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2022 (9) TMI 1100 - HC - Income TaxOffence punishable under Section 276(B) r/w 278(B) - delayed payment of tax deducted at source - HELD THAT - The Income Tax Act comes up with a very specific provision under Section 2(35) of the Act, wherein notice can be issued to all the directors treating them as principal officers. The Hon'ble Apex Court in the above judgment has categorically held that once such notice is given and necessary averments are also made in the complaint, the fact as to whether the director is a principal officer or not can only be decided in trial. This ratio will squarely apply to the facts of the present case. That is the reason why, the learned Single Judge, while dismissing two other quash petitions filed by the petitioner challenging two other complaints of similar nature, rightly relied upon the judgment of the Hon'ble Apex Court in Madhumilan Syntex Ltd., 2007 (3) TMI 670 - SUPREME COURT and dismissed those petitions. The present petitions are also liable to be treated in the same manner and this Court does not find any ground to interfere with the proceedings of the Court below. The presence of the second petitioner is dispensed with and she shall be represented through her counsel. The second petitioner shall be present before the Court at the time of questioning u/s 313 Cr.P.C. and at the time of passing judgment in the complaint. The learned counsel appearing on behalf of the second petitioner shall cross-examine the witnesses on the same day or on the next hearing date, the witnesses who are examined in chief. It goes without saying that it will be left open to the second petitioner to raise all the grounds before the Court below and the Court below shall consider the same on its own merits and in accordance with law, without being influenced by any of the observations made in this order. In the result, all the criminal original petitions stand dismissed and there shall be a direction to the learned Judicial Magistrate No.1, Tiruchirappalli within a period of three months from the date of receipt of a copy of this order.
Issues Involved:
1. Criminal complaints against the Company and its Directors under Section 276(B) r/w 278(B) of the Income Tax Act, 1961. 2. Status of the first petitioner due to death. 3. Classification and responsibility of the second petitioner as a non-executive director. 4. Applicability of previous judgments and legal precedents. 5. Whether the second petitioner can be treated as a principal officer under Section 2(35) of the Income Tax Act. 6. Request to dispense with the presence of the second petitioner during trial proceedings. Detailed Analysis: 1. Criminal Complaints Against the Company and its Directors: The income tax department filed criminal complaints against the Company and its Directors for delayed payment of tax deducted at source, punishable under Section 276(B) r/w 278(B) of the Income Tax Act, 1961. The complaints for different assessment years were substantively the same. 2. Status of the First Petitioner Due to Death: During the pendency of the proceedings, the first petitioner expired. Consequently, the proceedings abated concerning the first petitioner, and the court only considered the stand of the second petitioner. 3. Classification and Responsibility of the Second Petitioner as a Non-Executive Director: The second petitioner claimed to be a non-executive director, not involved in the day-to-day affairs of the Company. The petitioner's counsel referenced Form-32 and Supreme Court judgments (GUNMALA SALES (P) LTD. vs. ANU METHA AND OTHERS and POOJA RAVINDER DEVIDASANI vs. STATE OF MAHARASHTRA AND ANOTHER) to argue that non-executive directors cannot be treated as Principal Officers. 4. Applicability of Previous Judgments and Legal Precedents: The petitioner's counsel cited a Gujarat High Court judgment (IONIC METALLIKS AND 3 OTHERS vs. UNION OF INDIA AND 3 OTHERS) and a previous order by the Madras High Court (Crl.O.P(MD)Nos.16082 etc., of 2018) to support quashing proceedings against non-executive directors. However, the Department's counsel argued that these precedents applied to nominee directors, not non-executive directors, and referenced other orders where similar pleas by the second petitioner were dismissed. 5. Whether the Second Petitioner Can Be Treated as a Principal Officer: The court examined the Supreme Court judgment in MADHUMILAN SYNTEX LTD., AND OTHERS vs. UNION OF INDIA AND ANOTHER, which held that whether directors are principal officers under Section 2(35) of the Act must be determined at trial. The court noted that notice was issued to the second petitioner treating her as a principal officer, and such averments were made in the complaint. This determination could only be made at trial, not in a quash petition. 6. Request to Dispense with the Presence of the Second Petitioner During Trial Proceedings: Considering the request, the court dispensed with the second petitioner's presence, allowing her to be represented by counsel, except during questioning under Section 313 Cr.P.C. and at the time of passing judgment. The court emphasized that the second petitioner could raise all grounds before the trial court, which should consider them on their merits. Conclusion: All criminal original petitions were dismissed. The Judicial Magistrate No.1, Tiruchirappalli, was directed to dispose of the cases within three months. The second petitioner's presence was dispensed with, except for specific stages of the trial.
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