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2023 (3) TMI 929 - HC - Income TaxOffence u/s 276B read with Section 278B of the Income Tax Act - persons responsible for paying tax as per section 204 of the I.T. Act have committed a default under Section 200 of the I.T. Act, 1961 read with Rule 30 of the Income Tax Rules, 1962 - HELD THAT - As in case of complaint under Section 138 of the Negotiable Instruments Act, 1881 there is no application of mind by the statutory authorities before initiation of the complaint. In the case of prosecution under Income Tax Act, sanction order and the order passed by learned Commissioner of Income Tax indicate prima facie application of mind by the statutory authorities before initiation of the complaint under Section 276B read with Section 278B of the Income Tax Act, 1961. Therefore respondent No.1 at this stage has made out a sufficient case for proceeding against the petitioner. Contention of the petitioner that he is not residing in India and is resident of Netherlands for Six years Respondent No.1 invited attention to the sanction order which contains address of the petitioner as being resident of Navi Mumbai, Maharashtra. Whether the petitioner was actually residing in Netherland for Six years or not has to be decided at the time of trial of the complaint or at the appropriate stage which is permissible. At this stage, scope of inquiry is to ascertain as to whether the averments in the complaint are sufficient to constitute offences alleged against the petitioner or not. No interference is called for in order of issuance of process.
Issues:
The challenge in this petition is to the order dated 18th November, 2019 issuing process against the petitioner and others for alleged offence under Section 276B read with Section 278B of the Income Tax Act, 1961. Judgment Summary: Issue 1: Alleged Offence under Section 276B and 278B of the Income Tax Act, 1961 The petitioner, a professional executive director, claimed non-involvement in the company's affairs for the past six years and being a resident of Netherlands. The petitioner argued that the complaint's averments were insufficient to establish the alleged offence. The respondent, however, pointed to the sanction order designating the petitioner as a Director Incharge and responsible for the company's affairs, supported by the Commissioner's satisfaction of fulfilling conditions under Section 276B and 278B. The court found the complaint, sanction order, and Commissioner's order sufficient to establish the petitioner's liability, citing relevant case laws. Issue 2: Sufficiency of Averments in the Complaint The complaint detailed the accused's failure to pay taxes deducted under various sections of the Income Tax Act, 1961, attributing liability to the directors for the company's acts and omissions. The sanction order identified the directors responsible for the company's conduct and liable for prosecution under Section 278B. The court concluded that the complaint, along with the sanction order and Commissioner's order, met the necessary pleading requirements to establish a person's responsibility for the company's affairs. Issue 3: Residence of the Petitioner The petitioner's claim of residing in Netherlands for six years was disputed by the respondent, referring to the sanction order listing the petitioner's address as Navi Mumbai, Maharashtra. The court determined that the petitioner's actual residence would be addressed during the trial, emphasizing the current inquiry's focus on the sufficiency of the complaint's allegations. Considering the material before the Magistrate, including the sanction order and Commissioner's order, the court found no basis to interfere with the process issuance order. In conclusion, the court dismissed the writ petition, stating that the respondent had established a sufficient case to proceed against the petitioner, with no costs awarded.
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