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TMI Blog2020 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal under section 61 of Insolvency & Bankruptcy Code 2016 (In Brief I & B Code) against the order dated 10-6-2019 passed by Adjudicating Authority (NCLT) Bench at Hyderabad in Interlocutory Application No. 97/2019 in Company Petition (IB) NO. 111/7/HDB/2017 whereby allowed the Application filed by Mr. G.Venkatesh Babu (Respondent No. 1 herein) the erstwhile Managing Director of the Corporate Debtor. 2. Brief Facts of this Appeal are that the Corporate Debtor (Respondent No.2) is a company engaged in engineering, procurement and construction activity and is one of the biggest player in the power and infrastructure sector. Due to various country level power sector and infrastructure sector problems the Corporate Debtor faced liquidity cris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prosecute the Criminal Compliant No. 530366/2016 and further direction to liquidator to reimburse compounding fees to the Respondent No. 1. 3. Above referred complaint case filed by Income Tax Office against the Respondent No. 2 M/s Linco Infratech India Ltd. and Respondent No. 1, a person responsible and in charge of day to day affairs of the Company being Managing Director of Respondent No. 2 under section 276-B read with 278-B of the Income-tax Act for the Financial Year 2012-13 alleging that the Respondent No. 1 has deducted Tax and source under various Sections of TDS amounting to Rs. 37,90,87,796/- during the Financial year 2012-13 but has not deposited the Tax deducted to the Government account within stipulated period i.e., on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that since the prosecution was initiated by the Income-tax Department, against the Respondent No. 1 as he was the person responsible and in charge of the day to day affairs of the Company being Managing Director, therefore, the Respondent No. 1 is defending himself. Learned Counsel for the Appellant further submits that learned Adjudicating Authority has failed to appreciate the precedent i.e., judgment of Hon'ble Kerala High Court in the case of ITO v. Joseph (1972) 83 ITR 362 which holds that the Criminal Prosecution launched under the provisions of Section 276-B of the Income-tax Act attached itself personally to the vender not to the Company. Learned Adjudicating Authority erroneously held that the prosecution was lodged against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company in different circumstances. It was observed that if the Department has to drag anybody under the provisions of Income-tax Act, they have to establish that deduction was done personally by the particular officer of Company and the Officer did not deposit the TDS with the Department. The Corporate Debtor i.e., Respondent No. 2 is at default and is liable to make the payment of compounding fees. The liquidator in memo of Appeal acknowledged that he has been put in charge of affairs and management of the Corporate Debtor and is responsible to look after the interest of Corporate Debtor during the process of liquidation. Therefore, the liquidator cannot escape the liability to reimburse the compounding fees to Respondent No. 1. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able under section 276-B read with Section 278-B of the Income-tax Act for the offence the punishment is prescribed a minimum imprisonment of 3 months which can be extended up to an imprisonment of 7 years. The said compliant filed on 31-3-2016 before Additional Chief Metropolitan Magistrate Tis Hazari Court New Delhi bearing Criminal Case No. 530366/2016. 12. From the Above facts it is clear that much before CIRP Process the alleged offence has been committed by the Respondent Nos. 1 and 2. 13. The question involved in this Appeal is that actually who has committed the default by non-depositing the TDS in time certainly the alleged offence is committed during the financial year 2012-13. Therefore, the person responsible and in charge of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idator has not committed the alleged offence therefore; he is not required to file Application before compounding authority accepting that he has committed an alleged offence. However it is true that the liquidator has to defend the Respondent No. 2 Company once he has taken the charge of the Company. 15. We are unable to convince with the findings of Ld. Adjudicating Authority that the Respondent No. 1 is appearing in the Criminal Case filed against the Company as he was the then Managing Director. Actually the prosecution is launched against the Company as well as against the Respondent No. 1. in his personal capacity. Therefore, even after the liquidation proceedings have been started the Respondent No. 1 has to face the trial in his pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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