The respondents were prosecuted for non-depositing of TDS at the appropriate time. 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. Despite these constraints, the respondents eventually deposited the entire TDS amounts, albeit belatedly, along with applicable interest and late fees, even prior to the filing of the complaint. The Trial Court acquitted the respondents primarily on the ground that the respondents had satisfactorily demonstrated the existence of a ‘reasonable cause’ for the delay in depositing TDS, within the meaning of section 278AA.On appeal by the revenue the Court held that section 278AA carves out an express exception to penal liability under section 276B, where accused can establish a ‘reasonable cause’ for failure to deposit TDS. Section 278AA specifically provides intent of legislature that no person shall be punished for failure to comply with section 276B if it is established that failure occurred due to a reasonable cause. Respondents were prosecuted for non-depositing of TDS at appropriate time. \u00a0Defence advanced by respondents was that during relevant assessment years, it was undergoing an acute financial crisis. Trial Court acquitted respondents primarily on ground that respondents had satisfactorily demonstrated existence of a ‘reasonable cause’ for delay in depositing TDS, within meaning of section 278AA.\u00a0 Prosecution’s case hinged more on occurrence of default than on requisite mental element necessary to sustain conviction under section 276B, read with section 278E. \u00a0Trial Court had adopted a legally tenable interpretation of section 278AA and rendered findings which were not only supported by record but also resonated with underlying objective of provision-namely, to shield individuals from criminal prosecution where non-compliance was neither wilful nor mala fide.<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 278AA : Offences and prosecutions-Reasonable cause-For failure to deposit TDS-No punishment-Order of the Trial Court acquitted the respondents primarily on the ground that the respondents had satisfactorily demonstrated the existence of a ‘reasonable cause’ for the delay in depositing TDS, within the meaning of section 278AA-High Court affirmed. [S.201(IA), 234E, 276B, 278E, 279 Code of Criminal Procedure, 1973, S. 378(4)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-59372","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-frC","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59372","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=59372"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59372\/revisions"}],"predecessor-version":[{"id":59373,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/59372\/revisions\/59373"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=59372"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=59372"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=59372"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}