9911796707
TMI Blog2003 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... have been issued against them. The applicants cannot be made to undergo the ordeal of a trial unless it could be prima facie showed that they are legally liable for the failure of the company in paying the amount deducted to the credit of the company. Otherwise, it would be a travesty of justice to prosecute them and ask them to prove that the offence is committed without their knowledge. X X X X Extracts X X X X X X X X Extracts X X X X ..... Allied Consulting Engineers (P.) Ltd., (ii) Shrinivas Plates and Structural Pvt. Ltd., (iii) Excellite Insulators Pvt. Ltd., and (iv) Kanaiya Construction Company. Though the company had deducted the tax payable by the said contractors while making payment to the contractors the company failed and neglected to remit the tax deducted to the treasury within the stipulated time. Admittedly, there is delay in remitting the tax deducted to the Central Government. As required under section 194C, the tax had to be credited to the Central Government by May 7, 1989. However, the same was paid to the credit of the Central Government only on May 30, 1989. The tax deducted had to be credited to the Central Government within one week from the last date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, they cannot by law act as full time directors. They could only act as non-executive directors not exercising any administrative powers or performing any administration duties. Reliance is placed on sections 194C(l), 2(35), 204 and 279 of the Income-tax Act which cost liability on the company and its principal officers for making payment of the amounts deducted to the credit of the Central Government. Section 194C(l) makes the company/accused No. 1 responsible for making payment of amount deducted from the contractors and crediting it to the Central Government. Section 204(iii) states that the persons responsible for crediting the said amount are the company itself and the principal officer of the said company. In order to attract th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any one of them as the principal officer of the firm connected with the management or administration. It seems necessary that the complainant must allege and show by some acceptable materials that the partners concerned were in charge of and responsible for the conduct of the business of the firm to make them also vicariously responsible along with it. A mere allegation to that effect will not be sufficient. There should be credible materials to show their active involvement in the conduct and management of the business of the firm. Short of stating that they were in charge of and responsible for the conduct of the business of the firm nothing had been mentioned in the complaints either about their role or as to the extent of their liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were in charge of and responsible for the conduct of the business of accused No. 1-company, this defence cannot be taken by the accused at this stage but the accused can raise this point at the time of framing of charge. It must be fairly stated that at the time of hearing of the said application for discharge, the attention of the court was not drawn to the case of M.A. Unneerikutty v. Deputy Commissioner of Income-tax [1996] 218 ITR 606, where the Kerala High Court clearly states that it is necessary that the complainant must lead and show some acceptable materials that the partners were in charge of and responsible for the conduct of the business of the firm to make them also vicariously responsible along with it. A mere allegation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to undergo the ordeal of a trial unless it could be prima facie showed that they are legally liable for the failure of the company in paying the amount deducted to the credit of the company. Otherwise, it would be a travesty of justice to prosecute them and ask them to prove that the offence is committed without their knowledge. The Supreme Court in the case of Sham Sunder v. State of Haryana [1990] 67 Comp Cas 1; AIR 1989 SC 1982, 1984, held as follows: "It would be a travesty of justice to prosecute all the partners and ask them to prove under the proviso to sub-section (1) that the offence was committed- without their knowledge. It is significant to note that the obligation of the accused to prove under the proviso that the offenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
