MS FUSION ENGINNERING PRODUCTS PVT LTD THROUGH ITS DIRECTOR JYOTIRMOY GHOSH V. UNION OF INDIA INCOME TAX DEPARTMENT THROUGH SHRI KOLLURU SRINIVAS

Cr.M.P./1664/2015

AI Insights

The case involves two criminal miscellaneous petitions filed by M/s Fusion Engineering Products Pvt. Ltd. and its directors against the Union of India, Income Tax Department, concerning the delay in depositing TDS amounts for the financial year 2011-12. The petitions challenged the cognizance taken by the Special Court (Economic Offence), Jamshedpur, under Sections 276B and 278B of the Income Tax Act, 1961. The petitioners argued that the delay was unintentional and due to the company's industrial sickness and ongoing BIFR proceedings, which affected its financial operations. The Income Tax Department opposed the quashing, emphasizing the strictness of the TDS provisions. However, the court found merit in the petitioners' arguments, leading to the quashing of the proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 771641 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 11-10-2023
• Assessment Year: misc
• Other Referred Cases: Madhumilan Syntex Ltd. v. Union of India, W.P.(Cr.) No.577 of 2022, 2022 SCC Online Jhar 537
• Laws Referred To: Income Tax Act, 1961, Sick Industrial Company (Special Provisions) Act, 1985, Companies Act, 1956
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R N SAHAY; ANURAG VIJAY; RAJESH KUMAR; ARUN
• Assessee Lawyers: DIKSHA DWIVEDI; PRASHANT PALLAV; SHIWANI JALUKA
• Keywords: Criminal prosecution; Industrial sickness; Quashing petition; TDS delay
• Section: 278B; 276B; 278AA

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr. M. P. No. 1664 of 2015 M/s Fusion Engineering Products Pvt. Ltd., a Company registered under the Companies Act, 1956 having its registered office at Gamharia, Seraikela- Kharsawan through its Director, Jyotirmoy Ghosh … …. Petitioner Versus Union of India, Income Tax Department through Shri Kolluru Srinivas, Income Tax Officer (TDS Ward), Jamshedpur, East Singhbhum. … …. Opp. Party With Cr. M. P. No. 810 of 2016 1. Gautam Mukerjee 2. Ratan Das 3. Jyotirmoy Ghosh … …. Petitioners Versus Union of India, Income Tax Department through Shri Kolluru Srinivas, Income Tax Officer (TDS Ward), Jamshedpur, East Singhbhum. … …. Opp. Party ----- CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY ----- For the Petitioners : Ms. Diksha Dwivedi, Advocate For the ITD : Mr. R. N. Sahay, Sr.S.C. Mr. Anurag Vijay, AC to Sr.S.C. ----- Oral Order 03 / Dated : 11.10.2023 Both the criminal misc. petitions raise common questions of law and fact and, therefore, they are heard together and will be disposed of by this common order. 1. Cr. M. P. No.1664/2015 has been filed M/s Fusion Engineering Products Ltd through its Director Jyotirmoy Ghosh for quashing the entire criminal proceeding including the order taking cognizance dated 11.06.2015 by learned, Special Court (Economic Offence), Jamshedpur in connection with Complaint Case No.C/2-337/ 15 whereby and whereunder cognizance of the offence has been taken under Section 276B of the Income Tax Act, 1961 read with Section 278B of the said Act against the petitioner. Cr. M. P. No.810/2016 has been preferred by the Petitioners who are the directors of M/s Fusion Engineering Products Ltd. 2. Prosecution complaint was lodged for the delay in depositing the TDS amount of Rs.2,89,844/- for the Financial Year 2011-12 and assessment year 2012-13. As per the case of the prosecution, the complaint filed by Income Tax Officer (TDS Ward), Jamshedpur, the amount had been deposited after the stipulated time of seven days of the following month. 3. The main allegation against the Petitioner Company is that there was delay in depositing the TDS amount of Rs.2,89,844/- for the Financial Year 2011- 2012 and assessment year 2012-2013. As per the case of the prosecution disclosed in the prosecution complaint filed by Income Tax Officer (TDS Ward), Jamshedpur, the amount had been deposited after the stipulated time of seven days of the following month. 4. The main plea of the petitioner is that the entire TDS amount has been deposited even before the issuance of receipt of notice. The delay was not intentional since 1991 BIFR proceeding was pending against the company and due to industrial sickness of the company, the TDS amount could not be deposited within the stipulated time. 5. Learned counsel for the petitioner in support of her submission has relied upon the judgment reported on 2022 SCC Online Jhar 537 wherein the criminal prosecution has been quashed on similar fact situation and the SLP has been dismissed by the Hon’ble Supreme Court. Reliance is also placed in the judgment passed in W.P.(Cr.) No.577 of 2022 by this Hon’ble High Court in the case of M/s A. M. Enterprises and Anr. vs. The State of Jharkhand and Anr. 6. It is submitted that there is inordinate delay of six years in issuing the show cause notice. The TDS amount was already deposited in the year 2009 whereas the show cause notice was issued in the year 2014. 7. Learned counsel for the Opp. Party- Income Tax Department has opposed the quashing petition. It is submitted that the provisions is express and emphatic that once the TDS has been made and the company fails to deposit, penal provision is attracted. It cannot be said that the Petitioner-Company was not having the requisite amount for depositing it in the account of the Central Government. It is further submitted that Section 22 of the Sick Industrial Company (Special Provisions) Act, 1985, certain coercive actions have been mentioned, but that does include criminal prosecution under Sections 276B of the Income Tax Act. Whether there existed a reasonable ground for not depositing the said amount is a matter which can be looked into only by the learned Trial Court. Reliance is placed on Madhumilan Syntex Ltd. v. Union of India, (2007) 11 SCC 297 27. From the above provisions, it is clear that wherever a company is required to deduct tax at source and to pay it to the account of the Central Government, failure on the part of the company in deducting or in paying such amount is an offence under the Act and has been made punishable. It, therefore, cannot be said that the prosecution against a company or its Directors in default of deducting or paying tax is not envisaged by the Act. 8. The Income Tax Department in the counter-affidavit has not disputed that the TDS amount has been deposited, although after a delay of 12 months. 9. This Court is of the view that pendency of BIFR proceeding against the company due to industrial sickness of the company, delay in deposit of the TDS amount within the stipulated time was a reasonable cause. In view of the reasonable cause, Section 278 AA of the Income Tax will apply. Under the aforesaid facts and circumstance, the impugned order as well as the entire criminal proceeding is quashed against the petitioners named above. Criminal miscellaneous petitions are allowed. (Gautam Kumar Choudhary, J.) AKT Uploaded IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr. M. P. No. 2062 of 2018 ----- 1. Dinesh Kumar Khowala 2. Laxmi Devi Khowala 3. Manoj Kumar Khowala 4. Sangita Khowala … …. Petitioners Versus 1. The State of Jharkhand 2. Sanjay Choudhary … …. Opp. Parties ----- CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY ----- For the Petitioners : M/s Prashant Pallav & Shiwani Jaluka, Advocates For the State : Mr. Rajesh Kumar, A.P.P. For the O.P. No. 2 : Mr. Arun, Advocate ----- Oral Order 07 / Dated : 11.10.2023 1. The instant criminal misc. petition has been filed for quashing the FIR in connection with Deoghar Town P.S. Case No. 349 of 2018 (G.R. No. 953 of 2018) arising out of Complaint Case No. 625 of 2018 registered under Sections 406, 467, 420, 34 of IPC 2. The petitioners are the co-owners of the land measuring an area 3 Bigha 6 Katha and 12 Dhurs for which a memorandum of understanding (for short MOU) was entered into between the Petitioners and the Complainant on 13.03.2008 and subsequently an agreement of sale was executed on 25.03.2008 between the parties. 3. The case of the complainant is that there was one MOU entered between these petitioners and also Bhagwan Das Jain (since deceased) and two separate agreements were executed one with these petitioners and another with said Bhagwan Das Jain. In pursuance of the agreement with the Petitioners, a total sum of Rs. 2.50 Crore was to be paid to these petitioners in terms of the said agreement. 4. The main allegation of the complainant is that by making false representation that the petitioners are absolute owners of the said property and had perfect right, title and interest over it, induced the complainant to enter into MOU and later on agreement was executed and huge sum was taken by them. It is further case of the Complainant that the pending civil suit regarding the property was deliberately suppressed and this came to his knowledge only on the date of execution of agreement for sale on 25.03.2008. "