A Delhi court has convicted three company officials for failing to remit Rs 8.51 crore in TDS, emphasising that tax collected on behalf of the state cannot be used as a short-term financial cushion, marking a tougher stance on corporate non-compliance.
A Delhi court has convicted three company officials over a Tax Deducted at Source default of Rs 8.51 crore, ruling that money collected on behalf of the state cannot be treated as a temporary source of working capital.
According to The Indian Express, Additional Chief Judicial Magistrate Renu Chaudhary said the sum involved was substantial and that the failure to deposit it over a significant period harmed the public exchequer and honest taxpayers. The court rejected the company’s claim of financial stress, saying commercial hardship may explain a cash crunch but cannot excuse withholding tax already deducted from payments.
The case arose from a survey by the Income Tax Department on December 20, 2013, when officials found that Dehradun Highways Project Limited had deducted TDS from payments but not remitted Rs 8,51,54,265 to the central government within the required time. Formal charges were later framed in January 2018. The court said the company’s reply to a show-cause notice did not dispute the deduction or the amount, but relied on an alleged liquidity crisis, a defence the judge said had no legal force.
In convicting Amit Bharana, Alok Khanna and Nikhil Jain, the court focused on their actual roles rather than their job titles. The Indian Express reported that Bharana’s claim to be only a non-executive director was not supported by the record, while Khanna’s signature on the balance sheet, his name in Form 27A and his role as audit committee chairman pointed to responsibility for compliance. Jain’s argument that he merely handled technical filings for another group company also failed, as the court found evidence that he helped with TDS calculations and returns.
The ruling comes amid a wider push by tax authorities to pursue TDS defaults more aggressively. Livemint recently reported another Delhi court jail term in a separate TDS case, underscoring a tougher approach towards corporate non-compliance. In this case, the judge said the offence was serious even if it lacked the visible harm of more conventional crimes, because it erodes confidence in self-assessed tax compliance and shifts the burden onto taxpayers who do obey the law.
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