2015 (6) TMI 1254 - HC - Income Tax

Cognizance u/s 276 B r.w.s. 278 B of the Income Tax Act and u/s 409/34 of the Indian Penal Code - tax deducted at source from the employees of H.E.C.was not deposited with the Income Tax Department - whether petitioner will not come under the definition of employee in view of Section 2(35) of the Income Tax Act, 1961? - HELD THAT - As apparent that the petitioner was neither regular employee nor he comes within the meaning of employee u/s 2(35) of the Income Tax Act, 1961. The terms on which services of the petitioner was hired by H.E.C. does not disclose that he was in any manner responsible for depositing the T.D.S. with the Income Tax Department. Since prima facie it does not appear that the petitioner is in any manner responsible for the offences alleged, we feel inclined to allow this petition by invoking the power conferred upon this Court u/s 482 Cr.P.C. Accordingly, the order of cognizance dated 04.10.2001 passed by learned I/c Special Judge, Economic Offence, Ranchi in connection with Complaint Case to the extent of prosecution of present petitioner stands quashed. The order impugned shall remain in force so far remaining accused persons are concerned, unless the order is not set aside wholly - M.P. stands allowed.

Summary

Issues:
Quashing of order dated 04.10.2001 regarding cognizance under Income Tax Act and IPC against the petitioner.

Analysis:
The judgment delivered by Hon'ble Mr. Justice D.N. Upadhyay pertains to a petition seeking the quashing of an order passed by the learned I/c Special Judge, Economic Offence, Ranchi, regarding the initiation of proceedings under the Income Tax Act and the Indian Penal Code against the petitioner and other accused. The primary contention raised was that the tax deducted at source from the employees of H.E.C. for the financial year 1995-96 was not deposited with the Income Tax Department. The petitioner argued that he did not fall under the definition of an employee as per Section 2(35) of the Income Tax Act, as his services were hired for a specific purpose related to finance and costing improvement, and he was not responsible for T.D.S. deposition. The complainant failed to provide any evidence implicating the petitioner in the alleged offenses.

The counsel for the Union of India did not file a counter affidavit to rebut the petitioner's claims. The court noted that the terms of the petitioner's service with H.E.C. did not indicate any responsibility for T.D.S. deposition. Based on the evidence presented, it was concluded that the petitioner was not a regular employee and did not fall within the definition of an employee as per the Income Tax Act. As there was no prima facie evidence linking the petitioner to the alleged offenses, the court invoked its power under Section 482 Cr.P.C. to quash the order of cognizance against the petitioner. The order was upheld for the remaining accused unless set aside entirely.

In conclusion, the petition was allowed, and the order of cognizance dated 04.10.2001 against the petitioner was quashed. The judgment emphasized the importance of establishing a clear connection between an individual's role and responsibilities to hold them accountable for alleged offenses under the law.