..1 .. C.C.No.121/SW/2014.

    Judgment.

                                                CNR No.  MHMM20­000170­2014
                                                       Complaint  filed on       :07.04.2014.
             Complaint registered on:07.04.2014.
                         Decided on                    :09 .08.2019
      Duration      : Y.   M      D.
              05    04     02
 

IN THE COURT OF ADDL. CHIEF METROPOLITAN MAGISTRATE,
38th COURT, BALLARD PIER, MUMBAI
(Presided over by I. R. Shaikh)
C. C.NO.121/SW/2014.
Exh. –  

Income Tax
Through ­
Ganesh S. Shetty, age­50 yrs,
Income Tax Officer(TDS)­2(3),
Room No. 708, 7th floor,
K.G.Mittal Ayurvedic Hospital building,
Opp. Charni Road Station (W),
Mumbai­400 002. .. Complainant.

V/s.

1. Manik Industries Limited,
    Lakhi Industrial House,
    L.B.S.Marg, Bhandup (W)
    Mumbai­400 078.

2. Kishin Chellaram Manik,
    Director,

3. Mukesh Kishinchind Manik,
    Director.  

    No.2&3 r/o­ Manik Industries Limited,
    Lakhi Industrial House,
    L.B.S.Marg, Bhandup (W)
    Mumbai­ 400 078. .. Accused.  
                                         ..2 .. C.C.No.121/SW/2014.
    Judgment.

Charge   : Under Section 276B r/w 278B of The Income Tax Act,1961.

Appearance : Special Public Prosecutor Amit Munde for complainant.
    Ld. Advocate Mr.Raajkuvar Jaywant for accused.

     JUDGMENT
(Delivered on 09.08.2019)
1. The   complainant   Ganesh   S.   Shetty,   Income   Tax
Officer(TDS)­2(3)   had   filed   the   complaint   u/s.   200   of   the   Cr.P.C.
against the accused   for committing the offence punishable u/s. 276B
r/w   sec.   278B   of   Income   Tax   Act,   1961   pertaining   to   financial   year
assessment year 2009­2010.

2. Brief facts of the complainant's case are as under ­
The   complainant   submitted   that   accused   No.01   is   an
assessee   in   the   jurisdiction   of   complainant   at   all   material   time   for
Income­Tax   TDS   purposes   and   accused   No.02   and   3   are   principal
officers   of   accused   No.1.   Accused   No.01   is   a     limited   company   and
accused No.02 are the Principal Officers and the persons responsible for
deduction of tax at source within the meaning of section 2(35) of the
I.T.Act.   Accused   No.   2&3   have   signed   various   documents   for   an   on
behalf   of   the   company   and   has   acted   as   the   Principal   Officer   of   the
company during the relevant time.

Accused No. 2 and 3 are the Principal Officers of accused
No.   1   were   under   obligation   U/sec.   194J,   194I   and   194C   of   The
Income­tax Act to deduct the Income­tax return from the payment of
fees for professional or technical services, rent payment and payment to
contractors/   credited.   Accused   No.   2   and   accused   No.3   were   further
under obligation U/sec. 200 and 204 of the said Act r/w Rule 30 of
                                         ..3 .. C.C.No.121/SW/2014.
    Judgment.

Income­tax Rules 1962 to pay deposit the income tax so deducted   to
the credit of the Central Government within the prescribed period. The
accused deducted tax of Rs. 1,47,987/­ U/sec. 194J, 194I and 194C of
the Income­tax Act, but have failed to pay or to deposit the Income­tax
so   deducted   to   the   credit   of   the   Central   Government   within   the
prescribed period.

The complainant further submitted that accused No.2 and
accused No.03 being the Principal Officers and authorized persons of
accused   No.1   are   also   liable   for   the   said   acts,   omission   and   any
contravention committed by accused No.01 and therefore accused No. 2
and   3   are   liable   to   be   prosecuted   and   to   be   punished   for   the   Act
committed by accused No.1 in view of legal provisions contemplated
U/sec. 278B of Income­tax Act, 1961.

The complainant further submitted that from 01.04.2009 to
31.03.2010   Income­tax   amounting   to   Rs.   1,47,987/­   was   deducted
U/sec.   194J,   194I   and   194C   of   The   Income­tax   Act   from   payments
made   to   the   parties.   After   deduction   of   said   amount   instead   of
depositing  such  TDS   amount  to   the   Government   account   within  due
date   for   payment   to   the   credit   of   Central   Government,   the   accused
failed, without reasonable cause or excuse to pay within the prescribed
period   the   said   amount   of   Income­tax   to   the   credit   of   the   Central
Government. He further submitted that said amount was paid after a
long   period   of   delay   beyond   12   months,   therefore   he   submits   that
accused have committed a default U/sec. 200 and 204 of The Income­
tax Act r/w Rule 30 of The Income­tax Rules, 1962 by failing without
reasonable   cause   or   excuse   to   pay   the   Income­tax   so   deducted.   He
                                         ..4 .. C.C.No.121/SW/2014.
    Judgment.

further submitted that said default amounts to an offence punishable
U/sec. 276B r/w 278 B of The Income­tax Act. 

A show cause notice was issued to all accused as to why
prosecution   should   not   be   launched   against   them   for   the   offences
committed U/sec. 276B r/w 278B of the said Act for its failure to pay
the said amount deducted by way of Income­Tax within the stipulated
time.   The explanation given by the accused for its failure to pay the
said   tax   deducted   at   source   within   the   prescribed   time   does   not
constitute   a   reasonable   excuse   or   cause   for   the   said   default.   The
complainant   therefore   charges   the   accused   having   committed   the
offences under section  276B r/w 278B of The Income­tax Act. 

6. Accused   appeared.   My   Ld.   Predecessor   has   framed

charge below Ex.24 under section 276B r/w 278B of The Income­Tax
Act. Contents of it were read out and explained to the accused in their
vernacular, but they pleaded not guilty and claimed to be tried.

7. The following points arise for my determination and
I have recorded  my findings against each point with reasons as follows:

Sr.No. Points Findings

1 Does prosecution prove that, accused No.1
and   its   Director   i.e.   accused   No.2   and   3
are   responsible   for   deduction   of   Tax   at
source but accused failed to pay tax TDS
of   the   Financial   year   2009­2010     and
Assessment  year  2010­2011   to  the   credit
of   Central   Government   within   time
without any justifiable reason and thereby
committed  an   offence   punishable   u/s. .In the ­­­­­­­­­­­­­­
276B r/w 278B of The Income­Tax Act?
                                         ..5 .. C.C.No.121/SW/2014.
    Judgment.

2 What order ? As per final order.

REASONS.
As to points No. 1 and 2 :
8. In   order   to   prove   the   guilt,   complainant   has   examined
Ganesh (C.W.1) at Ex.14 and Vinod (C.W.2) at Ex.21.

9. It  is  not  disputed  that   accused  No.1  is  a   Private   Limited
company. Accused No.2 and 3 are Directors and the responsible person
of deduction of tax. It is not disputed that   accused had deducted the
TDS   amount   of   Rs.   1,47,987/­   for   the   period   from   01/04/2009   to
31/03/2010 under section 194A and 194H of Income­Tax Act,1961.  It
is   admitted   that   accused   not   deposited   the   said   amount   within
stipulated  period  i.e.  on   or  before   7 th  day  of  next  month.    It  is  also
admitted position that subsequently out of total amount deducted under
sec. 278E and 194H of the Act accused paid all amount with interest
and penalty as required u/s. 201(A) of the Act owing to the delay in
payment of the aforesaid amount.  Accused paid TDS amount after 12
months, therefore, there is delay of more than 12 months.

10. Now,   coming   to   the   evidence   of   Ganesh   (C.W.1),   he

deposed   that,  he   received     sanction   order   for   launching   prosecution
against accused.  His name was specifically mentioned in sanction order
passed by CIT Shri. V. K. Pandey. Manik Industries i.e. accused No.01
comes under his jurisdiction in respect of TDS.  In TDS system he found
that accused deducted Rs.  1,47,987/­  but paid after the expiry of 12
months.  As per the requirement of law, assessee had to deduct and pay
                                         ..6 .. C.C.No.121/SW/2014.
    Judgment.

the amount on 7th  day of next month.   But accused failed to pay TDS

amount   within   time.    Accused  have   committed   an   offence   as   per
provision of section of 276 B of I. T. Act.  Accused No. 2 & 3  are the
Directors of accused No.1. He had  filed the statement of TDS on record.
He had  filed TDS statement Ex.16 on record. The proposal which he
had   sent   to   CIT   for   the   financial     year   2009­2010   is   filed   at   Ex.18.
Notices issued to accused are marked at Ex. 19 to 19/3.

Cross­examination
Vinod   (C.W.2)   deposed   that   he   recorded   sanction   order
against   accused   No.01   Manik   Industry.     The     sanction   order   passed
against accused No. 1 to 3 marked at Ex.15. He had issued show cause
notice   to   accused   on   2.4.2013.   It   bears   signature   and   stamp   of   I.T.
Department. All three notices marked at Ex.22,22/1 to 22/2.

Cross­examination
                                         ..7 .. C.C.No.121/SW/2014.
    Judgment.

Ld. A.P.P. argued that prosecution has proved above
offence against accused by leading oral and documentary evidence. 

Advocate for accused argued that

Section   277AA   provides   that   if   accused   proves   that

there was   reasonable cause for the non­depositing of deducted TDS
amount within time limit, he shall not be punish.  

      As stated above, Advocate for accused pointed out sec.
278E of Act which deals when presumption as to culpable mental state.
Advocate for accused submitted that accused have no mental state or
have no intention to avoid the payment of TDS, if the defence of the
accused  about existence  of  such  mental state, then  burden lies upon
accused to prove that they had no such mental state with respect to the
act charged as an offence in that prosecution.  In the present case there
is no evidence that there is no culpable mental state of mind on the part
of   accused   persons,   in   the   failure   deposit   TDS   amount   beyond   time
limit.  There is no evidence at all brought on record, therefore it appears
that accused failed to rebut the presumption lies against them u/s. 278E
of the Act.      

I would like to reproduce here Section 278AA of the Act.
It   reads   as,   “punishment   not   to   be   imposed   in   certain   cases   ­
Notwithstanding   anything   contained   in   the   provisions   of   sec.   276A,
276AB or 276B, no person shall be punishable for any failure referred to
in the said provisions if he proves that there was reasonable cause for
such failure.
                                         ..8 .. C.C.No.121/SW/2014.
    Judgment.

Advocate   of   accused   contended   that   accused   has   given

reason   for   failure   to   pay   tax   in   time   due   to   fault   of   computer.   He
pointed out towards his reply Ex.­­­­­­­ in which it was stated that failure
to pay TDS amount was due to technical fault of computer software.
But accused during trial not proved the same.  The accused taken above
defence   but   except   putting   suggestions   and   say   filed   on   record   no
material is produced to substantiate the fact. 

Also The Commissioner Of Income­Tax in  Sanction order
Ex.   14   considered   and   examined   carefully   all   records   and   thereafter
after satisfied adequate ground, grant sanction for prosecution against
accused.   The accused nor proved that there was reasonable cause for
not   depositing   the   aforesaid   tax   amount   within   specified   time   limit.
Mere not mentioning the reply notice in Sanction Order Ex.15 does not
mean that Commissioner Of Income­Tax Act had not considered reply
of defence. 

It is further argued as stated above on behalf of accused
that, in the reply to show cause notice the accused gave the reasons for
non­payment of taxes but the Principal Commissioner of Income Tax
has not go through it and not considered the same as reasonable cause
for non paying TDS to the Government. But during granting sanction,
the Principal Commissioner of Income Tax as per Ex.­­­­­­­­­­specifically
mentioned that he has gone through the documents and after perusing
and examining carefully, he was satisfied that adequate grounds exist to
prosecute the accused. Thus, the contention of defence about concerned
authority is not considered cause to grant prosecution is not tenable and
proper.  
                                         ..9 .. C.C.No.121/SW/2014.
    Judgment.

Ld.   A.P.P.   argued   that   accused   would   have   filed   TDS

deposit by using other computers, as the site of Income­Tax Department
is available for any computers.   Mere taking up the contention is not
amounting   to   offering   a   reasonable   cause   for   failure   to   remit   the
deducted   TDS.     Nothing   has   brought   on   record   by   giving   oral   and
documentary evidence to show that accused made an effort to correct
technical fault in  computer software as alleged, to believe  that there
was such technical fault. The defence have not examine the software
Engineer to prove the fact that there was technical fault in computer
software.   This   was   material   witness   to   prove   defence   version   but
defence has not opted to examine him. Therefore, adverse inference can
be   drawn   against   accused   U/sec.   114(G)   of   Evidence   Act.   Therefore
The defence of accused seems not probable to accept. 

From the above discussion it is clear that it is admitted by
the   accused   that   accused   not   paid   deducted   TDS   amount   within
stipulated time.   No doubt, in the present case, accused paid the tax
with   interest   and   penalty,   but   tax   was   paid   after   stipulated   period.
Also   sanction   granted   by   sanctioning   authority   after   considering   the
documents and applying mind.  After considering all the material facts
before the court and the defence of the accused about reasonable cause
is   not   probable.   The   accused   has   defaulted     to   pay   the   tax   within
stipulated time to the Central Government from the TDS amount for the
financial   year   01/04/2008   to   31/03/2009­­­­­­­­­   and   accused   is   the
only person to pay the said amount.  No doubt in the present case the
accused has deposited the TDS amount at belated stage.
                                         ..10 .. C.C.No.121/SW/2014.
    Judgment.

The advocate for the complainant relied on the authority
reported   in  Madhumilan   Syntex   Ltd;   and   Ors.   v/s   Union   of
India(UOI) and Ors. AIR 2007 SC (148).   The Hon'ble Apex Court in
para. 37, 40 and 41 held that ­
“Once a statute requires to pay tax and stipulates period within which
such payment is to be made, the payment must be made within that
period.  If the payment is not made within that period, there is default
and an appropriate action can be taken under the Act.”
In view of aforesaid reasons arguments advanced on behalf
of   defence   holds   no   ground.   Defence   utterly   failed   to   prove   the
submissions by leading evidence as stated above. Considering the above
referred authority and the present case, it appears that if the payment is
made at belated stage then it will be treated as default and appropriate
action can be taken under this Act.   It also clear that deposit of TDS
with delay does not absolve criminal liability.   If it is considered that
accused   paid   the   amount   after   period   of   12   months,   in   such
circumstance,   complaint   is   maintainable   and   it   does   not   absolve
criminal liability of the accused persons. 

Nothing   has   come   on   record   during   searching   cross­

examination of both witnesses. Nothing has brought on record during
cross­examination   to   disbelieve   version   of   above   both   witnesses.
Therefore,   considering   the   evidence   available   on   record,   I   come   to
conclusion that the accused is responsible person to pay tax within time
and   accused   failed   to   deposit   TDS   within   time.     Therefore,   the
complainant has proved the case against the accused beyond reasonable
doubt and proved the guilt of the accused u/s. 276B r/w 278 B of I.T.
Act. Here, I pause to hear  the accused on the point of sentence.    
                                         ..11 .. C.C.No.121/SW/2014.
    Judgment.

Heard accused, advocate and Special P.P. Shri. Amit
Munde on the point of sentence.   Accused submitted that this is his
first offence and he has already paid tax amount with interest and
penalty and leniency be shown to accused.   On the other hand,   Ld.
Spl.P.P. Amit Munde submitted that accused is the educated person
and he had sufficient amount to pay TDS amount, but he failed to do
so and used said amount for any other purpose, therefore this aspect
cannot be viewed lightly and prayed for punishment as per law. In
view   of   nature   of   offence   I   am   not   inclined   to   give   Probation   Of
Offenders Act benefit to accused.

On   considering   submissions   of   Ld.   Spl.   A.P.P   and

Advocate for accused and seeing the nature of offence,  I am  of the
considered   view   that   accused   are   liable   for   following   punishment.
Therefore, in view of above said reasons and discussion, my findings
recorded as to point No.1 in the affirmative and I proceed to pass the
following order.
O R D E R
i.  Accused No. 1 to 3 are convicted  under section 248 (2) of
the   Code   of   Criminal   Procedure   for   the   offence   punishable   under
section 276B r/w 278 B of The Income­Tax Act, 1961.

ii. The accused No. 1 Manik Industries Ltd  ;  is sentenced to

pay   fine   of   Rs.5,000/­   (Rs.   Five   Thousand   only)   for   the   offence
punishable U/sec. 278B of Income­Tax Act, 1961.

iii. The   accused   No.   2   Kishin   Chellaram   Manik   and   accused

                                         ..12 .. C.C.No.121/SW/2014.
    Judgment.

No. 3 Mukesh Kishinchind Manik shall undergo Rigorous Imprisonment
for a period of three months  and to pay a fine of Rs.5,000/­ (Rs. Five
Thousand only)each, in default of payment of fine, the accused No. 2
and   3 shall undergo simple imprisonment for a period of 30 days for
the offence punishable U/sec. 276B r/w 278B of The Income­Tax Act,
1961.

iv. The  accused  No.  2  and  3  shall   pay  the  fine   imposed   on
accused No.1.

v. Bail bonds of accused shall stands surrendered. 

vi. Copy of Judgment be provided to the accused free of costs.

vii. Dictated and pronounced in open Court, before parties and
their counsels.
            

Date:09.08.2019.              ( I.R.Shaikh )
                Addl. Chief Metropolitan Magistrate,
                             38th Court, Ballard Pier, Mumbai.

Dictated on screen on   ­09.08.2019.  
Signed on         ­09.08.2019.