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TMI Blog1991 (11) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Officer, Headquarters, Madras-34 filed a complaint under Ss.276-B read with 278-D of the Income-tax Act, 1961 for failure to remit tax deducted at source to the credit of Government of India within the time prescribed under Rule 30(1)(b)(2) of the Income-tax Rules, 1962 and under S.409 of the Indian Penal Code for the year ending 31.3.1977. 4. The first accused is a partnership firm carrying on business as film exhibitors in Sathyam Theatre Complex, Madras. The second accused is the Managing Partner and the third accused is the Joint Managing Partner of the first accused firm and the fourth accused is the employee of the first accused firm in charge of financial borrowings, bank transactions and interest payments etc. The first accused paid interest to M.V.S.K. Appa Rao for the financial year ending with 31.3.1977 from which it deducted income tax at source as per the provisions of S.194-A of the Income tax Act, 1961 of ₹ 1067-37 on 31.3.1977 and the first respondent should remit to the credit of Government of India within seven days from the last day of the month in which deduction was made. But this was paid only on 21.6.1977, i.e., after a delay of two mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Income Tax Act reads as follows: If a person fails to deduct or after deducting, fails to pay the tax as required by or under the provisions of sub-S.(9) 80E or Chapter XVII-B, he shall be punishable- (i) in a case where the amount of tax which he has failed to deduct or pay exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. S.278-B of the Income Tax Act reads as follows: 278-B(1). Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of 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 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngredients have to be satisfied by the respondent, namely, (a) the petitioner should be the person coming under S.278(B) read with S.204 and S.2(35) of the Act and (b) such a person without reasonable cause or excuse failed to deduct or after deducting failed to pay the tax. Learned counsel for the petitioner also pointed out that the evidence of P.Ws.1 to 3 and Exs.P.131 to P.214 would not show that the petitioner could be said to be in charge and in the conduct of the business of the first accused firm within the meaning of S.278(b) of the Act. The evidence of P.W.2 is clear that the petitioner was an employee of the first accused firm and that there is no evidence let in by P.Ws.1 to 3 to show that the petitioner had committed the offence satisfying the ingredients of S.276-B of the Act falling within the definition of S.278(B) of the Act. 8. Learned counsel for the petitioner also submitted that the complaint is not evidence and it is only a pleading and the respondent has failed to prove the case against the petitioner under S.276(B) read with 278(b) of the Income Tax Act. 9. Mr. K. Ramaswami, learned Central Government Advocate for Income Tax cases, rebutting the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared by general or special order of the Board to be a company. In the case on hand, the first accused is a body of partners. S.2(35) of the Act reads as follows: Principal Officer , used with reference to a local authority or a company or any other public body or any association of persons or any body of individuals, means- (a) the secretary, treasurer, manager or agent of the authority, company association or body, or (b) any person connected with the management or administration of the local authority, company, association or body upon whom the Assessing Officer has served a notice of his intention of treating him as the principal office thereof. Therefore, the contention of the learned counsel for the respondent that the first accused does not come within the definition of company cannot be accepted since the definition of company includes any institution, association or body and it is the case of the petitioner that the first accused is a firm and that it is assessable and accordingly it was assessed under the Income tax Act. Therefore, the first accused can be construed as a company, as per the definition of the said Act and therefore, the provisions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which shall hot be less than three months but which may extend to seven years and with fine. 11. In support of the contention the learned counsel for the petitioner, relied upon the judgment reported in Shital N. Shah others v. I.T.O. Madras 1990 L.W.(Crl.) 478. That was a case where prosecution was laid against the partnership firm for failure to remit tax deducted at source under S.194-A of the Act and credit the same to the Government of India. This Court (Arunachalam, J.) held that to persons who do not fall under the category of secretary, treasurer, manager, or agent of the authority, company or body etc., failure to serve notice on the part of the Income tax Officer stating his intention to treat any one of them as principal officer connected with the administration of firm, prosecution is not maintainable and accordingly, the criminal proceedings were quashed. In that case, the petitioner was prosecuted under S.276-B read with 278-B of the Income tax Act for having failed to deduct and remit the tax deducted at source under S.194-A of the Act and credit the same to the Government of India within the time prescribed under the Rules. It was held in that case the words ..... X X X X Extracts X X X X X X X X Extracts X X X X
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