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TMI Blog2025 (2) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court the reply given by the Company wherein it also categorically acknowledged while giving reply that with reference to the above facts and subject with regard to the launching of prosecution when notice was issued under Section 276B r/w Section 278B of the Act that notice was given to the Company and Principal Officers of the Company and have received notices from the complainant and also categorically mentioned that notice was acknowledged with regard to the proposal to launching of prosecution against the Principal Officers of the Company for delaying remittance of TDS and in the reply also, they admitted reasons for delay in remittance of the amount. When such material is available before this Court and when specific averment is made in the complaint itself that this respondent and others are in the helm of affairs of the Company and they are the Directors, they are the Principal Officers and notices were also given and marked documents - Exs.P5 to P9 and the very contention that no notice was served and they are not in charge of the affairs of the Company, the Trial Court committed an error in making such an observation that no notice was served as contemplated under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by its Assistant Commissioner of Income Tax, TDS Circle-3(1) filed the complaint under Section 200 of the Code of Criminal Procedure, 1973 (for short, 'Cr.P.C') alleging that accused No. 1 - Company and other accused had not remitted the deducted Tax Deducted at Source (TDS) of Rs. 4,84,69,841/- pertaining to the financial year 2013-14 and thereby, committed an offence punishable under Section 276B of the Income Tax Act, 1961 (hereinafter called as 'the Act'). 4. Accused Nos. 2 to 6 being the Directors vicariously liable for the offence committed by the accused No. 1 by virtue of Section 278B of the Act. In pursuance of the complaint, the case was registered against the accused persons and cognizance was taken and they appeared through their counsel and got enlarged on bail. Accused No. 1 was represented by Mr. Shivashankar. 5. The evidence before charge was also recorded as required under Section 244 of Cr.P.C. The complainant cited the witnesses, who were also examined as PWs.1 and 2 and relied upon the documents, which were marked as Exs. P1 to P13. The case was posted for hearing before charge. At this juncture, the accused Nos. 2 to 6 have filed an applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the records referred therein. The documents for having issued the notices or for having served the notices are also not produced. The first reason assigned by the Trial Court is that no notices were served on accused Nos. 2 to 6. The second reason is that in order to prove that they were in-charge of the affairs of the Company and treating them as Principal Officers of the accused No. 1, also not produced the document to show that prima facie case is made out that they were in-charge of the affairs of the Company. The Court cannot presume the issuing and serving of notice as contemplated under Section 2 (35) (b) of the Act. Even otherwise, there is no evidence to the effect that the accused Nos. 2 to 6 were in-charge of financial affairs of accused No. 1-Company. The Trial Court answering the point No. 2, discharged the accused Nos. 2 to 6 including this petitioner, who is an accused No. 2 and hence, the present revision petition is filed before this Court. 6. The counsel appearing for the petitioner would vehemently contend that the Court below has failed to appreciate the facts and numerous case laws of higher Courts which held that notice issued under Section 2 (35) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remittance of TDS. He also brought to the notice of this Court the reasons for delay in remittance also mentioned in the letter itself. When once they have admitted that notice was issued cannot seek for discharge. The counsel also submit that these accused persons have been discharged erroneously. Proceedings was held against accused No. 1 wherein the document is also marked as Ex. P12 for admitting the issuance of notice and when such notice was issued and acknowledged, the very reasoning given by the Trial Court that no notice was served as contemplated under Section 2 (35) of the Act is not correct. The counsel would also vehemently contend that when the Principal Officers are recognized, and also brought to the notice of this Court, Section 2 (35) of the Act wherein the term "principal officer" is defined as follows: "(35) "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, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Referring to this judgment, counsel would vehemently contend that the Trial Court committed an error in coming to such a conclusion. Whether respondent in helm of affairs or not, he could be said to be principal officer or not, would require evidence and it should be considered at the stage of trial and the Trial Court ought not to have come to such a conclusion that in the evidence was recorded under Section 245 of Cr.P.C. and also brought to the notice of this Court paragraph No. 26 of the said judgment wherein also an observation is made by the Hon'ble Apex Court that it is a matter of evidence, an appropriate order can be passed at the trial. Even the counsel brought to the notice of this Court paragraph No. 28 of the said judgment, where it was observed: "...under s.276B r/w s. 278B of the Act that the directors were to be treated as principal officers under the Act. In our opinion, however, no such independent and separate notice is necessary and when in the show-cause notice it was stated that the directors were to be considered as principal officers under the Act and a complaint was filed, such complaint is entertainable by a Court provided it is otherwise maintainable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Trial Court invoking Section 200 of Cr.P.C. making the allegation that the accused No. 1 - Company has not remitted the amount of Rs. 4,84,69,841/- to the Central Government for the financial year 2013-14 after deducting the TDS. It is alleged that this respondent and others have committed the offence punishable under Section 276B of the Act. The question before this Court is only with regard to whether the discharge of accused No. 2 made by the Trial Court is right or wrong? Whether there are materials before the Court or not? It has to be noted that in the order itself, the Trial Court while answering point No. 2, made an observation that accused Nos. 2 to 6 are the Directors of the accused No. 1-Company and they were in charge of the day-to-day affairs of the accused No. 1- Company and the same has been averred in the complaint. It is also contended in the complaint that while issuing the notice under Section 2 (35) of the Act, this respondent and others were treated as Principal Officers of the accused No. 1. It is also important to note that Exs.P5 to P9, which are the attested copies of the notices under Section 2 (35) of the Act, were also marked before the Trial Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the petitioner also contend that notices were issued to accused Nos. 2 to 6 and also the Court has to take note of definition of 'principal officer' Section 2 (35) of the Act. Having taken note of Section 2 (35) of the Act which is extracted above, it is very clear that the definition of 'principal officer' under Section 2 (35) of the Act states that 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 officer thereof. Having taken note of the same is concerned, the Trial Court also referred to in paragraph No. 11 of its order that in the complaint, it is specifically averred that accused Nos. 2 to 6 are the Directors of the accused No. 1- Company and they were in charge of the day-to-day affairs of the accused No. 1-Company and accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly: 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 without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. (3) Where an offence under this Act has been committed by a person, being a company, and the punishment for such offence is imprisonment and fine, then, without prejudice to the provisions contained in sub-section (1) or sub-section (2), such company shall be punished with fine and every person, referred to in sub-section (1), or the director, manager, secretary or other officer of the company referred to in sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph No. 15 of the said judgment in the case of Madhumilan Syntex Ltd. (supra) reads as follows: "15. So far as directors are concerned, it is alleged in the show-cause notice as well as in the complaint that they were 'principal officers' of the company. In the show-cause notice, it was asserted that the appellants were considered as principal officers under s.2 (35) of the Act. In the complaint also, it was stated that the other accused were associated with the business of the company and were treated as principal officers under s. 2 (35) of the Act and hence they could be prosecuted. Dealing with an application for discharge, the trial Court observed that accused No. 1 was company whereas other accused were directors. Whether they could be said to be principal officers or not would require evidence and it could be considered at the stage of trial and the application was rejected. In revision, the First Addl. Sessions Judge took similar view." 14. In paragraph No. 15 also, it is categorically stated that in the show-cause notice as well as in the complaint that they were 'principal officers' of the company. So far as the Directors are concerned, it was asserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and an appropriate order can be passed at the trial." From the observation also it is very clear with regard to the fact that the averments are made in the complaint that this respondent and others are responsible for the affairs of the Company that could be considered in the trial. 15. The Apex Court in paragraph No. 28 of the judgment in Madhumilan Syntex Ltd.'s case (supra) has held as follows: "28. It was urged that a separate notice and/or communication ought to have been issued before issuance of show cause notice under s. 276B r/w s. 278B of the Act that the directors were to be treated as principal officers under the Act. In our opinion, however, no such independent and separate notice is necessary and when in the show-cause notice it was stated that the directors were to be considered as principal officers under the Act and a complaint was filed, such complaint is entertainable by a Court provided it is otherwise maintainable." Having referred paragraph No. 28 of the said judgment also, question with regard to the issuance of separate notice is concerned, the Apex Court held that "it was urged that a separate notice and/or communication ought to have been issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty and incorrectness and the trial Court committed an error in coming to such a conclusion that this respondent and others were not in charge of the affairs of the Company when specific allegation is made in the complaint itself for making an averment and even the same has been extracted by the Trial Court in paragraph No. 11 of the impugned order in the beginning itself with regard to the specific averments made in the complaint and also marking of documents Exs.P5 to P9, the attested copies of the notices issued under Section 2 (35) of the Act and the defence cannot be raised at the time of considering the discharge application. Only the Court has to look into the material available on record and the same is a matter of trial. 16. The counsel appearing for the respondent would contend that the judgment which was referred by the petitioner's counsel by considering the scope of Section 482 of Cr.P.C and whether it is petition under Section 482 Cr.P.C. or in other petitions also, the Court has to look into the principles laid down by the Apex Court in the judgment rendered in the case of Madhumilan Syntex Ltd. (supra) particularly referring the provisions of Sections 276B and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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