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Section 278AA of the Income-tax Act, 1961 - Offences and prosecution - Punishment not to be imposed in certain cases - Financial years 1995-96, 1997-98 to 1999-2000 - Respondents initiated prosecution proceedings against appellant under section 276B for its failure to deposit tax deducted at source - On writ, Single Judge dismissed same - Whether provisions of section 278AA would be available to appellant if it was proved that it had sufficient and good reasons for committing default contemplated in section 200 - Held, yes - Whether it was for appellant to produce sufficient evidence for non-deposit of tax deducted at source during criminal trial to avail of benefit of section 278AA and since except for pleading financial hardship, there was no other reason provided by appellant for such default, Single Judge was justified in not entertaining writ petition of appellant - Held, yes FACTS The appellant had failed to deposit and/or pay to the credit of the Central Government the tax deducted by the appellant at source. The respondents, therefore, initiated prosecution proceedings against the appellant under section 276B. On writ, the Single Judge dismissed the writ petition holding that there was no scope for pre-empting the criminal proceedings unless it could have been established that even if the allegations made by the respondents were all true, they did not constitute any offence under section 276B. On appeal, the appellant submitted that, admittedly, it had defaulted in depositing the tax deducted at source for the financial years in question, but such default was neither intentional nor with a motive to avoid payment of the said tax, but because of financial crisis faced by it which was duly recognized both by the Court and the income-tax authorities themselves, that the appellant-company had been permitted to pay off the tax in instalments without imposition of penalty and that the company had honoured the commitment and had paid off the entire outstanding dues; therefore, its conduct did not warrant grant of sanction for prosecution for the default in question. HELD The provisions of section 278AA would, no doubt, be available to the appellant to its…

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