D. N. Homes Pvt. Ltd v. UOI (2023)459 ITR 211 /156 taxmann.com 169 (Orissa)(HC)

S. 279 : Offences and prosecutions-Sanction-Chief Commissioner-Commissioner-Offences and prosecutions-Failure to pay to the credit tax deducted at source-Sanction for prosecution-Reasonable cause-Failure to deposit tax deducted at source due to prevalence of pandemic-Reasonable cause shown for failure-Sufficient cause-Assessee depositing tax deducted at source in phased manner with interest though after delay-Prosecution orders set aside.[S. 2(35), 276B, 278AA, 278B, 279]

Allowing the revision petition, that the assessee and its principal officer had deposited the entire tax deducted at source with interest for the delayed deposit before the time of consideration of the matter as to launching of the prosecution under section 279(1) of the 1961 Act. The tax deducted at source with interest had been accepted and gone to the State exchequer when by then no loss to the Revenue stood to be viewed. The assessee and its principal officer in their show-cause had described all the difficulties which they had faced during the prevalence of the covid-19 situation. The real estate sector heavily faced the wrath of the pandemic covid-19 situation and there were serious labour migrations, stoppage of all forms of construction activities and also buying and selling of real estate projects which were all undeniable facts. The point for consideration by the authority was not to cull out the justification for delay in depositing the tax deducted at source but was whether to launch the prosecution. Hence, the order under section 279(1) passed by the Commissioner (TDS) suffered from the vice of non-consideration of the admitted factual settings as to the existence of reasonable cause for the failure to deposit the tax deducted at source and the complaint was vitiated since the failure was on account of the reasonable cause of the prevalence of covid-19 pandemic. The order of sanction having been passed without due application of mind and in a mechanical manner and putting the blame upon the assessee and its principal officer for not filing any exemption or relaxation notifications or circulars stood vitiated. Hence, the trial court ought not to have taken cognizance of the offences under sections 276B, 2(35) and 278B when even the latter two were no penal provisions and its orders were bad in law and, therefore, set aside.(AY.2021-22)