Law:

Section:

Section 276B, read with section 278B, of the Income-tax Act, 1961 - Offence and prosecution - Failure to pay tax deducted at source - Assessment year 1985-86 - Whether where delay in depositing amount of TDS was not substantial; amount involved was not very huge and amount in default had also been deposited, department in its discretion could not launch prosecution under section 276B - Held, yes - Whether when conditions for exempting assessee from prosecution are available, it would not be open for authorities then also to have discretion in matter of launching prosecution - Held, yes FACTS Prosecution was launched against the applicant along with the co-accused for failure to deposit the amount of TDS within the prescribed period. The accused persons were held guilty under section 276B, read with section 278B and were sentenced to imprisonment and fine. On appeal, the first additional Sessions Judge allowed the appeal of the co-accused and acquitted him but dismissed the appeal filed by the applicant and confirmed the sentence imposed on him. The appeal filed by the appellant was also dismissed. On revision applicant's case was that the prosecution was not proper at the belated stage when he had already deposited the amount of tax deducted at source. HELD In the instant case, undisputedly the tax deducted at source was deposited when the authorities considered the case for launching prosecution. The delay in depositing the amount was not substantial as the delay was said to be of about five months and some days and the amount involved was Rs. 28,776 which could not be said to be very huge. In such a situation, the authorities concerned should have considered the matter in the light of the instructions contained in the relevant circular dated 28-5-1980 (see para 5). When the conditions for exempting the assessee from prosecution are available, it will not be open for the authorities then also to have discretion in the manner of launching prosecution. The relevant provisions of the statute and the instructions are not inconsistent with each other. Where there is conflict between the instructions and the provisions of the statute, no doubt, the provisions of the…

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