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TMI Blog2014 (9) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court is of the view that there are sufficient grounds for grant of leave to appeal. Accordingly, these three petitions are allowed and the cases are directed to be registered as criminal appeals and numbered as such by the Registry. Criminal Appeal No. of 2014 (to be numbered by the Registry) Criminal Appeal No. of 2014 (to be numbered by the Registry) Criminal Appeal No. of 2014 (to be numbered by the Registry) 2. With the consent of learned counsel for the parties, the appeals are taken up for final hearing. 3. The issue pertains to the assessment years ("AYs"), i.e., AY 1982-83, 1983-84, and AY 1984-85. With respect to the three AYs, show cause notices ("SCNs") under Section 276-B read with Sections 194 A and 200 of the IT Act wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Additional Chief Metropolitan Magistrate ("ACMM") has by an order dated 3rd December 2011 in CC No. 7/4/09 acquitted A-2 and A-3 while convicting the company (A-1) for the offence under Section 276-B of the IT Act and by an order of the same date the company (A-1) was sentenced to pay a fine of Rs. 50,000. Aggrieved by the aforementioned orders dated 24th September 2011 of the learned ASJ and order 3rd December 2011 of the learned ACMM, the ITD has filed the present appeals. 7. The main ground on which A-2 and A-3 were acquitted is that the SCNs issued by the ITD were only to the "principal officer" of the company and not to the individual directors, i.e., A-2 and A-3. In both the impugned judgments, reliance has been placed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entical circumstances where the ITD had prosecuted a company under Section 276 B read with Section 278 B IT Act. The only distinction between the case of Madhumilan Syntex Limited (supra) and the case on hand is that in that case the SCN issued expressly stated that the directors were considered to be treated as "principal officers". However, it appears that the Supreme Court also perused the complaint filed by the ITD in which it was stated that the directors were considered as principal officers. The relevant paragraphs of the decision in Madhumilan Syntex Limited (supra) read as under: "44. In the case on hand, in the show cause notice dated March 11, 1991 issued under Section 276B read with Section 278B of the Act, it was expressly sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge and responsible to Accused No. 1 for the conduct of its business at the time when the offence, which is the subject matter of this complaint, was committed. The Complainant has been authorized and directed by the Commissioner of Income Tax, Delhi-III, New Delhi, Shri R.S. Aggarwal, under Section 279 (1) of the Income Tax Act (hereinafter to be referred to as the Act) to file the present complaint at his instance against the Accused. The authorization of the Commissioner of Income Tax, Delhi-III, New Delhi, is attached herewith and marked as Annexure-A. In instituting this complaint, the Complainant is also acting in the discharge of her official duties being a public servant." 11. For the purpose of Section 278 B of the IT Act, the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub- section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain why they should not be proceeded against. Even if in the SCN there was no express mention that the directors were considered as "principal officers", in the complaint filed by the ITD it was clearly stated that "Accused Nos. 2, 3 and 4 are the directors/principal officer of the said company and were in charge and responsible to Accused No. 1 for the conduct of ........." 14. In Madhumilan Syntex Limited (supra) it was held that the proceedings against the Directors would be maintainable as long as the complaint clearly stated that they were being treated as principal officers of the company. Even otherwise for the purpose of Section 278 B of the IT Act, once the offence is shown to have been committed by the company, then the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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