INCOME TAX OFFICER Vs. DINESH K SHAH

JUDGEMENT

(1.) THE ITO, Headquarters, TDS, and the ITO, Salaries Circle, Madras, have preferred three complaints before the Addl. Chief Metropolitan Magistrate, (Economic Offences I) Madras -8, against the respondents herein under ss. 276B and 276B r/w S. 278B of the IT Act, 1961 (hereinafter referred to as the Act) for their failure to deduct income -tax at source from the interest amounts paid to various persons as per S. 194A of the Act. The 1st respondent is the firm and the 2nd respondent is the partner of the 1st respondent firm.

(2.) THE 1st respondent -company in EOCC Nos. 232 to 360 of 1987 (Crl. R.C. No. 417 of 1987) furnished its return of income, which was signed by the 2nd respondent, in the form of trading, P&L a/c and balance sheet for the accounting year 30th Sept., 1982 (asst. year 1983 -84) on 30th Dec., 1985. In the statement accompanying the return, the firm claims to have paid interest to the extent of Rs. 6,64,565 -98 to various parties. Of these, there were payments over Rs. 1,000 in aggregate during the financial year in respect of 68 parties. The respondents have failed to deduct tax of Rs. 2,400, on the interest credited to Sri Finance Corporation on various dates. Since the 1st respondent had failed to deduct the tax at source as per the provisions of S. 194A of the Act, show cause notice under S. 276B of the Act was issued on 31st Oct., 1986 calling for the assessee's explanation for non - deduction of tax at source under s. 194A of the Act. There was no response from the firm. For the failure on the part of the 1st respondent -firm to deduct tax at source from the amount of interest paid to the creditors and thereafter to remit the same within seven days from the last day of the month in which deduction was made or within two months of the expiration of the month in which the date of crediting to the parties, amount falls to the credit of the Government of India's account as stipulated in r. (30(1)(b) of the IT Rules, 1962, which is without reasonable cause or excuse, the Department seeks to prosecute the 1st respondent -firm under S. 276B of the Act. The 2nd respondent being the managing partner of the 1st respondent - firm at the material time, is responsible for the conduct of the business of the firm, and has committed the offence under S. 276B r/w S. 278B of the Act. Therefore, the above complaint was filed requesting the trial Magistrate to take the complaint on file, issue process to the accused/respondents and deal with them in accordance with law.

(3.) THE 1st accused in CC Nos. 268 to 291 of 1987 on the file of the Addl. Chief Metropolitan Magistrate (Economic Offence I) Madras -8 is the firm functioning at Madras and accused 2 and 3 respondents 1 and 2 are the partners, who are responsible for the conduct of the business of the firm. They filed the return for the year ended on 31st March, 1980 and trial final accounts in the form of trading, P&L a/c and balance sheet. In the statement of interest paid account, the firm had claimed to have paid interest to the extent of Rs. 99,000 to eight persons. It is stated that the accused have delayed the remittance of the tax deducted at source to Government of India's account from the interest. The firm remitted the TDS amount after a delay of nearly two months. Therefore, summons under S. 131 of the Act were issued to the assessee on 13th Nov., 1986 asking them to appear on 21st Nov., 1986 with books of accounts for the years ended 31st March, 1980 to 31st March, 1983. On 19th Dec., 1986, the assessee filed a letter dt. 12th Dec., 1986 relating to the asst. year 1980 -81 along with the particulars of interest paid, TDS paid, etc. The assessee in their explanation had stated that all the depositors were already on the list of assessee and due to misapprehension, the depositors themselves paid advance tax on these interest payments. It is therefore, stated that the failure on the part of the firm to deduct tax at source from the amount of interest paid to the creditors and thereafter remit the same within the time stipulated is without reasonable cause or excuse, and as such, the 1st accused/firm has committed the offence punishable under S. 276B of the Act and accused 2 and 3/respondents have committed the offence punishable under S. 276B r/w S. 278B of the Act.