TaxTMI 
TaxTMI 
2026 (5) TMI 1640
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....t Jaunpur, pending before the court of learned Special Judicial Magistrate, Varanasi and the complaints (Case No. 1083 of 1997 as well as Case No. 1084 of 1997) and its proceedings under Section 276-B Income Tax Act, 1961, pending before the court of learned Special C.J.M., Varanasi. 3. Learned counsel for the applicants submitted that the present prosecution, instituted by the complainant/opposite party no. 2, namely the Income Tax Department, on 11.10.1985 and registered as Criminal Case No. 3682 of 1985 and Criminal Case No. 3681 of 1985 (subsequently renumbered as Case No. 1083 of 1997 and Case No. 1084 of 1997), pertains to an alleged contravention of Section 276-B of the Income Tax Act, 1961 on account of non-remittance of TDS amounting to Rs. 243/- on an interest credit of Rs. 2798.10/- for the financial year 1979-80 under Section 194A of the Income Tax Act, 1961. It is further submitted that the proceedings have remained pending for an inordinate period of about 36 years. The applicants entered appearance before the court concerned in the year 1990, however, the cases were subsequently transferred to Varanasi in the year 1997 without any information or notice to the appl....
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....does not obliterate the prosecution; (iii) the non-initiation of penalty proceedings does not lead to a presumption that the default in payment was for good and sufficient reasons or that the assessee was deprived to establish that there were good and sufficient reasons for the default in payment; (iv) non-initiation of penalty proceedings in a case cannot be equated with a case where the penalty proceedings were initiated and a finding is recorded by the competent authority that there were good and sufficient reasons for the delay in payment; (v) there is no statutory requirement either under section 279 or under any other provision of the Act to give a show-cause notice to the assessee before criminal proceedings are initiated against him. In other words, a notice or a right of being heard before launching criminal proceedings under the Income-tax Act for the offences mentioned under Chapter XXII is not mandatory and proceedings cannot be quashed on this ground. Though, if such notice is given by the Department, it may check frivolous and unnecessary criminal cases or such cases where the default in payment is technical or committed in good faith. The q....
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....rguments advanced by the learned counsel for the parties and have gone through the entire record. 6. A notice dated 27.11.1984 was issued to the applicants under Sections 221(1) and 201(1A) of the Income Tax Act, 1961, calling upon them to show cause why interest and penalty should not be levied for non-compliance, and why the matter should not be referred to the Commissioner of Income Tax, Allahabad, under Section 276B for the initiation of prosecution. 7. Notwithstanding the notice, the applicants willfully failed to comply with its requirements. Consequently, a penalty under Section 221(1) was imposed for the failure to deduct Tax Deducted at Source (TDS) as mandated under Section 194A of the Act. As a result of this deliberate default, a prima facie offence under Section 276B of the Income Tax Act is made out against the applicants. 8. Here, it would be necessary to go through the relevant Sections 156, 201(1A), 221(1) of the Income Tax Act, 1961, which are quoted as under:- "156. Notice of demand. -When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the 2 [Assessing Officer] shall serve upon the....
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....in arrears: Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard: Provided further that where the assessee proves to the satisfaction of the [Assessing Officer] that the default was for good and sufficient reasons, no penalty shall be levied under this section." 9. The show cause notice dated 27.11.1984 clearly stated that the applicants were required to appear before the competent authority, either personally or through a representative, on 20.12.1984. However, the applicants failed to appear on the said date. Subsequently, the Income Tax Officer, Jaunpur, passed an order under Section 201(1A) of the Income Tax Act, 1961 on 21.12.1984, imposing a penalty for the default committed by the assessee. The assessing officer in the impugned order has recorded that "I charge an interest under section 201(1A) of the Income Tax Act, 1961 of issue notice of demand and challan." 10. As the applicants failed to deposit the penalty amount, the Commissioner of Income Tax, Allahabad, exercising powers under Section 279(1) of the Income Tax Act, 1961, passed an order dated 30.09.1985 directing the Income Tax Offi....