The Delhi High Court held that a bald assertion in the statement of the accused under Section 313 CrPC cannot be considered as a defence proven in terms of Section 278AA of the Income Tax Act, to entitle the accused to an acquittal.
The Court noted the statement made under Section 313 CrPC, where the accused company, through its director, took the defence of the bad financial condition of the company, on account of which the TDS could not be deposited in time and was ultimately deposited after the availability of funds and interest.
After considering the statement and the evidence available on record, the Court clarified that the onus to prove the special circumstance of bad financial condition is on the accused to dispel the absolute liability imposed under Section 276B of the Income Tax Act for not depositing the TDS in the government account, which was shown to have been deducted. The best evidence to establish this defence was to produce the documentary evidence to reflect the poor financial condition, which the respondent company has miserably failed to do in this case.
However, finding that the entire amount, along with compensatory interest of Rs. 2.20 crores, was already deposited and the fact that the respondent company is facing liquidation proceedings, reflecting its poor financial status, the Court opined that further imposition of fine is not merited, and therefore modified the fine amount of Rs. 25 lacs and sentenced the respondent company to admonition.
A Single Judge Bench of Justice Neena Bansal Krishna observed that there was a delay of 4-15 months in the deposit of TDS. This shows that the respondent was functioning and had the financial capacity to pay, though delayed by 4 months to 15 months. There is no circumstance brought forth by the respondent to show that there existed any reasonable cause in depositing the TDS with delay.
Since the respondent miserably failed to establish its defence under Section 278AA, the Bench concluded that the ACMM was right in holding the respondent guilty for the offence under Section 276B for not depositing the TDS in time, despite deducting it in the Government Account within the prescribed period.
Briefly, a complaint through an Income Tax Officer was filed in the Court of ACMM under Section 276B read with Section 278B of the Income Tax Act, alleging that the respondent (accused) had deducted certain Tax Deducted at Source (TDS), but failed to deposit the same in the Government Account within the prescribed period. In the said matter, an order was passed under Section 2(35) of the Income Tax Act, holding the Principal Officer of the Company liable for the offence under Section 279B.
After the framing of the charge, the ACMM held the company guilty under Section 276B, read with Section 278B, for not depositing the TDS in the Government account. Resultantly, the respondent was sentenced along with a fine of Rs. 25 lacs. The Sessions Court, however, set aside the conviction, holding that no offence was made out since the TDS, along with a fine, stood deposited. The respondent was accordingly acquitted.
Appearances:
Advocate Rishabh Nangia, for the Petitioner/ Revenue
Advocate Asiya Khan, for the Respondent/ Taxpayer
