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Tax evasion by corporates rising, says Delhi court
May, 15th 2015

Tax evasion by corporates in one form or another is rising day by day causing huge loss to public exchequer, a Delhi court observed today and said this needs to be curbed with a firm hand.

Additional Chief Metropolitan Magistrate Devendra Kumar Sharma made the observations while slapping a fine of Rs 1.5 crore on a private firm dealing in insurance business, for its failure to deposit TDS of over Rs 1.6 crore with the Income Tax department within the stipulated time.

"It is seen that nowadays, evasion of tax by corporate/ persons in one form or the other form by non-depositing of TDS (tax deducted at source) or other taxes within prescribed time are rising day by day which causes huge loss to government exchequer and such practice should be curbed with firm hand," the court said.

It held Delhi-based M/s Medsave Health Care (TPA) Ltd guilty of failing to deposit the TDS with the government under the Income Tax Act and imposed a fine of Rs 1.5 crore.

As per the IT department, on the total payment of Rs 16.8 crore, the TDS to be deposited by the company amounted to Rs 1.68 crore.

The court said the firm made payments to various parties and also deducted TDS but did not deposit it. Had there been no survey, huge amount of Rs 16,85,28,897 would not have come to light and the tax amount would have been evaded, it said.

"The same would have caused great loss to the revenue as well as economy of the country. Its impact can be seen further in the light of recently launched Prime Minister's Life Insurance Scheme where on deposit of Rs 330 in a year, the risk cover is Rs two lakh.

"From the undisclosed tax amount, thousand of persons can be provided life insurance free of cost. The convict company itself is dealing in insurance business," the court said.

The court refused to take a lenient view towards the firm observing that though TDS amount has been deposited but there was "unexplained delay" and disclosure was not voluntary.

According to the Income Tax Department's case, the firm had made payments to its deductees of Rs 16.8 crore including interest on principle amount of Rs 15.9 crore during 2013-14 financial year, but TDS was not deposited in time.

The company, on its part, claimed that the entire TDS amount along with penalty has been deposited with the IT Department and the delay in depositing it was due to financial crunch.

It said the delay in payment of TDS was neither willful nor deliberate.

The court referred to a Law Commission report, dealing with various aspects of tax evasion, terming the offence as "white collar crime".

The court, in its judgement, noted that the trial in the case concluded within six months as the complaint was filed on November 7, 2014 and conviction verdict was passed on May 12.

The court also observed "our minds are familiar with conventional offences like murder, rape and theft where a tangible person or property of an individual is attacked".

"But it takes time to realise the seriousness of non-conventional crimes where tangible property, in the sense of economic recourses of the community are involved, or where the harm cause is indirect and remote, and there is no immediate tangible object of the harm visible to the mind.

"Neither the offender nor the society adequately realises the harm, because of the absence of an immediate victim," it said.

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