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TMI Blog2011 (11) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. Admittedly, both the petitioners were the directors at the relevant time in the company under the name and style of M/s.S. N. Bhatia Company Private Limited. Shri S. N. Bhatia was and is the managing director of said company. 7. The allegations against the accused persons are as under:- 3. That as per the information available on the record, during the previous year ending on 31-7-1980 and relevant to the assessment year 1981-82, accused Nos.2 to 4 were the directors of accused No.1. They were exercising all powers to control and the day to day business of accused No.1. They were also signing and filling documents on behalf of accused No.1. They were, thus, incharge of and responsible to accused No.1 for the conduct of its day to day business. 8. Mr.Sanjeev Sachdeva, learned Senior Advocate for the petitioners submits that as per the provisions of Section 140(c) of the Income Tax Act, 1961, it is the managing director of the company who is responsible for signing of the returns to be filed under Section 139 of the Income Tax Act, 1961. The clause (c) to Section 140 the Income Tax Act, 1961 reads as under:- (c) In case of a company, by the managing director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the managing director of the company to let him know whether he was prevented from signing the verification on February 14,1978, due to any unavoidable reason. He further pointed out that if there was no such cause, the return of income would be invalid and in that event a duly signed and verified return should be filed. 11. Learned Senior Advocate for the petitioners further relied upon a decision rendered by this Court in S.N.P.Punj v. Dy Commissioner of Income Tax 137 (2007) DLT 608 wherein it has been observed as under:- 6. Learned Counsel for the petitioners submitted that when there was no dispute about the factum of arbitration award, which was also made rule of the Court by orders of this Court dated 17.3.1988, it was clear that the petitioners ceased to have any concern with the said firm with effect from 7.8.1987. It is submitted that the learned ASJ in the impugned order failed to appreciate that when the petitioners were no more partners in the firm with effect from 7.8.1987, they could not be treated as in-charge of and responsible for the conduct of the business of the firm and, therefore, cannot be deemed to be guilty of the offence. It was also submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed period after satisfying that it is a case for extension of time. Therefore, no criminal prosecution can be launched or continued after charging the interest under Section 139(8) as it is an implied extension of time to file the return of income. Therefore, no question of willful default in filing the return of income arises in the present case. The prosecution of the petitioners is liable to be quashed on this ground alone. Reference in this regard is made to a decision of the Supreme Court in CIT v. M.Chandra Sekhar. It is submitted that following the aforesaid decision of the Supreme Court, the Calcutta High Court in Gopalji Shaw v. ITO Vol. 173 ITR 554, had held that having charged interest under Section 139(8) of the Act there is a presumption that the ITO has extended the time for filing the return beyond the period of limitation, hence, the prosecution for late filing of return after charging the interest under Section 139(8) is liable to be quashed. The aforesaid judgment of the Supreme Court was further followed in CIT v. M.J. Daveda 1993 Supp.(1) SCC 408. 8. After hearing the counsel for the parties, I am of the view that these petitions warrant to be allowed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der an award dated 7th August 1987 which was made rule of the Court on 17th March 1988. The period for which the petitioners are being prosecuted for non-filing of return pertains to the year 1988-89 when according to the award, the petitioners had nothing to do with the company. We are not going into this aspect as this relates to the defense of the petitioners. But, we are of the view that the prosecution of the petitioners is unwarranted for the reason that there is no indication of any sort in the complaint as to how the petitioners were in charge and responsible to the company for the conduct of its business....Dinesh Verma and Anr., reported in Income-Tax Reporter, Volume 169 of 1988, decided on 11th August 1987, has held that mere reproduction of the expression in Section 278-B in the complaint does not meet the requirements of law. The complainant is bound to provide indication, though not evidence as to in what manner a particular partner of the firm is supposed to be in charge of and responsible for the conduct of business. Mere reproduction of the words used in the Section is not sufficient. We consider it to be good and valid law and since we find no indication in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioners further submits that this plea was raised before the learned Trial Court, despite that charge against the petitioners have been framed vide order dated 10.05.2010. Thereafter, the petitioners moved an application for dropping of the charge against them, which was also rejected vide order dated 02.11.2010. 15. Admittedly, the petitioners were and are directors of the company. Under Section 140 of the Income Tax Act, 1961, only the managing director of the company is responsible. The managing director was fully capable of filing the income tax return. The petitioners were not under obligation to file the return. Therefore, the complaint filed under Section 276CC of the Income Tax Act, 1961 against the petitioners is bad in law. 16. Due to the reasons and law discussed above, the orders dated 10.05.2010 and 02.11.2010 passed by learned Trial Court are liable to be set-aside. 17. Keeping the circular dated 07.02.1991 issued by Central Board of Direct Taxes into view, the complaint against the respondent No.3 is liable to be rejected. 18. Consequently, in the interest of justice, the complaint case filed by respondent No.1 under Section 276 CC of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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