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1994 (3) TMI 9 - HC - Income Tax

Issues involved: Quashing of complaints and related proceedings u/s 482 of the Code of Criminal Procedure regarding failure to deduct income tax at source and alleged offences u/s 276B(ii) and 278B of the Income-tax Act, 1961.

Summary:
The petitions sought to quash complaints and proceedings related to the firm's failure to deduct income tax at source. The petitioners, as partners, argued they were not in charge of the firm's business and were not served notice by the Income-tax Officer. The court considered whether interference was warranted u/s 482 of the Criminal Procedure Code based on the allegations. The Income-tax Act imposes liability on those in charge of a company's business for offences committed. However, partners are not automatically considered "principal officers" unless notice is served. Mere allegations of involvement are insufficient; credible evidence of active participation is required for vicarious liability. Citing relevant case law, the court emphasized the need for specific allegations and evidence of responsibility. The court agreed with the petitioners, quashing the complaints against them but allowing proceedings against the firm to continue in accordance with the law.

The court's decision was based on the interpretation of the Income-tax Act provisions regarding liability for tax deductions and offences committed by a company. The court emphasized the importance of proving active involvement and responsibility in business conduct for vicarious liability. Citing precedents, the court highlighted the necessity of specific allegations and evidence to establish liability. Ultimately, the court quashed the complaints against the petitioners while allowing proceedings against the firm to proceed lawfully.

 

 

 

 

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