1988 (10) TMI 32 - HC - Income Tax

Summary

Issues:
1. Failure to deduct tax at source under section 194C(2) of the Income-tax Act, 1961.
2. Legality of the order summoning the petitioners by the Chief Judicial Magistrate.
3. Compliance with the provisions of section 204 of the Criminal Procedure Code in issuing summons.

Analysis:

1. The petitions were filed by Raja Ram and Sons, accused of not deducting tax at source under section 194C(2) of the Income-tax Act, 1961, while making payments to subcontractors exceeding Rs. 5,000. Prosecution under section 276B of the Income-tax Act, 1961, was initiated against the accused partners of the firm or trust for their alleged involvement in the offense. The accused contested the liability of deducting tax at source and challenged the legality of the complaint filed by the Income-tax Officer.

2. The petitioners challenged the legality of the order summoning them before the Chief Judicial Magistrate, Chandigarh. It was argued that the order was illegal, arbitrary, and without jurisdiction, as it was passed in violation of section 200/202 of the Criminal Procedure Code. The court found the summoning orders to be cryptic and lacking the application of mind as required under section 204 of the Criminal Procedure Code. The court emphasized that summoning orders must be speaking orders containing sufficient grounds for the issuance of processes.

3. The court held that summoning orders made without the application of judicious mind are void and illegal, and can be quashed under section 482 of the Criminal Procedure Code. It was reiterated that the learned trial court must apply its mind to the facts and circumstances of the case before issuing processes. The court directed that some of the petitioners, who were ladies, be exempted from personal appearance during the trial upon request. The petition was allowed to the extent that the trial court was instructed to pass a fresh order in accordance with the law, allowing the petitioners to raise their defenses during the trial.

This judgment highlights the importance of complying with tax deduction provisions, ensuring the legality and reasoning behind summoning orders, and the necessity of a judicious application of mind by the trial court in criminal proceedings.