2001 (9) TMI 94 - HC - Income Tax

Summary

Issues:
1. Stay of criminal proceedings against petitioners under sections 276C and 277 of the Income-tax Act, 1961.
2. Applicability of section 446(1) of the Companies Act in criminal proceedings against the managing director/director of the company.

Analysis:
1. The revision petition challenged the order dismissing the application for staying criminal proceedings against the petitioners under sections 276C and 277 of the Income-tax Act, 1961. The petitioners argued that as a provisional liquidator had been appointed for the company, the criminal complaint could not proceed without leave of the winding-up court. However, the court found this argument without merit. The complaint alleged that the accused attempted to evade tax and provided false statements, leading to charges under sections 276C and 277 of the Act. The court noted that the provisions of section 446(1) of the Companies Act, which require court permission for legal proceedings against a company in winding-up, do not apply to criminal proceedings unrelated to the company's assets. Therefore, the criminal proceedings against the petitioners could not be stayed under section 446(1) of the Companies Act.

2. The court further clarified that section 446(1) of the Companies Act cannot be invoked for criminal proceedings against the managing director/director of the company for offenses under the Act. Citing a previous decision, the court emphasized that the scope of section 446(1) does not extend to criminal cases against individual directors. The court distinguished the present case from a previous ruling and concluded that the proceedings against the petitioners in the criminal complaint cannot be stayed under section 446(1) of the Companies Act. Therefore, the revision petition was dismissed, allowing the criminal proceedings to continue against the petitioners.