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TMI Blog1976 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... K. C. Gangwal, designated as the principal officer of the said companies, for failure to deduct income-tax from the salary of the employees, for failure to submit returns in time, for failure to deduct income-tax and super-tax on dividends for certain period under various sections of the Income-tax Act. To be precise, the Revision Case No. 271 of 1975 relates to a complaint for delay in submitting returns under section 276(b) of the Income-tax Act.The returns were due on April 30, 1971, but the same were filed on December 12, 1972, and the complaint was filed on the 19th of September, 1973. The complaints were made against Shyam Sundar Jalan, H. L. Dey (since deceased) and Bal Krishna Jalan described as directors and one Mr. K. C. Gangwal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax and super-tax on dividend for the year ending on the 31st of March, 1967, under section 276(d). The amount was due on April 8, 1967, but was paid on October 18, 1973. The complaint was filed on 21st of May, 1974 .......... The next point urged by Mr. Banerjee was that a company can have only one principal officer. According to him, more than one principal officer is not contemplated under the existing laws. Directors are not principal officers but under the Income-tax Act any director may be designated as a principal officer. In these cases the sanctioning authority accorded sanction against Mr. K.C.Gangwal as principal officer and against others as directors. He referred in this connection to section, sub-section(35), of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividually as agents for the company. According to Mr. Banerjee, the director means board of directors. In any event, since the proceedings were initiated on the basis of sanction but the sanction describes all the persons as directors except one it is clear that the case cannot proceed against them. Mr. Ghose, on the other hand, contended with some force that as regards principal officer the definition under section 2(35), sub-clause (a), only was involved. Clause (b) was not attracted. Directors should be treated as agents of the company. There is no reason why the company may not have plurality of officers. Citing Palmer's Company Law, 17th edition, page 167, he stated that directors are, in the eye of law, agents of the company. What s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat ground alone. Again, section 2(20) of the Income-tax Act states that the expression " director has the same meaning as is ascribed to it in the Companies Act ". Now, in the Companies Act, according to section 2, sub-section (13), a director would include any person occupying the position of director by whatever name called and under section 2, sub-section (24), an individual, (sic) the principal officer, also includes a manager or an agent. Whether the directors in these cases were in charge of the management is a matter of evidence. The complaint, as is well known, does not usually and need not contain all material pleadings. Facts and circumstances may be proved by evidence to show that directors acted as managers. Their own appeal be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the company. As such, they are endowed with powers and duties of carrying on the whole of its business subject, however, to restrictions imposed by the articles and statutory provisions. Definition of manager in Companies Act in section 2(24) would include a director. Therefore, it is a question of evidence. The complaint makes out an offence. Evidence would only disclose who are the offenders. The word " directors " may be looked upon as designations to identify particular persons. The role they played will only appear in course of evidence. Board of directors, as such, cannot be prosecuted. Whether one or two directors or the entire board of directors acted as agents in the company would appear only through evidence. On a careful co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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