{"id":20643,"date":"2019-06-01T12:36:22","date_gmt":"2019-06-01T07:06:22","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=20643"},"modified":"2019-06-01T13:00:37","modified_gmt":"2019-06-01T07:30:37","slug":"ito-vs-firoz-abdul-gafar-nadiadwala-accm-s-276b-prosecution-for-delay-in-payment-of-tds-the-default-is-complete-if-the-tds-is-not-deposited-in-time-late-deposit-does-not-absolve-the-accused-the-ac","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/ito-vs-firoz-abdul-gafar-nadiadwala-accm-s-276b-prosecution-for-delay-in-payment-of-tds-the-default-is-complete-if-the-tds-is-not-deposited-in-time-late-deposit-does-not-absolve-the-accused-the-ac\/","title":{"rendered":"ITO vs. Firoz Abdul Gafar Nadiadwala (ACMM)"},"content":{"rendered":"
See also: Guide To Offenses And Prosecutions Under The Income-tax Act, 1961 (With Video)<\/a> <\/div>\n

CNR No. MHMM200001812014
\nComplaint filed on : 26.03.2014.
\nComplaint registered on:26.03.2014.
\nDecided on : 25.04.2019
\nDuration : 05Y. & 29D.
\nIN THE COURT OF ADDL. CHIEF METROPOLITAN MAGISTRATE,
\n38th COURT, BALLARD PIER, MUMBAI
\n(Presided over by R. S. Sarkale)
\nCOURT CASE NO.95\/SW\/2014.
\nExh. \u2013
\nIncome Tax
\nThrough Ajay
\nG. Kamble
\nIncome Tax Officer(TDS)1(
\n5) .. Complainant.
\nV\/s.
\nMr. Firoz Abdul Gafar Nadiadwala
\nPlot No.20, Barkat, Gulmohor Cross Road,
\nNo.5, Juhu Scheme, Andheri(W), Mumbai. .. Accused.
\nCharge : Under Section 276B of The Income Tax Act,1961.
\nAppearance : Special Public Prosecutor Mr. Amit Munde for
\ncomplainant.
\nLd. Advocate Mr. Ashok Bhatia for accused.
\nJUDGMENT
\n(Delivered on 25.04.2019)
\n1. The complainant Ajay Kamble, Income Tax Officer(TDS)1(
\n5) had filed the complaint u\/s. 200 of the Cr.P.C. against the accused
\nfor committing the offence punishable u\/s. 276B of Income Tax Act,
\n1961 pertaining to financial year 20092010
\nand assessment year 20102011.
\n2. Brief facts of the complainant’s case are as under The
\ncomplainant is the Income Tax Officer (TDS)1(
\n5),
\nMumbai, attached to CIT(TDS), Mumbai. The sanctioning authority in
\n..2..
\nexercise of powers conferred u\/s. 279(1) of Income Tax Act has
\naccorded sanction to prosecute the accused u\/s. 276B of Income Tax
\nAct. Accused is an assessee in the jurisdiction of the complainant for
\nthe income tax (TDS purpose). The accused is an individual having his
\noffice at plot No.20, Barkat, Gulmohor Cross Road, No.5, Juhu Scheme,
\nAndheri(W), Mumbai. The accused during various dates from the
\nperiod 01\/04\/2009 to 31\/03\/2010 and was under obligation u\/s.194A
\nof the Act to deduct the income tax from interest paid\/credited under
\nsection 194C of the act to deduct the income tax from the payment of
\ncontractors, u\/s.194H of the Act to deduct the income tax from the
\npayments of commissions and u\/s.194J of the Act to deduct the income
\ntax from the payment of fees for professional or technical services. The
\naccused was under further obligation u\/s. 200 and 204 of the Act r\/w
\nRule 30 of the Income Tax Rules, 1962 to pay or to deposit income tax
\nso deducted to the credit of Central Government within the prescribed
\nperiod. During the period from 01\/04\/2009 to 31\/03\/2010 accused
\nhad deducted tax of Rs. 8,56,102\/u\/
\ns. 194A, 194C, 194H and 194J of
\nthe Income Tax Act but failed to pay or to deposit income tax so
\ndeducted to the credit of Central Government. The accused failed to
\nshow reasonable cause or excuse to pay deducted tax within the
\nprescribed period to the credit of Central Government within the
\nprescribed period. The said amount was paid after a long period of
\ndelay beyond 12 months. Therefore, the accused has committed default
\nu\/s. 200 and 204 of the Act, 1961 r\/w Rule 30 of the Income Tax
\nRules, 1962.
\n3. The complainant further submitted that in view of default
\ncommitted by the accused show cause notice was issued to the accused,
\n..3.. C.C.No.95\/SW\/2014.
\nJudgment.
\nthe accused required to show cause as to why prosecution should not be
\nlaunched against him for offence u\/s. 276B of the Income Tax Act for
\nfailure to pay the amount deducted by way of income tax within
\nstipulated time. The complainant submitted that the explanation given
\nby the accused for his failure to pay the said tax deducted at source
\nwithin prescribed time does not constitute reasonable cause for the said
\ndefault. The accused has committed a default u\/s. 200 and 204 of the
\nIncome Tax Act 1961 r\/w Rule 30 of the Income Tax Rules, 1962 by
\nfailing without reasonable cause or excuse to pay the income tax so
\ndeducted to the credit of Central Government and said default amounts
\nto an offence punishable u\/s. 276B of the Income Tax Act. Therefore,
\nby granting sanction u\/s. 279(1) of the Income Tax Act, prosecution
\nlaunched against the accused as accused has failed to comply with the
\nstatutory provisions without reasonable cause. Hence accused has
\ncommitted an offence punishable under section 276B of Act. Hence,
\npresent complaint.
\n4. After filing of the complaint, cognizance was taken and
\ncase was registered against the accused for offence punishable u\/s.
\n276B of the Income Tax Act. The process was issued u\/s. 276B of the
\nIncome Tax Act. Notice was served on the accused, in response to the
\nnotice, accused appeared through his Counsel and enlarged on bail.
\n5. The complainant complied the formalities u\/s. 207 of Cr.
\nP.C. All the documents were furnished to the accused. Thereafter
\nevidence of the complainant and sanctioning authority was recorded
\nbefore charge and after hearing both the sides my Predecessor hold that
\nthere is sufficient material to frame the charge and accordingly charge
\n..4..
\nwas framed against the accused as per Ex.17 u\/s. 276B of the Income
\nTax Act. Contents of the charge were read over to the accused in
\nvernacular. Accused pleaded not guilty and claimed for trial. The plea
\nof the accused is at Ex.18.
\n6. In order to prove the charges leveled against the accused,
\nthe complainant has examined two witnesses. These are C.W.1 Vinod
\nKumar Pande, sanctioning authority at Ex.10 and C.W.2 Ajay
\nGhanshyam Kamble, complainant at Ex.19 and placed number of
\ndocuments on record. After closer of evidence of the complainant,
\nstatement of accused u\/s. 313 of Cr. P.C. was recorded at Ex.23. The
\naccused denied incriminating evidence put to him. Defence of accused is
\nof total denial. The accused submitted that TDS amount is already
\ndeposited with the Government and he is regular payee of the tax and
\nfalse case filed against him.
\n7. From the contents of the complaint and evidence of both
\nthe sides, after hearing Ld. Advocate for complainant and accused at
\nlength, following points arise for my determination and I have recorded
\nmy findings against each point with reasons as follows Sr.
\nNo. Points Findings
\n1 Does prosecution prove that, accused is
\nresponsible for deduction of Tax at source
\nbut accused failed to pay TDS of the
\nFinancial year 20092010
\nand Assessment
\nyear 20102011
\nto the credit of Central
\nGovernment within time without any
\njustifiable reason and thereby committed
\nan offence punishable u\/s. 276B of The
\nIncomeTax
\nAct? ..In the affirmative.
\n2 What order ? As per final order.
\n..5.. C.C.No.95\/SW\/2014.
\nJudgment.
\nREASONS.
\n8. In order to prove the guilt against the accused, complainant
\nhas examined C.W.1 Vinod Kumar Pande, sanctioning authority at
\nEx.10 and C.W.2 Ajay Ghanshyam Kamble, complainant at Ex.19.
\nExcept that no other witness was examined by the complainant. While
\ncomplainant relied upon documentary evidence i.e. proposal Ex.14,
\nreply Ex.15, show cause notice Ex.12, 13, 16, details of traces Ex.20,
\nsanction order Ex.11. Except that no other oral or documentary
\nevidence led by the complainant. Thereafter complainant has filed
\nevidence closed pursis at Ex.21. While in defence accused has not led
\nany oral or documentary evidence and filed evidence close pursis at
\nEx.25.
\nAs to Point No.1:
\n9. It is the case of complainant that the accused has deducted
\nthe tax amount but failed to deposit the tax within stipulated period
\nprescribed in the Income Tax Act to the Central Government, therefore
\naccused has committed offence u\/s. 276B of the Income Tax Act.
\nIn order to prove the guilt against the accused, complainant has
\nexamined two witnesses. C.W.2 Ajay Ghanshyam Kamble, complainant
\ndeposed at Ex.19. He deposed that from 2013 to 2015 he was attached
\nto TDS office situated at Charni Road, Mumbai. He received sanction
\norder from CIT(TDS) Shri. V.K. Pandey for launching prosecution
\nagainst the accused Firoz Nadiadwala. During assessment of case of
\naccused he found that accused had deducted tax of Rs. 8,56,102\/of
\nthe financial year 20092010
\nbut deducted tax amount not deposited or
\npaid to the Central Government account within stipulated time. The
\nperiod of deduction of tax amount is up to the 7th day of next month.
\n..6..
\nHe collected the information from the system of his department and
\nfound that accused was defaulter for non payment of tax amount within
\nstipulated time. The traces statement is at Ex.20. The accused
\ndeposited tax and TDS amount after expiry of 12 months.
\n10. The witness was crossexamined.
\nIn the crossexamination
\nwitness admitted that he did not remember which documents are
\nannexed with sanction order by CIT(TDS), he also did not remember on
\nwhich date he received the sanction order. He has not issued the notice
\ndtd. 27\/09\/2012 and the said notice was issued by his Predecessor. He
\ndenied that he was not signatory of any document filed on record. He
\nadmitted that reply given by the accused to show cause notice is seen by
\nhim before filing of complaint. He did not file reply of the accused of
\nshow cause notice as he do not want it is necessary. He admitted that
\nEx.20 is unsigned document and there was no mention of name of
\nGovernment Website. He admitted that in the complaint nowhere
\nmentioned about Ex.20 is generated by him personally from official
\ncomputer system traces. He did not remember on which date accused
\nfiled income tax returns of financial year 20092010
\nand year 20102011.
\nOn Ex.20 there are 104 PAN numbers are mentioned. Witness
\nadmitted that the amount of Rs. 8,56,102\/was
\ndeposited by the
\naccused. He also admitted that in his complaint it was mentioned that
\naccused deposited said amount and delayed by 12 months. He
\nadmitted that his department levied penalty, interest and legal fees in
\ncase of delayed payment. He admitted that accused deposited same
\namount in the department. He did not remember about the
\ncorrespondence dtd. 09\/10\/2012 made by the accused with
\ndepartment. The sanction order is of dtd. 25\/03\/2014 while he filed
\ncomplaint on 26\/03\/2014 but denied that he has no any authority to
\nfile the complaint. Witness denied that accused has given satisfactory
\n..7.. C.C.No.95\/SW\/2014.
\nJudgment.
\nexplanation to the department but department has not considered his
\nexplanation about delayed payment of TDS. He denied that department
\nhas accepted the amount from the accused after giving satisfactory
\nexplanation by the accused, by accepting explanation of the accused.
\nHe denied that he has filed false complaint against the accused without
\nany authority.
\n11. By perusing the evidence of complainant, it seems that as
\nper the directions given by Principal Income Tax Commissioner(TDS),
\nhe has filed complaint against the accused as accused deducted the tax
\nbut not deposited the said amount with tax authority within stipulated
\ntime. The witness admitted that the accused have paid the TDS
\namount but amount was paid by the accused after expiry of
\nstipulated time. As per directions given, witness filed present complaint
\nas per authority given to him.
\n12. C.W.1 Vinod Kumar Pande, sanctioning authority deposed
\nat Ex.10. He deposed that he has passed sanction order for prosecution
\nagainst the accused on 25\/03\/2014 as per Ex.11 and authorised
\ncomplainant Ajay Kamble to file complaint against the accused. Before
\ngranting sanction he issued show cause notice dtd. 12\/11\/2012 as per
\nEx.12 & 13. The proposal came from Shri. Ramankumar I.T.O. TDS
\n1(5) as per Ex.14, reply received by the accused as per Ex.15. Assessee
\ndeducted the TDS from various payment made to others but assessee\/
\naccused did not deposit TDS with the Government within stipulated
\nperiod. On 01\/10\/2013 notice was issued to the accused through ITO
\nhead quarter, Mumbai and one more opportunity was given to accused
\nbut accused not complied with the same.
\n..8..
\n13. The witness was crossexamined
\nby defence. In the crossexamination
\nthe witness admitted that he has gone through the record
\nof assessee. In the financial year 20092010
\nassessee deducted Rs.
\n8,56,102\/but
\ndeposited said amount after 12 months. He did not
\nremember whether accused gave a reply to the notice. Witness denied
\nthat if the amount of income exceeded Rs. 20,000\/then
\nTDS would be
\napplicable. To the notice issued by him, accused gave reply dtd.
\n17\/12\/2012 but witness denied that he ignored that reply. When he
\nfound that reply of accused is not satisfactory that is why he has passed
\nsanction order for launching prosecution against the accused. He
\ndenied that before passing sanction order he had not gone through the
\nreply of assessee. He denied that in spite of satisfactory explanation
\ngiven by the accused, he passed sanction order in the year 2014. He
\ndenied that he passed orders without verifying details of assessee and
\nnot verified whether the said amount comes under the exceptions of
\nsection 192 clause1 A of Income Tax Act.
\n14. C.W.2 is the sanctioning authority, as per procedure and
\nauthorisation given by the Act to him and by perusing relevant
\ndocuments and by applying his mind and after considering all the
\nrelevant factors, he passed sanction order against the accused for
\nprosecution. Nothing brought on record from the mouth of this witness
\nto discard his testimony.
\n15. Spl. Public Prosecutor Shri. Munde argued that on perusal
\nof the evidence on record the guilt of accused is proved. The accused
\ndeducted TDS but failed to deposit the deducted tax to the Government
\nwithin stipulated perod. The accused himself admitted the said fact
\n..9.. C.C.No.95\/SW\/2014.
\nJudgment.
\nduring recording the statement under section 313 of The Code of
\nCriminal Procedure as well as in his reply to the show cause notice
\ntherefore accused be punished as per law. The Advocate also submitted
\nthat the accused is duty bound to remit the deducted TDS amount
\nwithin stipulated period of time as prescribed in Rule 30 Income Tax
\nrules and the failure to remit the TDS after its deduction within
\nstipulated period of time attracts penal provision contained in section
\n276B of The IncomeTax
\nAct. The deducted TDS amount belongs to the
\nGovernment and the payer acts in fiduciary capacity. Thus, it is
\nbounden duty to remit the TDS to the Government account and no
\namount of helplessness and financial difficulty will not come in the
\nrescue of the payer. The payer is not entrusted to retain the deducted
\nTDS and used the same for any other purpose. Thus, the accused has
\nfailed to comply with the statutory provisions without reasonable cause,
\nhence committed an offence punishable under section 276 B of IncomeTax
\nAct.
\n16. Advocate for accused submitted that before any initiating the
\nprosecution, the accused has deposited all the TDS amount to the
\ndepartment, therefore present complaint is not maintainable. It is also
\nsubmitted by Advocate that during the stipulated period, the
\neconomical condition of the accused is not well and the business of the
\ncomplainant was not in a good condition. After March 2008, there were
\nno active film production. His income comprised of only sale receipt of
\nold movie. No new movie released during three years therefore accused
\ncould not paid TDS amount within stipulated period. The accused
\nsubmitted reply to the show cause notice and this is the first time
\naccused defaulted for payment of money. It is further submitted that in
\n..10..
\nview of the instructions issued by Government Of India, Ministry Of
\nFinance, CBDT dt. 28.05.1980, the prosecution under section 276B are
\nnot expected to be proposed when the amount involved and period of
\ndefault is not substantiated and the amount in default has also been
\ndeposited, in the meantime, to the credit of Government along with
\ninterest and these instructions are binding on the Government.
\nAdvocate for accused also submitted that in view of provisions under
\nsection 278AA when there is reasonable cause, in such cases, no penalty
\nshould be imposed. On that basis Advocate for accused submitted that
\naccused is entitled for acquittal.
\n17. It is not disputed that the accused had deducted the TDS
\namount of Rs.8,56,102\/for
\nthe period from 01\/04\/2009 to
\n31\/03\/2010. It is admitted that accused not deposited said amount
\nwithin stipulated period i.e. on or before 7th day of next month. It is also
\nadmitted position that subsequently out of total amount deducted under
\nsection 194A, 194C,194H and 194J of the Act accused paid all the
\namount with interest as required under section 201A of the Act. Owing
\nto the delay in payment of the aforesaid amount. The accused paid TDS
\namount after statutory period, therefore there was delay for the
\npayment of amount. The complainant during the evidence brought on
\nrecord that the accused deducted TDS, but not deposited and deposited
\nafter the period of 12 months. It means that the accused not deposited
\nTDS amount within stipulated time or deposited beyond the period of
\nstatutory limit, the accused not denied the same fact. The accused is
\nresponsible to deposit deducted TDS amount within stipulated time as
\nper section 200 and 204 of the Act and accused committed default.
\n..11. C.C.No.95\/SW\/2014.
\nJudgment.
\n18. Advocate for accused submitted that sanction accorded by
\nsanctioning authority under section 279(1) of Income Tax Act for
\nlaunching prosecution against accused under section 276B of IncomeTax
\nAct is mechanical and contrary to the instructions issued by the
\nCentral board of Direct taxer dt. 28.05.1980. Advocate for accused
\nfurther submitted that section 278A of the Act postulates an express bar
\non punishment under section 276A, 276AB or 276B of the Act. If access
\nis proved that there was reasonable cause for such failure. In the
\npresent case accused shows reasonable cause about financial difficulty
\nand payment of taxes to the Government and shows bonafides the tax
\nalong with interest has been paid, therefore the prosecution is
\nunwarranted. While Advocate for complainant submitted that by
\nmaking payment of TDS amount along with interest will not exonerate
\nthe accused from the liability of section 278B of the Act. Accused
\ndeducted the tax at the source, but did not deposit with Central
\nGovernment within specified time limit.
\n19. Advocate for accused submitted that sanction accorded
\nwithout proper offering opportunity and not considered say or reply and
\nonly mechanical sanction is granted. Accused gave a reply to show
\ncause, but it was not considered by sanctioning authority, but here in
\nthis case the sanction order on record at Ex.12 in paragraph No. 05 of
\nEx.12, the sanctioning authority mentions that the facts and materials
\nplaced before me which I have gone through fully and carefully
\nexamined and I am further satisfied that adequate ground exist to
\nprosecute the said person.
\n20. Sanction is an administrative function and is only to see that
\nfrivolous or avoidable trials do not take place notwithstanding that it is
\n..12..
\nan objective exercise by the sanctioning authority to consider the
\nmaterial on record to satisfy himself whether a case fit for launching
\nprosecution exists, on such satisfaction, the sanction can be accorded
\nand thereafter the trial proceedings in which the person sent proceeded
\nagainst has ample opportunity to defend himself against the allegations
\nmade against him and to meet the evidence, led to substantiate those
\nallegations by the prosecution. In the present case notice is given before
\nissuance of sanction to which reply was filed by accused and after
\nconsidering all the relevant facts and material on record sanction was
\ngranted.
\n21. Advocate of accused submitted that no proper sanction to
\ninitiate the criminal proceeding against accused person as sanction
\norder does not mentioned any details regarding explanation given by
\nthe accused in respect of delay in making the payment. Sanction order
\nat Ex.11 is on record and that discloses in paragraph No.05 that \u201c the
\nfacts and material placed before me which I have gone through fully
\nand have carefully examined and I am further satisfied that adequate
\ngrounds exists to prosecute the said person\u201d, accordingly sanction was
\ngranted to initiate the criminal proceeding. In case of Gopal
\nEngineering V\/s Thanngaraja reported in 1995 211 ITR 303, it is
\nheld that \u201c there is no necessity that each and every aspect of the case
\nmust be dealt with in the authorisation\u201d. Thus there is no merit in the
\ncontention of the accused that there is no proper sanction to initiate the
\ncriminal proceeding against the accused person.
\n22. Section 277AA provides a window for the accused to
\nescape from the penal consequence by proving that he had reasonable
\n..13.. C.C.No.95\/SW\/2014.
\nJudgment.
\ncause for the nondepositing
\nof deducted TDS amount within time limit.
\nThe accused taken defence that financial constraints and lower down
\nthe business activity during financial year 20092010
\nas no active film
\nproduction and income only comprised old films sale resulted in not
\ndepositing of TDS amount but except putting suggestions and say filed
\non record, no material is produced to substantiate the fact. Say of the
\naccused on record which shows that the taxes are deducted and same
\nwas deposited but it is delayed. But accused during the trial not
\nproduced any material to substantiate the contentions referred above.
\nMere taking of the contentions is not amounting to offering a
\nreasonable cause for the failure to remit the deducted TDS.\u201d It is the
\ndefence of accused that accused gave detailed explanation of non
\npayment of TDS in time where accused’s business activities during the
\nfinancial year 20092010
\nis not active in film production. His income
\ncomprised only sale receipts of old movies and no movies were
\ncompleted and sold or released during three years, also problem of
\ncompetent staff, accountants negligence, accused not aware about
\ndeducted and payment of tax voluntary payment of TDS and small
\namount of default. There is no intentional default, no mens rea, but
\nbecause of above reasons accused could not deposited TDS in time. But
\naccused not produced any material to substantiate the contention above
\nreferred. Mere taking up the contention is not amounting to offering a
\nreasonable cause for the failure to remit the defaulted TDS.
\n23. Advocate of complainant submitted that financial
\nconstrains could not be made as a ground to evade the penal
\nconsequences. Once TDS amount is deducted then the deductor is
\nlegally bound to remit the same to the Government. The accused has no
\nright to retain the TDS amount and make use of the same for any
\n..14..
\npurpose. The financial difficulty is not defence of the default. As far as
\nnot having mens rea is concerned, it is submitted that mens rea is not
\nprerequisite
\ningredients to the offence under section 194C of The
\nIncomeTax
\nAct. If accused fails to make deduction of tax at source, he
\nis liable to be punished for the said offence. This liability is an absolute
\nliability.
\n24. Thus mens rea is not a requisite ingredient of the offence
\nunder section 194A, 194C and 276B of The IncomeTax
\nAct. If accused
\nfailed to make deduction of tax at source, he is liable to be punished for
\nthe said offence. Section 276B of the Act does not contain the word
\n\u201cknowingly\u201d. It provides punishment for contravention of the provisions
\ncontained in section 194(A). Section 194A requires the person making
\nany payment of interest to deduct the tax at the rate in force. This
\nliability is an absolute liability. Deficit deduction or non deduction was
\na conscious act therefore in a case under section 276B r\/w sec. 194A
\nmens rea is not required.
\n25. Advocate for accused submitted by referring of the
\ndocuments on record and answers given by the complainant in crossexamination
\nthat the deducted TDS amount with interest,penalty and
\nlegal fees deposited by accused before initiation of proceeding. Hence,
\nthe present complaint is not maintainable. This contention is not
\nsubstantiate under law because the offence punishable under section
\n276B of The IncomeTax
\nAct is complete when the tax deducted at
\nsource is not deposited within given time and late deposit will not
\nabsolve the accused.
\n26. Advocate of accused submitted that since TDS has already
\n..15.. C.C.No.95\/SW\/2014.
\nJudgment.
\nbeen deposited to the account of Central Government, there was no
\ndefault and no prosecution can be ordered. There is no provision in the
\nIncomeTax
\nAct imposing criminal liability for delay in deduction as for
\nnon payment in time. I am unable to agree with Advocate of accused
\nonce statute requires to pay tax and stipulates period within which such
\npayment is to be made, the payment must be made within that period,
\nthere is default and appropriate acton can be taken under the Act.
\n27. Advocate for accused pointed out section 278E of the Act
\nwhich shows that if any prosecution for any offence under this act
\nwhich requires a culpable mental state on the part of accused, then
\nCourt shall presume the existence of such mental state, but it shall be a
\ndefence for the accused to prove the fact that he has no such mental
\nstate with respect to the Act charged is an offence in that prosecution.
\nAdvocate of accused submitted that the accused have no mental state or
\nno intention to avoid payment of TDS, but there are some financial
\nproblems under such circumstances, accused default in making payment
\nof TDS and tax were paid at belated stage. If the defence of the accused
\nabout existence of such mental state, then burden lies upon the accused
\nto prove that he had no mental state with respect to the Act charged as
\nan offence in that prosecution. In the present case there is no evidence
\nthat there is no culpable mental state of mind from the part of accused
\nperson if the failure deposit TDS amount beyond time limit. There is no
\npositive evidence brought on record, therefore it appears that accused
\nfailed to rebut the presumption lies against him under section 278E of
\nThe IncomeTax
\nAct.
\n..16..
\n28. Before proceeding further it shall be useful to see the
\nrelevant instructions, the same reads as \u201cthe prosecution under
\nsection 276B should not normally be proposed when the amount
\ninvolved and for period of default is not substantial and the amount
\nin default has also been deposited in the meantime to the credit of the
\nGovernment. No such consideration will of course apply to levy of
\ninterest under section 201, section 278AA of the Act reads as \u201c
\npunishment not to be proposed in certain casesNotwithstanding
\nanything contained in the provisions of section 276A, 276AB or 276B,
\nno person shall be punishable for any failure referred to in the said
\nprovision if he proves that there was reasonable cause for such
\nfailure. This section provides a window for accused to escape from the
\npenal consequence by proving that he had reasonable cause for the
\nnondepositing
\nof deducted TDS amount within time limit.
\n29. Advocate for accused contended that accused had given
\nreason for failure to pay tax in time due to to financial problem,
\ncompetent staff, accountant’s negligence, accused not aware about
\ndepositing tax, but accused during trial not proved the same. The
\naccused taken defence that due to financial problem resulted in not
\ndepositing of TDS amount, but except putting suggestions and say filed
\non record, no material is produced to substantiate the fact. Mere taking
\nof the contentions is not amount to offering a reasonable cause for
\nfailure to remit the deducted TDS. The accused not proved that during
\ntrial by leading evidence that there was reasonable cause for not
\ndepositing the aforesaid tax amount within specified time limit.
\n30. Section 276B of The IncomeTax
\nAct reads as
\n\u201cFailure to pay tax to the credit of Central Government under Chapter
\nXIID
\nor XVIIB
\nIf
\na person fails to pay to the credit of the Central
\n..17.. C.C.No.95\/SW\/2014.
\nJudgment.
\nGovernment (
\na) the tax deducted at source by him as required by or under the
\nprovisions of Chapter MVIIB;
\nor
\n(b) the tax payable by him, as required by or under (
\ni) subsection(
\n2) of section 115O;
\nor
\n(ii) the second proviso to section 194B
\nhe shall be punishable with rigorous imprisonment for a
\nterm which shall not be less than three months but which
\nmay extend to seven years and with fine.
\nIncome Tax Act makes separate provisions for levy of
\ninterest, penalty and criminal prosecution. The charging of interest has
\naltogether a different purpose and i.e. for compensating the revenue
\nfor depriving it of the user of the money during the period the payment
\nwas withheld. The provisions with regard to criminal prosecution in
\ncases of economic offences or violations of income tax law are of recent
\ngrowth and their desirability and for necessity was felt because of
\nrampant attitude of the defiance displayed by some affluent sections of
\nthe society. The pernicious effect on the economy of the country that
\nevasions and violations were playing naturally called for sterner
\nmeasures. These prosecutions has thus been made permissible in spite
\nof the already existing provisions with regard to levy of penalties by
\nincome tax authorities. The legislature’s wisdom, therefore, to open up
\nprosecutions and dire consequences has a sound basis and can not be
\ndoubted. There is no question of Double Jeopardy in such cases. The
\nmain objectives of prosecution provisions contained in Chapter XXII of
\nthe Act is to punish the offenders found guilty of the tax evasion and
\nother tax related offence and to install fear of ‘law’ in the minds of
\n..18..
\nthose, who may even contemplate evading payment of legitimate taxes.
\nThe scope and purport of penalty proceedings and prosecutions are
\nseparate and independent. The existence of one or the other is not bar
\nto any of them. They are coexisting.
\nAn accessee can be levied penalty
\nas well as punished by the prosecution. It is defence of the accused that
\nthey has paid all the amount with interest and penalty. No doubt the
\naccused has paid all the tax amount. It was not paid within stipulated
\nperiod, but it was paid after delay and said fact was not disputed by the
\naccused.
\n31. It is the defence of accused that delay in depositing TDS
\nand interest on such delay was due to reasons beyond its control.
\nHowever, this plea of accused does not hold much water. The accused
\nhas not explained as to what has prevented or under which
\ncircumstances TDS could not be deposited in time. Except bald
\nstatement accused has not produced any document on record or lead
\nany defence evidence to show its bonafide for not depositing TDS
\nwithin time. Said defence was taken by the accused before IncomeTax
\nauthorities, but IncomeTax
\nDepartment not to considered the defence
\nof accused. Reasonable excuses shown by the accused before granting
\nsanction for prosecution. But accused failed to brought on record said
\ndefence taken before income tax officer during proceeding before the
\nconcern department and to show these documents before the concern
\ndepartment. It is contention of accused that accused paid all deducted
\nTDS amount with interest and penalty. In spite of that, sanction was
\ngranted by Commissioner of Income Tax u\/s. 279(1) of IncomeTax.
\nBut, here in the present case, accused not applied for compounding of
\noffence. Under the IncomeTax
\nAct, all the powers are vested with
\ndepartment about compounding. But here accused not availed the said
\n..19.. C.C.No.95\/SW\/2014.
\nJudgment.
\nremedy. Therefore it can be conclude that the accused have number of
\ndefences but accused has not brought on record that there was
\nreasonable cause and accused not followed proper procedure and not
\navailed opportunity given to them. Therefore defence taken by accused
\nwas not proper.
\n32. Section 200 of I.T. Act obligates a person, deducting any
\nsum in accordance with the various provisions under the chapter to pay
\nwithin the prescribed time period in the treasury of the Central
\nGovernment, the sum so deducted to the credit of the Central
\nGovernment or as the board directs. In this case, breach of provisions of
\nsection 200 of I.T. Act has been alleged against the accused for which
\nsanction for prosecution has been granted u\/s.279 of the Act.
\n33. However, for breach, one of consequence is to levy penalty
\nas provided u\/s.201 which reads as under Sec.
\n201Consequences
\nfor failure to deduct or pay (
\n1) where any
\nperson including the principal officer of a company (
\na) who is required to deduct any sum in accordance with
\nthe provisions of this Act; or
\n(b) referred to in subsection
\n(1A)
\nof section 192, being an
\nemployer, does not deduct, or does not pay, or after so deducting fails
\nto pay the whole or any part of the tax, as required by or under this Act,
\nthen, such persons shall, without prejudice to any other consequences
\nwhich he may incur, be deemed to be an assessee in default in respect
\nof such tax:
\n34. From the aforesaid provisions, it is apparent that
\n..20..
\nnotwithstanding treating a company which has not deposited the tax to
\nthe credit of Central Government within prescribed time as an assessee
\nin default to be liable to penalty. It further makes it clear that such
\npenalty is not to be imposed on any person, whether in his own
\ncapacity, as a company or as Principal Officer of the company unless
\nAccessing Officer is further satisfied that such person or Principal
\nOfficer of the company, as the case may be, has failed to deduct and to
\npay tax without any good and sufficient cause. Therefore, a bonafide
\ndefault with good and sufficient reasons in payment of tax required to
\nbe deducted at source to the treasury within prescribed time mitigates
\nthe gravity of the offence to an extent that even penalty for such breach
\ncan not be imposed.
\n35. It is argued on behalf of the accused that in reply to show
\ncause notice at Ex.15 dt. 17.12.2012 the accused gave reasons for non
\npayment of the tax, but the Principal Commissioner of IncomeTax
\nhas
\nnot gone through it and not considered the same as reasonable cause
\nfor non paying TDS to the Government, but during granting sanction
\nthe Principle Commissioner Of IncomeTax
\nspecifically held in
\nparagraph of Ex.11 that \u201c The facts and materials placed before me
\nwhich I have gone through fully and have carefuly examined and I am
\nfurther satisfied that adequate grounds of exist to prosecute the said
\nperson\u201d. Thus, contention of defence about concerned authority is not
\nconsidered and to grant prosecution is not tenable and proper. It is also
\ndefence of accused that sanctioning authority not applied proper rules
\nduring granting the sanction, but on perusal of section order the
\nsanctioning authority clearly gave finding about applying the mind and
\nthereafter granted sanction, therefore there is no question of non
\napplying of mind would arise. Therefore, it clear that accused gave
\n..21.. C.C.No.95\/SW\/2014.
\nJudgment.
\nopportunity for explaining for non payment of tax, but accused not
\navailed the same. Therefore accused not given reasonable cause for
\ndelaying payment of tax.
\n36. It is the defence of accused that reply was filed by the
\nChartered Account of accused and accused is not aware about the same,
\nbut the said defence of accused is not acceptable because the reply filed
\non record and it was not possible for C.A. without giving any authority
\nand without instructions by accused, he cannot filed reply to the
\nconcerned authority. Moreover, accused has not examined his C.A. as a
\ndefence witness. In spite of stating during recording of statement of
\naccused under section 313 of Criminal Procedure about to examine C.A.
\nbut not examined him and brought on record, the said fact, best reason
\nknown to the accused. Moreover, as per the contentions of accused his
\nChartered Accountant without his instruction, Chartered Accountant
\nfiled reply in the proceeding. Thereafter, accused have liberty to take
\nnecessary steps against the CA for filing reply in the proceeding without
\nauthority and without any information, but in the present case no any
\nevidence brought on record to show that C.A. of accused filed reply
\nwithout consent of accused, hence defence is not accepted.
\n37. Advocate for accused argued that whole prosecution case is
\non annexure B i.e. Ex.20 which is TDS default statement on Traces. As
\nper the contentions of accused, the document is not proved by
\ncomplainant and it can not be read in evidence and this document have
\nno evidentiary value and not proved as per law as no any signature on
\ndocument, the documents does not reflect in any manner that he has
\n..22..
\nbeen generated to the office system and bears the name of the
\nGovernment of India or any dominion made to the IncomeTax
\nAct also
\nno where mentioined that Ex.20 has been generated by the witness
\npersonally from office computer traces, also witness not known how the
\nentries Ex.20 are generated, not examined any witness who feed data,
\nwho obtain print out, as well as no certificate annexed under section
\n65B of The Evidence Act. On the basis of which date is accessed and
\ndocument is not verified with IncomeTax
\nDepartment. Hence, Advocate
\nfor accused submitted that document is not admissible.
\n38. While Advocate for complainant submitted that the
\ndocument is not a CD or DVD. The document is auto generated by
\nputting PAN or TAN number in which cases certificate under section
\n65B of Evidence Act is notnecessary. The certificate is required for
\nservice provider, but concerning with contention of Advocate of
\ncomplainant is not acceptable.
\n37. As per authority in case of Anwar P.V. V\/s P.L. Bashir
\n(2014)10 SCC, 473, the Hon’ble Apex Court held that \u201cAn electronic
\nrecord by way of secondary evidence shall not be admitted in evidence
\nunless the requirement under section 65B are specified. Thus, in case of
\nCD, DVD chips etc, the same shall be accompanied by certificate in
\nterms of section 65B obtained at the time of taking document, without
\nwhich the secondary evidence pertaining to that electronic record is
\ninadmissible. In the present case complainant has not complied the
\nprovisions of section 65B of Evidence Act and the document is not
\nproved as per law and it is not admissible in evidence. here, in the
\npresent case, the case of prosecution is not entirely on the said
\ndocument where in the present case accused admitted that he paid
\n..23.. C.C.No.95\/SW\/2014.
\nJudgment.
\nTDS amount to the Government Treasury after statutory period which is
\nadmitted by filing reply as well as during recording statement of
\naccused under section 313 of Cr.P.C. Admission is best evidence to
\nprove the allegations. The fact of deposit of tax amount within time has
\nbeen proved by the complainant by leading evidence. Thus, there is no
\nfurther evidence required to prove the case of complainant.
\n39. From the above discussion it is clear that it is admitted by
\nthe accused that accused not paid deducted TDS amount within
\nstipulated time. No doubt, in the present case, accused paid the tax
\nwith interest and penalty, but tax was paid after stipulated period. The
\naccused not preferred the application for compounding the offence
\nbefore concern authority where as per act the powers of compounding
\nwas only given to Commissioner of IncomeTax,
\nbut accused not availed
\nthe same. Also sanction granted by sanctioning authority after
\nconsidering the documents and applying mind. After considering all the
\nmaterial facts before the court and the defence of the accused about
\nreasonable cause is not proper. The accused has defaulted to pay the
\ntax within stipulated time to the Central Government from the TDS
\namount for the financial year 20092010
\nand assessment year 20102011
\nand accused is the only person to pay the said amount. No doubt
\nin the present case the accused has deposited the TDS in the amount of
\nCentral Government but depositing amount at belated stage.
\n40. The advocate for the complainant relied on the authority
\nreported in Madhumilan Syntex Ltd; and Ors. v\/s Union of
\nIndia(UOI) and Ors. AIR 2007 SC (148). The Hon’ble Apex Court in
\npara. 37, 40 and 41 held that 37
\n\u201c
\nOnce a statute requires to pay tax and stipulates period within
\n..24..
\nwhich such payment is to be made, the payment must be made within
\nthat period. If the payment is not made within that period, there is
\ndefault and an appropriate action can be taken under the Act.\u201d
\n40 \u201c
\nIt is true that the Act provides for imposition of penalty for non
\npayment of tax. That, however, does not take away the power to
\nprosecute accused persons if an offence has been committed by them.\u201d
\n41 \u201c
\nFinally, the contention that a civil suit is filed by the complainant
\nand is pending has also not impressed us. If a civil suit is pending, an
\nappropriate order will be passed by the competent Court. That,
\nhowever, does not mean that if the accused have committed any
\noffence, jurisdiction of criminal court would be ousted. Both the
\nproceedings are separate, independent and one can not abate or defeat
\nthe other.\u201d
\n41. Considering the above referred authority and the present
\ncase, it appears that if the payment is made at belated stage then it will
\nbe treated as default and appropriate action can be taken under this
\nAct. It also clear that deposit of TDS with delay does not absolve
\ncriminal liability. If it is considered that accused paid the amount after
\nperiod of 12 months, in such circumstance, complaint is maintainable
\nand it does not absolve criminal liability of the accused persons.
\n42. Considering all the discussion and record, it clear that the
\naccused deducted TDS amount for the relevant financial year 20092010
\nbut failed to deposit the TDS amount with Government account
\nwithin stipulated time. The accused is responsible person to pay the
\namount within time. The factum of nondeposit
\nof tax amount within
\ntime has been proved and admitted by the accused during statement
\nrecorded u\/s. 313 of Cr.P.C. Thus, no further evidence is required to
\n..25.. C.C.No.95\/SW\/2014.
\nJudgment.
\nprove the case of the complainant. Admission is the best evidence to
\nprove the allegations. Thus, in view of aforesaid case laws and
\nadmission by the accused, the case of complainant stands proved. All
\nthe facts clearly indicates that accused deducted the TDS for the
\nrelevant period and did not deposit the same with Government account
\nwithin stipulated period and withheld the same for her own use.
\nAccused can not be allowed to use the tax amount, so deducted for any
\nother purpose. The TDS deducted on behalf of the Government and
\nshould be deposited in Government account. Deductor is not supposed
\nto finance their business through Government money. Therefore,
\nconsidering the evidence available on record, I come to conclusion that
\nthe accused is the person to pay tax within time and accused failed to
\ndeposit TDS within time. Therefore, the complainant has proved the
\ncase against the accused beyond reasonable doubt and proved the guilt
\nof the accused u\/s. 276B of I.T. Act. Therefore, I answer point no.1 in
\naffirmative. I heard the accused on the point of sentence.
\nDate:25.04.2019. ( R.S. Sarkale )
\nAddl. Chief Metropolitan Magistrate,
\n38th Court, Ballard Pier, Mumbai.
\n43. Heard accused, advocate of accused and Special P.P.
\nAccused submitted that this is his first offence and he has already paid
\ntax amount with interest to the Government Treasury and submitted
\nto show leniency. While advocate for accused submitted that this is
\nhis first offence already all TDS amount with interest, penalty and
\nlegal charges are paid to Government Treasury and prayed for
\nleniency.
\n..26..
\n44. On the other hand, Ld. Spl.P.P. Munde submitted
\nthat accused is the educated person and he had sufficient amount to
\npay TDS amount, but he failed to do so. The accused failed to credit
\nthe amount in Government account and used said amount for any
\nother purpose, therefore this aspect cannot be viewed lightly and
\nprayed for maximum punishment for accused.
\n45. Considering the submission of either side, it is well
\nestablished that accused committed alleged offence. Before authority,
\nhe also remain absent. No any application for compounding the
\noffence is filed. It appears that there is culpable mental state of the
\naccused for non depositing of TDS amount within time therefore, he
\nis liable for punishment. The offence U\/sec. 276B of IncomeTax
\nAct
\n1961 is punishable with rigorous imprisonment which shall not be
\nless than three months and which may extend to 7 years and with
\nfine. The matter is on record not substantiate the contention of
\naccused that due to financial crunches fund problems, accountants
\nnegligence, accused not aware about payment of depositing tax
\nconstrains resulted in not depositing TDS amount. However, there is
\nno allegation that accused is irregular in paying the tax other than the
\ncase in hand. Thus, the Court is of the considered view that accused is
\nliable for possible sentence of 3 months rigorous imprisonment and
\nfine. It is the minimum punishment. The Court is not having
\ndiscretion in reducing the sentence. Therefore, accused shall undergo
\nrigorous imprisonment for a period of 3 months and fine of
\nRs.5,000\/(
\nRs. Five Thousand only) for having committed offence
\nU\/sec. 276B of IncomeTax
\nAct. From the above said reasons and
\ndiscussions, my findings recorded as to point No.1 in the affirmative
\nand proceed to pass the following order.
\n..27.. C.C.No.95\/SW\/2014.
\nJudgment.
\nORDER.
\ni. By exercising the power conferred U\/sec. 248(2) of The
\nCode of Criminal Procedure the accused Firoz Abdul Gafar Nadiadwala
\nis convicted for the offence punishable U\/sec.276B of The IncomeTax
\nAct, 1961.
\nii. The accused shall undergo rigorous imprisonment for a
\nperiod of three months and to pay the fine of Rs.5,000\/(
\nRs. Five
\nThousand only) in default of payment of fine, the accused shall undergo
\nsimple imprisonment for a period of 30 days for the offence punishable
\nU\/sec. 276B of The IncomeTax
\nAct, 1961.
\niii. Bail bonds of accused shall stands surrendered.
\niv. Copy of Judgment be provided to the accused on free of
\ncosts.
\nv. Dictated and pronounced in open Court, before parties and
\ntheir counsels.
\nsd x.x.x.
\nDate:25.04.2019. ( R.S. Sarkale )
\nAddl. Chief Metropolitan Magistrate,
\n38th Court, Ballard Pier, Mumbai.
\nDictated on 22.04.2019
\nTranscribed on 23.04.2019
\nSigned on 25.04.2019
\nsd x.x.x.
\nDate:25.04.2019. ( R.S. Sarkale )
\nAddl. Chief Metropolitan Magistrate,
\n38th Court, Ballard Pier, Mumbai.<\/p>\n","protected":false},"excerpt":{"rendered":"

Considering all the discussion and record, it clear that the accused deducted TDS amount for the relevant financial year 20092010 but failed to deposit the TDS amount with Government account within stipulated time. The accused is responsible person to pay the amount within time. The factum of non deposit of tax amount within time has been proved and admitted by the accused during statement recorded u\/s. 313 of Cr.P.C. Thus, no further evidence is required to prove the case of the complainant. Admission is the best evidence to prove the allegations. Thus, in view of aforesaid case laws and admission by the accused, the case of complainant stands proved. All the facts clearly indicates that accused deducted the TDS for the relevant period and did not deposit the same with Government account within stipulated period and withheld the same for her own use. Accused can not be allowed to use the tax amount, so deducted for any other purpose. The TDS deducted on behalf of the Government and should be deposited in Government account. Deductor is not supposed to finance their business through Government money. Therefore, considering the evidence available on record, I come to conclusion that the accused is the person to pay tax within time and accused failed to deposit TDS within time. Therefore, the complainant has proved the case against the accused beyond reasonable doubt and proved the guilt of the accused u\/s. 276B of I.T. Act.<\/p>\n

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