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./1662/2015

AI Insights

The case involved M/s Fusion Engineering Products Pvt. Ltd., which faced criminal proceedings for allegedly delaying the deposit of TDS amounting to Rs. 1,34,499 for the financial year 2008-09. The company argued that the delay was unintentional and due to ongoing industrial sickness since 1991, which affected its financial operations. The Income Tax Department opposed the quashing of the proceedings, emphasizing the strict penal provisions applicable for non-deposit of TDS. However, the court noted the significant delay in issuing the show cause notice and the company's ongoing industrial issues as mitigating factors, leading to the quashing of the proceedings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 766110 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 11-10-2023
• Assessment Year: misc
• Other Referred Cases: 2022 SCC Online Jhar 537, W.P.(Cr.) No.577 of 2022
• Laws Referred To: Income Tax Act, 1961, Companies Act, 1956, Sick Industrial Company (Special Provisions) Act, 1985
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R N SAHAY; ANURAG VIJAY
• Assessee Lawyers: DIKSHA DWIVEDI
• Keywords: TDS delay; Criminal proceeding quash; Industrial sickness; BIFR proceedings
• Section: 278B; 276B

Judgement Text

" IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr. M. P. No. 1662 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 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 ........... CORAM : HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY ----- For the Petitioner : Ms. Diksha Dwivedi, Advocate For the ITD : Mr. R. N. Sahay, Sr. S.C. Mr. Anurag Vijay, AC to Sr. S.C. ----- Oral Order 10 / Dated : 11.10.2023 1. The instant Cr. M. P. has been filed for quashing of the entire criminal proceeding including the order taking cognizance dated 11.06.2015 passed by learned Presiding Officer, Special Court (Economic Offence), Jamshedpur in connection with Complaint Case No. C/2- 338/ 2015 whereby and whereunder cognizance of the offence has been taken under Sections 276B and 278B of the Income Tax Act, 1961 against the petitioner. 2. The petitioner is a Company registered under the Companies Act, 1956 and the main allegation is that there was delay in depositing the TDS amount of Rs. 1,34, 499/- for the Financial Year 2008-09 and assessment year 2009-10. 3. As per the prosecution complaint filed by one Income Tax Officer (TDS Ward), Jamshedpur, the amount had to be deposited by 7th day of the following month. 4. It is submitted by learned counsel for the petitioner that the said amount was deposited on 04.06.2009 and on 11.06.2009 as well as on 24.06.2009. As such, the TDS deposit was made after delay of about 12 months. 5. In this regard, it is submitted that the said delay was not intentional because 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. 6. 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 preferred against the said order was dismissed by the Hon’ble Supreme Court. Reliance is also placed on 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. 7. 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. 8. It is further averred by way of supplementary affidavit that the amount has been deposited with interest and no penalty proceeding has been initiated. 9. Learned counsel for the Opp. Party- Income Tax Department has opposed the quashing petition. It is submitted that the provision is express and emphatic that once the TDS has been made and the company fails to deposit, penal provision is attracted. After the deductions are made, 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 exempted, but that does include with 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 2007 (11) SCC 297 at Paras 22 to 28 and 29. 10. I find substance in the submission advanced on behalf of the petitioner that there has been inordinate delay in issuing show cause notice with regard to deposit of TDS amount which will be apparent from Annexure-4 (Cr.M.P. No.1662 of 2015) which is issued by the Commissioner of Income Tax (TDS), Patna to M/s Fusion Engineering Products Pvt. Ltd. (petitioner) for depositing Rs.1,34,499/- for delay in depositing the TDS amount. 11. Indisputably, BIFR, 1991 proceedings initiated and there was industrial sickness which was the proximate cause for not depositing the amount within the stipulated time. Further, there has been inordinate delay to serve show cause to the petitioner(s). This Court is of the view that that there was a reasonable cause for delay in depositing the tax amount. Under the circumstance, the impugned order including the entire criminal proceeding in connection with Complaint Case No. C/2- 338/ 2015 is quashed so far as the Petitioner named above is concerned. Criminal Miscellaneous Petition is allowed. (Gautam Kumar Choudhary, J.) AKT Uploaded "