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A Mumbai Sessions Court upheld the conviction of Premal Parekh and Neha Parekh, directors of Brajesh Construction Pvt Ltd, for failing to deposit INR 43.4 lakh in tax deducted at source (TDS) within the stipulated period. The Income Tax Department initiated the case, leading to a magistrate court sentencing the duo to three months of imprisonment and a fine of INR 5,000. The court dismissed their appeal, citing insufficient evidence to justify delays, despite claims of financial difficulties. It emphasized that statutory obligations cannot be excused without substantial proof, reinforcing the necessity of timely compliance with tax regulations to ensure corporate accountability.
A sessions court in Mumbai has upheld the conviction of two directors of Brajesh Construction Pvt Ltd for failing to deposit the tax deducted at source (TDS) with the government within the stipulated period. Advertisement
Earlier, a magistrate court had sentenced the construction company, along with its directors, Premal Parekh and Neha Parekh, to three months of imprisonment and imposed a fine of INR 5,000. The case was initiated by the Income Tax Department, which alleged that the company had deducted INR 43.4 lakh as TDS but failed to deposit the amount with the government.
The court ruled that in the event of non-payment of the fine, the accused would face an additional month of simple imprisonment. Special Public Prosecutor Amit Munde stated that the accused had not provided substantial evidence of a "reasonable cause" to justify the delay. The sessions court noted that the appellants had failed to prove any reasonable circumstances that could have prevented them from depositing the TDS within the required timeframe.
The court highlighted that the assessment of "reasonable cause" relies on evidence presented by both parties during the trial. Despite receiving multiple notices and reminders, the company and its directors did not provide adequate responses or supporting evidence to explain the delays. The accused had cited financial difficulties and halted business activities as reasons for their non-compliance, but the court deemed their explanation unsatisfactory, given the lack of corroborative documents or witness testimony.
The prosecution submitted evidence demonstrating repeated instances of delayed TDS payments by the company, indicating persistent non-compliance. Meanwhile, the defence argued that financial struggles prevented timely payments, claiming the total TDS amount, along with interest, was eventually paid by securing a bank loan. However, the court found this explanation insufficient to exonerate the accused.
Additionally, the defence challenged the credibility of the prosecution's witnesses, asserting that the case was based on flawed assumptions. Nevertheless, the court observed that the defence had failed to provide tangible evidence, such as official financial records or corroborating witness accounts, to support their claims of financial hardship.
In conclusion,the court maintained that financial hardships do not absolve directors from timely compliance with statutory obligations. The lack of tangible evidence to support their claims led to the dismissal of their appeal. This ruling reinforces the importance of adhering to tax regulations and providing sufficient proof for delays, ensuring accountability in corporate financial practices.
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