Top official of a firm jailed for tax deposit delay

NEW DELHI: A Delhi court has ordered 18 months jail to the principal officer of a garment export firm and imposed a fine of Rs 25 lakh on the company for delay in depositing the tax deducted at source (TDS) for three years. The court has also imposed Rs 60,000 fine on the principal officer.

The order is likely to prove to be a deterrent for similar offenders. Sources said many of the defaulting firms are into the real estate business. Pronouncing its order last week, additional chief metropolitan magistrate Pawan Singh Rajawat said, “Evasion of tax by companies/ persons in one form or the other by non-depositing of TDS or other taxes within prescribed time by a company, is rising day by day which causes huge loss to the government exchequer and such practice should be curbed with firm hand.”

IT Act specifies all amounts deducted in income tax shall be paid to the government within seven days from the end of the month. Conviction for an offence attracts three to seven months rigorous imprisonment. The IT department had filed a complaint in the Tis Hazari Court for prosecuting the company and its principal officer after detecting it had deposited TDS worth Rs 30 lakh more than 12 months late.

The court, in January, held the firm guilty and imposed Rs 25 lakh fine. Another Rs 1 lakh fine was imposed on the principal officer and he was released on probation of six months. But before the IT department could file a review petition, the company challenged the order in a sessions court, which rejected the company’s appeal and upheld the fine.

It also set side the lower court’s order regarding probation to the principal officer. It held that the sentencing was to be done again by the lower court and sent the case back to it. After hearing the argument of IT department, the court ordered six months imprisonment to the principal officer for offence committed for each financial year.

“This year the IT department has issued over 500 prosecution notices to companies and firms in Delhi on charges of delay in remitting the TDS funds to the exchequer. Prosecution has been sanctioned in more than 300 such cases. Such defaulters cause hardship to the tax payers who taxes are deposited, but not deposited in time,” an official said.

The defaulters have the option of filing an application before the chief commission of IT for compounding the offence by paying taxes, interest and penalty. The official said in many cases, they receive complaints from employees about defaulters when they come to know about the wrong doing by their employers