Whether prosecution for late deposit of TDS sustainable if delay is beyond control of assessee?

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Short note of today's case law for quick reference:

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[2024] 471 ITR 262 (AP)

[IN THE ANDHRA PRADESH HIGH COURT]

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ADITYA INSTITUTE OF TECHNOLOGY AND MANAGEMENT AND OTHERS

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STATE OF ANDHRA PRADESH AND OTHERS

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SMT. VENKATA JYOTHIRMAI PRATAPA J.

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June 21, 2024.

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1. The assessee was an educational institution.

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2. Assessee deducted tax under various sections and deposited them belatedly with interest u/s 201(1) (a)

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3. Notice u/s 276BB r.w.s. 278B were issued to the assessee.

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4. Criminal complaints were filed.

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5. On criminal petitions for quashment of the criminal proceedings contending that the complaints were misconceived, that the assessee had communicated to the Department in writing that, due to inordinate delay in getting the reimbursement from the State Government for 90 per cent. of its students on fee reimbursement, they were unable to deposit the tax deducted pleading that they were ready to pay the penalty and that they had deposited the amount with due interest and that there was no provision of prosecution or punishment for the late payment.

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6. Held, allowing the petition:

That according to the proceedings of the Commissioner, u/s 279(1), if the assessee were able to establish a reasonable cause for failure to deposit the TDS, within stipulated time, there could not be any criminal prosecution.

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7. The assessee had filed the documents to show that they had not received fee reimbursement from the state Government within time and immediately after receiving the fee reimbursement amount, they had remitted the amount to the CG

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8. The reason provided for the delay in remitting the amount is sufficient to constitute reasonable cause u/s 278AA and hence criminal prosecution against the assessee is not warranted.

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9. There was no dispute that the assessee had paid TDS with interest and there are no tenable grounds to continue the criminal proceedings against the assessee.