TaxTMI 
TaxTMI 
2023 (9) TMI 32
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....ttempt to evade tax punishable under Section 276C of the Act. Show cause notice was issued on 18.01.2018 calling for explanation from the company and representatives, why proceedings should not be launched under Section 276B of the Act. Since there was no response to the show-cause notice, petitioners who are Managing director and Director were made responsible along with the company for evasion of tax punishable under Section 276B, 278B(1) of the Act and complaint filed. 4. The said complaint was filed on 28.03.2018 and taken cognizance by the learned Special Judge for Economic Offences, Hyderabad. 5. Learned counsel appearing for the petitioners would submit that a notice was issued on 18.01.2018 in which it was mentioned that a total of Rs. 91,80,995/- was deducted and deposited into the Central Government account with a default on 2 to 11 months. It was further mentioned that Rs. 7,73,901/- was late payment interest. However, the company paid interest of Rs. 4,67,670/- and late filing fee of TDS of Rs. 1,73,970/- vide challan No. 281 on 14.12.2017 itself. The said TDS amount, consequent interest and late filing fee were all paid even prior to the notice dated 18.01.2018. ....
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....he learned Judge, such a provision is subject to penalty under Section 201(1) of the Act. We are unable to agree with the above view of the High Court. Once a statute requires to pay tax and stipulates period within which such payment is to be made, the payment must be made within that period. If the payment is not made within that period, there is default and an appropriate action can be taken under the Act. Interpretation canvassed by the learned counsel would make the provision relating to prosecution nugatory." 8. Learned counsel further submitted that under similar circumstances when the entire amount was already paid and deposited, the Hon'ble Supreme Court held that if the payments are not made within the prescribed period in the statute, prosecution can be launched. The Hon'ble Supreme Court did not find favour with the judgment of the Calcutta High Court wherein the proceedings were quashed for the reason of payment of the defaulted amount though belatedly. For the said reasons, prosecution has to go on and petitioners have to face trial before the Special Court. 9. The Commissioner of Income Tax (TDS), Hyderabad granted sanction for prosecution of the petit....
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....such grant of sanction was found to be invalid. 15. The Hon'ble Supreme Court in the case of Mansukhlal Vithaldas Chauhan v. State of Gujarat (1997) 7 Supreme Court Cases 622 held as follows: "17. Sanction lifts the bar for prosecution. The grant of sanction is not an idle formality or an acrimonious exercise but a solemn and sacrosanct act which affords protection to Government Servants against frivolous prosecutions. (See: Mohd. Iqbal Ahmed vs. State of Andhra Pradesh, AIR 1979 SC 677). Sanction is a weapon to ensure discouragement of frivolous and vexatious prosecutions and is a safeguard for the innocent but not a shield for the guilty. 18. The validity of the sanction would, therefore, depend upon the material placed before the sanctioning authority and the fact that all the relevant facts, material and evidence have been considered by the sanctioning authority. Consideration implies application of mind. The order of sanction must ex facie disclose that the sanctioning authority had considered the evidence and other material placed before it. This fact can also be established by extrinsic evidence by placing the relevant files before the Court to show that....
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....ilure of justice is, what the appellate or revisional Court would in such cases look for. And while examining whether any such failure had indeed taken place, the Court concerned would also keep in mind whether the objection touching the error, omission or irregularity in the sanction could or should have been raised at an earlier stage of the proceedings meaning thereby whether the same could and should have been raised at the trial stage instead of being urged in appeal or revision. 24. In the case at hand, the Special Court not only entertained the contention urged on behalf of the accused about the invalidity of the order of sanction but found that the authority issuing the said order was incompetent to grant sanction. The trial Court held that the authority who had issued the sanction was not competent to do so, a fact which has not been disputed before the High Court or before us. The only error which the trial Court, in our opinion, committed was that, having held the sanction to be invalid, it should have discharged the accused rather than recording an order of acquittal on the merit of the case. As observed by this Court in Baij Nath Prasad Tripathi's case (supra)....