TaxTMI 
TaxTMI 
2025 (5) TMI 2060
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.... Deducted at Source (TDS) within the time prescribed under law. Each complaint pertains to a distinct financial quarter. 4. The petitioner alleged that the respondent company had deducted TDS but failed to deposit the same with the Central Government within the prescribed period. 5. CRL.L.P. 288/2022 relates to Complaint Case No. 6215/2018, which alleged that for the financial year 2015-16, the respondent company had made payment to various persons and had deducted Tax Deducted at Source (TDS) amounting to Rs. 68,78,256/- but failed to deposit the same to the credit of the Government Treasury, within the stipulated time as required under the IT Act. 6. CRL.L.P. 289/2022 relates to Complaint Case No. 6214/2018, concerning financial year 2014-15. In this instance, the respondent allegedly deducted TDS amounting to Rs. 1,59,72,437/- and did not deposit on time. 7. CRL.L.P. 290/2022 relates to Complaint Case No. 6212/2018, concerning financial year 2013-14, where the default amount was Rs. 2,01,34,235/-. 8. The delay in deposit of the tax led the petitioner to initiate a separate prosecution in line with departmental policy treating every quarterly default as a distinct offence. ....
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....ted with the Accused no. 1 Company and the Addendum of Sub-Contractor dt.21.08.2009 between the Niraj Cement Structurals Limited and the Accused no. 1 Company was also relied upon. 27. It is also pointed out that accused company had to receive a sum of Rs. 13,14,37,120/- from Neeraj Cement Structurals Ltd., being the ultimate client/debtor for the road construction work executed by the accused company for the project of Haryana State Roads & Bridges Development Corporation Ltd. But the said payment has not been released to the accused company by Neeraj Cement Structurals Ltd. It is also pointed out that main contractor has initiated an Arbitration Proceedings before the Ld. Arbitrator as Haryana and the Arbitrator has passed an Award dated 16.10.2017 in favour of the main contracting Company and against the Haryana State Roads & Bridges Development Corporation Ltd. For a sum of Rs. 14,79,36,410/- despite that the said amount was also not released. It is therefore point out that legally recoverable payments had not been released to the accused company which is the root cause for making the delayed payment of TDS by the accused company. It has also been pointed out that the income ....
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.... of financial hardship and pending income tax refunds. However, these reasons were specifically rejected in the sanction order as untenable and not amounting to 'reasonable cause'. 15. He submitted that the learned Trial Court erroneously accepted photocopies and vague justifications as sufficient evidence to acquit the respondents, holding that they had demonstrated a 'reasonable cause' under Section 278AA of the IT Act. It is contended that this interpretation dilutes the mandatory nature of TDS compliance and sets a precedent for evading statutory obligations. 16. He emphasized that once TDS is deducted, it becomes government property and cannot be withheld on the plea of financial difficulty. The deductor acts as a trustee of public revenue, and failure to deposit deducted TDS constitutes a serious economic offence. 17. Per Contra, the learned counsel for respondents submitted that the respondents had not disputed the fact of delay in depositing the TDS, but the entire case of the defence rested on the existence of a reasonable cause as contemplated under Section 278AA of the IT Act. 18. The learned counsel emphasized that the respondents were facing severe financial stress....
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....on filed under sub-section (3) of Section 378 of the Code. 20. In our opinion, however, in deciding the question whether requisite leave should or should not be granted, the High Court must apply its mind, consider whether a prima facie case has been made out or arguable points have been raised and not whether the order of acquittal would or would not be set aside. 21. It cannot be laid down as an abstract proposition of law of universal application that each and every petition seeking leave to prefer an appeal against an order of acquittal recorded by a trial court must be allowed by the appellate court and every appeal must be admitted and decided on merits. But it also cannot be overlooked that at that stage, the court would not enter into minute details of the prosecution evidence and refuse leave observing that the judgment of acquittal recorded by the trial court could not be said to be "perverse" and, hence, no leave should be granted." (emphasis supplied) 24. The Hon'ble Apex Court in the case of Babu Sahebagouda Rudragoudar and Others v. State of Karnataka : 2024 INSC 320 discussed the scope of interference by an Appellate Court for reversing the judgment of acquitt....
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....se' for the delay in depositing tax deducted at source (TDS), within the meaning of Section 278AA of the IT Act. The defence advanced by the respondents was that during the relevant assessment years, the company was undergoing an acute financial crisis, including non-receipt of substantial dues from clients, particularly government agencies, which led to a severe cash flow shortage and hindered timely TDS compliance. 26. At this juncture, it is relevant to extract Sections 276B and 278 AA of the IT Act, which read as under : Section 276 B :- If a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years alongwith fine. Section 278 AA:- Notwithstanding anything contained in the provisions of Section 276 A, Section 276 AB, or Section 276 B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure. 27. It is germane to note that Section 278AA of the IT Act begins with a non-obstante clause, which specifically provides....
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.... was passed by the petitioner authorities. It is abysmal to note that though para 3 of the sanctioning order recorded the submissions of the respondent company that it was facing financial crisis and delay in deposit of TDS was unintentional, yet the sanction to prosecute the respondent company and its Director was granted under Section 279 (1) of the IT Act. 30. Further, the testimony of CW-1, the Income Tax Officer, during cross-examination at the post-charge stage, is of considerable significance. He candidly admitted that the entire amount constituting the alleged TDS default had been deposited by the assessee even prior to the issuance of the show cause notice under Section 279 of the IT Act, 1961. This admission undermines the prosecution's narrative of wilful default and supports the respondents' claim that the delay in deposit was not motivated by any dishonest intent, but arose from circumstantial financial hardship. 31. The learned Trial Court, after carefully weighing this material fact, rightly concluded in the impugned judgment that the respondents' conduct reflected a responsible and remedial disposition. The respondents not only acknowledged the default but also to....