“Oversight on the part of Accountant can be presumed to be a reasonable cause for not depositing the tax within time”: Patna HC [Read Judgment]

Patna High Court

Justice Sanjay Priya of the Patna High Court came in to the rescue of an automobile dealer, which was facing criminal allegations by the Income tax department, for unintentionally delaying tax returns.

The Petitioner-company, Sonali Autos Private Limited, is a dealer in motor vehicles based in Anisabad, Patna. In the financial year 2009-2010, the petitioner could not deposit the deducted tax at source of Rs. 1,43,029/- in time due to the oversight on the part of the Accountant appointed to deal with Accounts and Income Tax matters. Subsequently, at the time of audit of Books of Accounts in August, 2010, this mistake was noticed by the Statutory Auditors of the petitioner-company. Thereafter, the petitioner immediately deposited the aforesaid amount of tax along with interest owing to the delay in payment, as required under Section 201 (1A) of the Income Tax Act, in the year 2010 itself.

Provisions of Section 201 (1A) of the Act provides for payment of tax deducted along with interest at the rate of 1.5% for every month or part of the month on the deducted amount from the date on which Tax was deducted to the date on which tax was actually paid. The petitioner, accordingly, has deposited interest of `23,595/- on the delayed payment of TDS.

All of a sudden, at a very belated stage, The Commissioner of Income Tax, TDS circle, Patna, granted sanction to his Deputy Commissioner under Section 279(1) of the Act on 31.03.2013 for launching prosecution under Section 276 B of the Act against the petitioner and its Directors after a lapse of three years from the date of payment of dues (tax + interest).

A Complaint Petition was filed by the petitioner-company before the Special Judge, Economic Offences, Patna, on 14.05.2013, inter alia, alleging the default pertaining to financial year 2009-10 under Section 276B of the Act and in respect of which cognizance has been taken by the impugned order.

The Court on the basis of explanation submitted by the petitioner, upheld the oversight on the part of the accountant as a reasonable cause for not depositing the aforesaid tax amount within the specified time limit.

Justice Sanjay Priya also observed that, the continuance of the criminal proceeding against the petitioner as mere harassment of petitioners and abuse of process of the Court.

Read the full text of the Judgment below.