M/S AZEEM INFINITE DWELLING INDIA PVT LTD,. vs. THE COMMISSIONER OF INCOME TAX (TDS)
What did the High Court hold?
The High Court allowed the petition. It held that a perusal of the material indicated that the petitioners' detailed replies, including documents explaining the delay in TDS payment and the reasons for it, were not considered by the respondents in their proper perspective. The Court also noted the petitioners' assertion that they would submit additional documents if given another opportunity. Adopting a justice-oriented approach, the Court set aside the impugned order dated June 18, 2024, and remitted the matter back to the first respondent for reconsideration. Liberty was granted to the petitioners to submit additional pleadings and documents, which would be considered by the respondent, who was directed to provide sufficient opportunity, including a personal hearing, and proceed in accordance with law.
What were the facts?
The petitioners, M/s Azeem Infinite Dwelling India Pvt Ltd and its directors, are challenging an order dated June 18, 2024, passed by the Commissioner of Income Tax (TDS) under Section 279(1) of the Income Tax Act, 1961, sanctioning prosecution. For assessment year 2018-2019, the petitioners delayed deducting and remitting Tax Deducted at Source (TDS), eventually paying the amount with penal interest on August 9, 2021. Subsequently, a notice was issued by the Deputy Commissioner of Income Tax seeking explanation for the delay. The petitioners submitted replies, citing demonetization, GST implementation, and the COVID-19 pandemic as reasons for financial difficulties and cash flow issues. Despite these explanations and a request for time to produce further documents, the Commissioner sanctioned prosecution.
What were the issues?
1. Whether the impugned order dated June 18, 2024, passed by the first respondent under Section 279(1) of the Income Tax Act, 1961, sanctioning prosecution against the petitioners, is liable to be quashed? (Question of law and fact, concerning Section 279(1) of the Income Tax Act, 1961). Assessee's Contention: The petitioners argued that the impugned order was passed without properly considering their detailed replies and the reasons for the delayed TDS payment, which were due to demonetization, GST implementation, and the COVID-19 pandemic leading to financial hardship. They also contended that they were not given sufficient opportunity to produce additional documents. Revenue's Contention: The respondents argued that the impugned order was detailed and well-considered, and therefore, did not warrant interference by the High Court. They asserted that sufficient opportunity had already been granted to the petitioners.
Which sections of the Income-tax Act were involved?
Section 279(1), Section 276B, Section 278B
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER
In this petition the petitioners seeks for the following reliefs: "a. Issue a writ of certiorari quashing the order bearing DIN & Order No.ITBA/COM/F/17/2024-25/1065714057(1) dated 18.06.2024 passed by the first respondent under Section 279(1) of the Act vide Annexure- E.
b. Pass such other Writ or direction as this Hon'ble Court deems fit to grant in the facts and circumstances of the present case."
A perusal of the material on record will indicate that for the assessment year 2018-2019, the petitioner deducted tax at source (TDS) and remitted the said amount to the credit of the Central Government by 09.08.2021, after 14 months along with penal interest. Subsequently, on 17.01.2023, the second respondent issued a notice to the petitioners seeking explanation as to why prosecution proceedings should not be recommended against the petitioners on account of the delayed payment HC-KAR NC: 2025:KHC:54320 deduction of TDS by the petitioners. The petitioners having submitted replies dated 22.03.2024, the first respondent issued a show cause notice dated 14.03.2024 to which the petitioners submitted detailed replies dated 16.02.2024 and 02.05.2024, interalia contending that the reasonable cause for delayed payment of TDS was on account of demonetization policy and subsequent GST implementation as also the COVID-19 pandemic on account of which the company faced financial loss and cash flows where cash flow was badly affected and huge monies had to be borrowed from NBFC's by way of debentures to run the business activities. It is submitted on instructions that the petitioners also requested time to produce additional documents in support of its claim.
Pursuant to the aforesaid notices and replies, the respondent proceeded to pass the impugned order dated 18.06.2024 granting sanction for prosecution under Section 276B read with Section 278B of the Income Tax HC-KAR NC: 2025:KHC:54320 Act, aggrieved by which the petitioners are before this Court by way of the present petition.
Per contra learned counsel for the respondents would reiterate the various contentions urged in the statement of objections and submit that since the impugned order is detailed and a well considered order, the same does not warrant interference by this Court in the present petition and sufficient opportunity had been extended/granted in favour of the petitioners who are not entitled to any indulgence in the present petition.
A perusal of the material on record including the impugned order will indicate that though the petitioners had submitted detailed replies along with documents to indicate that the TDS amount was subsequently paid together with penal interest and offering an explanation as to why there was a delay on the part of the petitioners, the same has not been considered by the respondents in its proper perspective. HC-KAR NC: 2025:KHC:54320
Further in the light of the specific assertion on the part of the petitioners that if one more opportunity is provided, the petitioners would submit additional documents in support of its claim, I deem it just and appropriate to adopt a justice oriented approach and set aside the impugned order at Annexure-F passed by the first respondent and remit the matter back to the first respondent for reconsideration afresh in accordance with law.
In the result the following: ORDER
(i) The petition is allowed.
(ii) The impugned order dated 18.06.2024 at Annexure-E is hereby set aside.
(iii) The matter is remitted back to first respondent for reconsideration afresh in accordance with law.
(iv) Liberty is reserved in favour of the petitioners to submit additional pleadings, documents, replies etc., HC-KAR NC: 2025:KHC:54320 which shall be considered by the respondent, who shall provide sufficient and reasonable opportunity to the petitioners and provide an opportunity of personal hearing to the petitioners and proceed further in accordance with law. (S.R.KRISHNA KUMAR) JUDGE NS CT:TSM List No.: 2 Sl No.: 0
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