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Issues:
1. Quashing of proceedings in C. C. No. 365 of 1987 on the file of the learned Additional Chief Metropolitan Magistrate, Economic Offences-I, Egmore, Madras-8. 2. Allegations against the third accused under sections 276C(1)(i) and 277 of the Income-tax Act and sections 193, 196, and 420 read with section 511 of the Indian Penal Code. 3. Interpretation of section 278B of the Income-tax Act regarding the liability of individuals in charge of a company's business. 4. Application of legal precedents regarding the definition of "a person in charge and responsible for the conduct of the affairs of a company." Analysis: The judgment pertains to a petition seeking the quashing of proceedings in C. C. No. 365 of 1987 involving the third accused, who was charged under sections 276C(1)(i) and 277 of the Income-tax Act and sections 193, 196, and 420 read with section 511 of the Indian Penal Code. The complaint alleged that the second and third accused were responsible for the conduct of the business under section 276B of the Income-tax Act. However, it did not specifically accuse the third accused of committing or being responsible for the offenses mentioned. The absence of an allegation that the petitioner was in charge of the company's business at the time of the offense was a crucial point of contention. The judgment delves into the interpretation of section 278B of the Income-tax Act, which imposes liability on individuals in charge of a company's business for offenses committed by the company. The court highlighted that for an individual to be deemed guilty under this section, it must be established that they were in charge and responsible for the business at the time of the offense. The absence of such allegations in the complaint raised doubts about the petitioner's liability under section 278B. Legal precedents were cited to support the argument that mere directorship or association with a company is insufficient to establish liability under section 278B. The court referenced a Supreme Court decision emphasizing that a person "in charge" must have overall control of the day-to-day business of the company or firm. Similarly, a local judgment underscored the importance of specific allegations regarding the role played by individuals in the business for sustaining a prosecution. Ultimately, the court found that the complaint lacked specific allegations against the petitioner to invoke the provisions of section 278B of the Income-tax Act. Consequently, the proceedings in C. C. No. 365/87 were quashed as against the third accused. The judgment emphasized the necessity of clearly outlining the involvement of individuals in the business to establish liability under relevant legal provisions.
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