The Madras High Court ruled that before the issuing of the SCN, a separate notification under Section 2(35) is not required to regard Directors as primary officers for the TDS Delay-Offense under Sections 276 and 278.
Facts
It is alleged in the complaints that the petitioners had deducted tax from the payments made to various parties and failed to deposit the tax to the credit of the Central Government within the prescribed time. The impugned complaints pertain to three different assessment years. It is alleged that in all three assessment years, the petitioners had delayed the deposit of tax deducted at source and therefore were liable for offences under Section 276 B r/w 278 B of Income Tax Act.
Submissions
Counsel for the petitioners submitted that the assessing officer had not issued a notice under Section 2 (35) of the Income Tax Act to the Directors of the Company before the impugned prosecution was launched and hence the impugned complaint is liable to be quashed.
He further submitted that the Commissioner of Income Tax had granted sanction nearly 18 months after the show cause notice was issued, which is in violation of the instructions issued by the Board under Section 119 of the Income Tax Act.
Counsel for the respondents submitted that the Commissioner of Income Tax did not grant sanction immediately since the petitioners had submitted the reply belatedly. The time taken for reply has to be excluded as per the instructions relied upon by the petitioners. Hence, the delay cannot be attributed to the respondents.
Decision
The single judge bench of Justice Sunder Mohan found that the Company and its Directors have been prosecuted for the offence under Section 276 B of the Income Tax Act.
The court observed that the impugned complaints cannot be quashed on the ground that no notice under Section 2 (35) of the Income Act was issued to the Directors. Further, the question as to whether the Directors were in charge of and responsible to the Company for its business is factual and has to be agitated only before the trial Court.
The bench viewed that the points raised by the petitioners have to be adjudicated only before the trial Court, and this Court is not inclined to entertain this quash petition.
Case title: M/s.Mehala Machines India limited and Ors. v/s The Income Tax Officer and Ors.
Citation: Crl.O.P.Nos.23615, 23439 and 23019 of 2019
