• The case involves a prosecution under Section 276B, along with sections 278AA and 278B, concerning delays in depositing TDS for the fiscal year 2016-17.
  1. 2. High Court’s Stance:

    • The Jharkhand High Court ruled in favor of the assessee, stating that TDS amounts were deposited with interest before criminal proceedings commenced.
    • Criminal proceedings were deemed inappropriate, especially considering that the deducted TDS amounts were mostly less than Rs. 50,000.

    3. Supreme Court’s Judgment:

    • The Supreme Court concurred with the High Court’s decision, dismissing the Special Leave Petition against it.
    • The court emphasized that since TDS amounts were deposited with interest, continuing criminal proceedings would amount to an abuse of the court’s process.

    4. Relevant Extract from the Supreme Court Judgment:

    • The Supreme Court held that the continuation of criminal proceedings after receiving the deducted amount with interest would be an abuse of the court’s process.
    Analysis of Jharkhand High Court’s Decision:

    1. Deposition of TDS Amount with Interest:

    • TDS amounts were deposited with interest, and the delay in depositing the TDS was acknowledged.

    2. Relevance of CBDT Instructions:

    • The sanctioning authority did not consider CBDT instructions, stating that prosecution under Section 276B should not be proposed if the amount involved is not substantial, and the default amount has been deposited.

    3. Launch of Prosecution:

    • Prosecution was initiated after the TDS amount with interest had been received, which was not in line with the law’s provisions.

    4. Section 278(AA) of the Act:

    • Section 278(AA) states that no person shall be punished under Section 276(B) if there is a reasonable cause for the failure.

    5. Conclusion by the Court:

    • The High Court concluded that since TDS was deposited with interest, there was no justification for continuing criminal proceedings, especially after the amounts were received.

    The Dev Multicom Pvt Ltd case emphasizes the need for a balanced approach between compliance and stringency in tax laws. The ruling suggests that after the deposit of TDS with interest for a delay, prosecution under Section 276B may be uncalled for. This calls for a comprehensive review of the relevant provisions to ensure a fair and effective tax system that encourages voluntary compliance.