G M Infinite Dwelling India Pvt Ltd and Sri Jawed Hussain and Sri Ghulam Mustafa V. The Commissioner of Income Tax (TDS) and The Deputy Commissioner of Income Tax TDS Circle-1(1)

WP/21832/2024

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The case involves M/S G M Infinite Dwelling India Pvt Ltd and its directors, who filed a writ petition against the Commissioner of Income Tax (TDS) and the Deputy Commissioner of Income Tax, challenging an order that sanctioned their prosecution under Section 276B read with Section 278B of the Income Tax Act for delayed payment of TDS. The petitioners argued that the delay was due to financial difficulties exacerbated by demonetization, GST implementation, and the COVID-19 pandemic. The court found that the respondents had not adequately considered the petitioners' explanations and documents, leading to the decision to set aside the impugned order and remit the matter for fresh consideration.

• Counselvise Citation: [] 140 COUNSELVISE.COM (IT) 823841 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 17-12-2025
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ARAVIND CHAVAN
• Assessee Lawyers: VANI
• Keywords: Cash flow; Covid-19; Debentures; Demonetization; Financial loss; GST Implementation; Income Tax; NBFC; Prosecution; TDS
• Section: 226; 279(1); 227; 278B; 276B

Judgement Text

" - 1 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO.21832 OF 2024 (T-RES) BETWEEN: 1. M/S G M INFINITE DWELLING INDIA PVT LTD A COMPANY INCORPOORATED UNDER THE COMPLANIES ACT 1956 HAVING OFFICE AT NO. 6 G M PEARL, BTM LAYOUT I STAGE I PHASE, BENGALURU - 560 068 REPRESENTED BY ITS DIRECTOR SRI JAWED HUSSAIN S/O LATE SRI GULAM RASOOL AGED ABOUT 47 YEARS 2. SRI GULAM MUSTAFA DIRECTOR OF M/S G M INFINITE DWELLING INDIA PVT LTD S/O LATE SRI. GULAM RASOOL AGED ABOUT 55 YEARS, RESIDING AT NO. 66, 3RD MAIN, 15TH CROSS BANGALORE - 560 102 3. SRI JAWED HUSSAIN DIRECOTRO OF M/S G M INFINITE DWELLING INDIA PVT LTD S/O LATE SRI GULAM RASOOL AGED ABOUT 47 YEARS Printed from counselvise.com Digitally signed by AASEEFA PARVEEN Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 RESIDING AT NO. 1/1 4TH CROSS, MADIWALA NEW EXTENSION, BANGALORE - 560 068 …PETITIONERS (BY SMT. VANI H., ADVOCATE) AND: 1. THE COMMISSIONER OF INCOME TAX (TDS) HMT BHAVAN, NO. 59 BELALRY ROAD, GANGANAGAR, BENGALURU - 560 032. 2. THE DEPUTY COMMISSIONER OF INCOME TAX TDS CIRCLE -1(1) HMT BHAVAN, NO. 59 BELLARY ROAD, GANGANAGAR BENGALURU - 560 032. …RESPONDENTS (BY SRI. ARAVIND V. CHAVAN, ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE ORDER BEARING DIN AND ORDER NO. ITBA/COM/F/17/2024- 25/1065319409(1) DATED 31.05.2024 PASSED BY THE 1ST RESPONDENT UNDER SECTION 279(1) OF THE ACT VIDE ANNEXURE-E AND ETC. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR Printed from counselvise.com - 3 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 ORAL ORDER In this petition the petitioners seeks for the following reliefs: \"a. Issue a writ of certiorari quashing the order bearing DIN & Order No.ITBA/COM/F/17/2024-25/10653194096 (1) dated 31.05.2024 passed by the first respondent under Section 279(1) of the Act vide Annexure-F, b. Issue a writ of certiorari quashing the Criminal Case registered as CC No.199/2024 and CC No.200/2024 filed by the second respondent on the files of the Special Court for Economic Offences, Bengaluru in which the summons dated 8.7.2024 vide Annexure-F, Annexure-F1 and Annexure-F2 are issued to petitioners, c. Pass such other Writ or direction as this Hon'ble Court deems fit to grant in the facts and circumstances of the present case.\" 2. A perusal of the material on record will indicate that for the assessment year 2019-2020, the petitioner deducted tax at source (TDS) and remitted the said amount to the credit of the Central Government by 19.03.2021, after 23 months along with penal interest. Printed from counselvise.com - 4 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 Subsequently, on 17.01.2023, the second respondent issued a notices to the petitioners seeking explanation as to why prosecution proceedings should not be recommended against the petitioners on account of the delayed payment deduction of TDS by the petitioners. The petitioners having submitted replies dated 27.01.2023, 15.03.2023 and 16.02.2024, the first respondent issued a show cause notices dated 19.03.2024 and 29.04.2024 to which the petitioners submitted detailed replies dated 16.02.2024 and 02.05.2024, interalia contending that the reasonable cause for delayed payment of TDS was on account of demonetization policy and subsequent GST implementation as also the COVID-19 pandemic on account of which the company faced financial loss and cash flows where cash flow was badly affected and huge monies had to be borrowed from NBFC's by way of debentures to run the business activities. It is submitted on instructions that the petitioners also requested time to produce additional documents in support of its claim. Printed from counselvise.com - 5 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 3. Pursuant to the aforesaid notices and replies, the respondent proceeded to pass the impugned order dated 31.05.2024 granting sanction for prosecution under Section 276B read with Section 278B of the Income Tax Act, aggrieved by which the petitioners are before this Court by way of the present petition. 4. Per contra learned counsel for the respondents would reiterate the various contentions urged in the statement of objections and submit that since the impugned order is detailed and a well considered order, the same does not warrant interference by this Court in the present petition and sufficient opportunity had been extended/granted in favour of the petitioners who are not entitled to any indulgence in the present petition. 5. A perusal of the material on record including the impugned order will indicate that though the petitioners had submitted detailed replies along with documents to indicate that the TDS amount was Printed from counselvise.com - 6 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 subsequently paid together with penal interest and offering an explanation as to why there was a delay on the part of the petitioners, the same has not been considered by the respondents in its proper perspective. 6. Further in the light of the specific assertion on the part of the petitioners that if one more opportunity is provided, the petitioners would submit additional documents in support of its claim, I deem it just and appropriate to adopt a justice oriented approach and set aside the impugned order at Annexure-E passed by the first respondent and remit the matter back to the first respondent for reconsideration afresh in accordance with law. 7. In the result the following: ORDER (i) The petition is allowed. (ii) The impugned order dated 31.05.2024 at Annexure-E is hereby set aside. Printed from counselvise.com - 7 - HC-KAR NC: 2025:KHC:54244 WP No. 21832 of 2024 (iii) The matter is remitted back to first respondent for reconsideration afresh in accordance with law. (iv) Liberty is reserved in favour of the petitioners to submit additional pleadings, documents, replies etc., which shall be considered by the respondent, who shall provide sufficient and reasonable opportunity to the petitioners and provide an opportunity of personal hearing to the petitioners and proceed further in accordance with law. Sd/- (S.R.KRISHNA KUMAR) JUDGE NS CT:TSM List No.: 2 Sl No.: 0 Printed from counselvise.com "