the petitioners and learned Standing Counsel appearing for the respondent-Department. 4. Learned counsel for the petitioners has urged three fold contentions. First, placing reliance on Section 201(1A) of the ....
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.... 7. Refuting the above contentions, learned Standing Counsel appearing for respondent/complainant would however submit that Section 200 of the Act read with Rule 30 of the Income Tax Rules, 1962 contemplate deposit of the TDS deducted within the prescribed time limit and failure to deposit would entail the prosecution of the assessee in terms of Section 276B of the Act. In the instant case, the petitioners do not dispute the fact that the tax deducted at source was not credited to the Complainant-Department within the prescribed period of time. As held by the Hon'ble Supreme Court of India in Madhumilan Syntex Ltd., and Others vs. Union of India and Another reported in (2007) 11 SCC 297 "......... wherever a company is required to deduct tax at source and to pay it to the account of the Central Government, failure on the part of the company in deducting or in paying such amount is an offence under the Act and has been made punishable. It, therefore, cannot be said that the prosecution against a company or its Directors in default of deducting or paying tax is not envisaged by the Act." 8. Further referring to the very same decision relied to by learned counsel for the ....
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....r (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income; and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:] Provided (further) that no penalty shall be charged under section 221 from such person, un....
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....nt" shall have the meaning assigned to it in the Explanation to sub-section (2) of section 288.]" 13. A bare reading of the aforesaid Section makes it clear that without prejudice to any other consequences, which the accused may incur, he is deemed to be "an assessee in default" in respect of such deduction. Therefore, it follows that in case of failure to deduct or to pay the tax deducted at source, accused may invite penalty consequent upon the adjudication or it may also "without prejudice to any other consequences", lead to prosecution of the accused. This view is expounded by the Hon'ble Supreme Court in Madhumilan's case referred supra, wherein while dealing with identical set of facts in para Nos.47 and 48, the Apex Court has observed as under:- "47. The next contention that since TDS had already been deposited to the account of the Central Government, there was no default and no prosecution can be ordered cannot be accepted. Mr.Ranjith Kumar invited our attention to a decision of the High Court of Calcutta in Vinar & Co. v. ITO. Interpreting the provisions of Section 276-B, a Single Judge of the High Court observed that: (ITR p.135) "[T]here is no provi....