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TMI Blog1971 (6) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... Under section 18(6) of the said Act and under section 200 of the Income-tax Act, 1961, the principal officer of the company was bound to pay the tax so deducted within 7 days from the date of deduction to the credit of the Central Government. It was not so remitted. The dividend was distributed on February 1, 1962. Under the Act, therefore, the tax had to be credited to the Central Government on or before February 7, 1962. It was averred in the complaint that accused Nos. 1 and 2 were the principal officers of the company during the period when the deduction was made. Even though the dividend was distributed as early as on February 1, 1962, the tax was paid only on May 26, 1969, and as such the accused are liable to be punished under sections 276( d ) and 276B of the Income-tax Act, 1961. In the connected case, C.C. No. 108/69, the complaint was against three of the office-bearers (M/s. C.L. Joseph, V. Devassia and V.M. Joseph). It was averred that they had committed offences falling under sections 276( d ) and 276B of the Income-tax Act, 1961, as amended by the Finance Act, 1969. According to the complainant, the accused were the principal officers of the company during the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainable. It was not proved by the prosecution that the accused had committed an offence punishable under the law in force at the time of the commission. They are, therefore, protected by the bar of article 20(1) of the Constitution. Learned counsel for the appellant did not labour much on this point. These two appeals are, therefore, dismissed. In respect of the other appeals Cr. Appeals Nos. 43 and 44/71 the first point arising for consideration is whether any of the accused was the principal officer of the company at the relevant time, and whether any tax was in fact deducted. The case of the complainant is that till April 15, 1963, the first respondent in Criminal Appeal No. 44/71 (Sri C. L. Joseph) was the managing director and as such he was the principal officer of the company. It is also their case that dividends were distributed for the year ending March 31, 1962, and the tax was actually deducted by the said C.L.Joseph under section 200 of the Income-tax Act, 1961. Under rule 30(1)( b ), it is the duty of the person making the deduction to pay the amount to the credit of the Central Government. As no deduction was made by either of the two persons, C.L. Joseph and V. Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany, he should have been served with a notice by the Income-tax Officer of his intention to treat him as the principal officer in order that he may be brought under clause ( b ) of section 2(35) of the Act. Such a notice were evidently not given in the instant case. It would, therefore, be wrong to say that the respondent, C. L. Joseph, was the principal officer of the company at the relevant time. Learned counsel placed reliance on exhibit P-4 in C. C. No. 107/69, statement filed by the secretary of the company before the Income-tax Officer on August 23, 1969, wherein C. L. Joseph is described as the principal officer. In the statement as against C. L. Joseph's name, the designation "principal officer" is shown within brackets. The statement, of course, is not signed by C. L. Joseph. It is seen to have been signed by the secretary and we are at a loss to know how the secretary happened to describe C. L. Joseph as the principal officer in the statement. In the statement, V. Devassia, the 2nd accused, is shown as "director/secretary/ principal officer." The person who was responsible for signing this statement has not been examined and we are not in a position to say under what c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stributing dividend. Section 205 (3) of the Companies Act, 1956, provides that no dividend shall be payable except in cash and, under sub-section (5)( b ), the mode of payment is indicated and that is : "Any dividend payable in cash may be paid by cheque or warrant sent through the post directed to the registered address of the shareholder entitled to the payment of the dividend . . . ." Payment of dividend by crediting in the accounts of the shareholders is thus no approved mode of disbursement of dividend. I would, therefore, agree with the learned appellate judge in his finding that evidence is lacking as to whether any tax was deducted from the dividend. For the accused to be hauled up under the penal provisions of the Act, the prosecution must show that the deductions were made by the particular officer and he failed to pay it to the credit of the Central Government; in other words, the offence is one attaching personally to the offender and not to the company as such and unless the prosecution succeeds in showing that the deduction was made by the particular accused no conviction can be entered on them. Accused Nos. 2 and 3 (V. Devassia and V. M. Joseph) came into the pic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e failure on the part of the principal officer to deduct tax from the dividend and pay to the credit of the Central Government. If the offence is the omission to do a thing, the act constituting the offence would continue so long as the obligation to do the thing continues. But, in the present case, the obligation to pay the tax has not been established. The accused could be burdened with that obligation only if it is further shown that the dividends were declared and paid and that the tax also was collected by them from the dividends. Then only the obligation to pay to the credit of the Central Government would be cast on the accused; in other words, it is not a mere default or omission to pay tax which a party is bound to pay. That is not the subject-matter of the offence here. Here the offence is the failure to deduct and pay. When the deduction itself is hot proved, the further obligation to pay cannot be thrown on the accused. The offence, if at all, was committed under section 51 of the 1922 Act, which cannot survive so as to be made the subject-matter of a complaint under the 1961 Act, as under the latter Act section 276( d ) requires that the deduction and payment of tax sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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