The Rajasthan High Court has overturned the prosecution under the Income Tax Act of 1961 against the applicant’s company, which is engaged in e-commerce transactions. The delay faced by prominent companies like Amazon, Naaptol, and eBay in submitting their bills led to the applicant being nearly 10 months late in filing the deducted TDS.
It was ruled by the division bench of Justice Maneesh Sharma and Justice Avneesh Jhingan that as the Tax Deducted at Source (TDS) was deposited by the applicant that too including the interest for delay, there was no case incurred against the applicant’s company.
It was ruled by the court that it was a settled proposition that the penal proceedings could not be started only that it was statutory to perform the same until the act of the taxpayer was malicious.
The applicant for the AY 2014-15 was obligated to deposit the TDS, deducted from the payments incurred to the other companies. But being pertinent to the e-commerce transactions and because of the delay of the e-commerce companies in filing the bills, the applicant got delayed in completing this liability.
However, after a delay of nearly 10 months, the TDS was deposited via the applicant, including an 18% interest rate.
Even after the same, the applicant was furnished a notice in 2018 u/s 279(1) of the Act, followed by the sanction being granted via the commissioner to prosecute the applicant and its directors for failing to adhere to the process in the regulation. Therefore, the petition was submitted.
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The Court, after hearing the opinions, ruled that,
“…the explanation given by the petitioners was neither doubted nor rejected. The case at hand is not of TDS not being deducted and deposited. It is undisputed that before issuance of the show cause notice, the T.D.S. was deposited voluntarily by the petitioner company along with the interest. The delayed compliance of the provision of deducting and depositing TDS stand alone shall not suffice for the grant of prosecution sanction.”
As per that, the petitioner was authorized to set aside the commissioner’s order that granted sanction to prosecute the applicant and its directors.
| Case Title | M/s Fortune Infovision Pvt. Ltd. vs Commissioner of Income Tax |
| Citation | D.B. Civil Writ Petition No. 11431/2018 |
| Date | 18.03.2025 |
| Petitioner by | Mr P.K. Kasliwal, Mr Priyesh Kasliwal |
| Represented by | Mr Shantanu Sharma, Mr Parth Vashishtha |
| Rajasthan High Court | Read Order |
