TMI Blog2014 (2) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... for taking cognizance of offence against the petitioners Decided against Assessee. Validity of sanction u/s 279(1) of the Act Held that:- Section 2(35-B) of the I.T. Act specifies that there is no bar for treating more than one person as the Principal Officer for initiation of criminal proceedings Relying upon Madhumilan Syntax Limited And Others Versus Union of India And Another [2007 (3) TMI 205 - SUPREME Court] - The subsequent event treating Sri. T. R. Venkatadri as the Principal Officer of petitioner No.1 company will not result in quashing of the proceedings against petitioner No. 2 - It is open for the Revenue to proceed against the company, its directors or any other principal officer or officers responsible for default Decided against Assessee. - Crl P No.4964 To 4966/2013 - - - Dated:- 18-1-2014 - H N Nagamohan Das, J. For the Appellants : Sri Harin Raval, Sri D L N Rao, Smt S R Anuradha, Advs. For the Respondents : Sri Mohan Parasaran, Learned Solicitor General, Sri K V Aravind, Learned Standing Counsel for Sri D L Chidananda, Adv. ORDER :- In these three petitions the petitioners have prayed for quashing the proceedings in C.C. No. 49/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the matter back to the assessing officer for reconsideration in accordance with law after providing an opportunity to the petitioners. The respondent Income Tax Department being aggrieved by the order of remand passed by the ITAT approached this Court in ITA No. 164, 165 and 166/2012. Learned Single Judge of this Court granted an interim order of stay, staying the remand order passed by the ITAT in case Nos. 369-371/Bang/2012. 5. In view of the stay order granted by this Court the Assessing Officer issued demand notice to the petitioners. Therefore the petitioners approached this Court in I.T.A. Nos. 239, 240 and 241/2012 challenging the order of ITAT remanding the matter and also the demand notice. This Court granted in interim order subject to the petitioners depositing 50% of the demand. 6. When the matter stood at that stage the respondent income tax department, after obtaining sanction as required under law, filed three private complaints against the petitioners for the offences punishable under Section 276-B and 278-B of the I.T. Act in C.C. Nos. 49/2013, 77/2013 and 78/2013 on the file of Special Court (Economic Offences) Bangalore. The Special Court vide order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT [TDS Circle 16(2)] sought for sanction but, it was given to ACIT [TDS Circle 16(1)] and he has filed the complaints before the Special Court and as such they are bad in law. Reliance is placed on number of decisions. 8. Per contra Sri. Mohan Parasaran, learned Solicitor General of India contends that the complaint filed by the respondent department is not based on the order of assessing officer under Section 201(1) and Section 201(A) of the I.T. Act. The complaint against the petitioners is based on the records and the categorical admissions made by the petitioners and their authorized representatives. It is contended that the quantification of the salaries paid to the employees and the actual deduction of tax at source is not necessary for initiation of proceedings for the offences punishable under Section 276-B and 278-B of the I.T. Act. It is contended that the complaint against the petitioners contain the necessary ingredients to constitute an offence against the petitioners and the same is supported by documentary evidence produced before the Special Court. It is true that the Assistant Commissioner of Income Tax (TDS Circle 16(2)) sought sanction from the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of recovery proceedings. The criminal proceedings are not dependent on the recovery proceedings. Therefore the pendency of proceedings initiated under Section 201(1) and Section 201(1-A) of the I.T. Act is not a legal impediment to continue the criminal prosecution against the petitioners. The pendency of proceedings under Section 201(1) and 201(1-A) of the I.T. Act cannot act as a bar to the institution and continuance of criminal prosecution for the offences punishable under Section 276-B of the I.T. Act. Quantification of amount for the purpose of initiation of criminal proceedings is not necessary. Therefore I am of the considered opinion that the proceedings initiated against the petitioners cannot be quashed on the ground that the proceedings under Section 201(1) and Section 201(1-A) of the I.T. Act are pending. 11. Respondents contend that the criminal prosecution against the petitioners is not founded upon the order of the Assessing Authority under Section 201(1) and Section 201(1-A) of the I.T. Act. On the other hand the complaint against the petitioners is based on the admission and representation in the form of letters written on behalf of the petitioner No. 1 company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 276B, section 276BB, section 276C, section 276CC, section 276D, section 277 [section 277A] or section 278 except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority; Provided that the Chief Commissioner or, as the case may be, Director General may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for institution of proceedings under this sub-section. A reading of the above section specifies that it contains two parts: The first part specifies that except with the previous sanction of the Commissioner or Commissioner (Appeals) or appropriate authority no person shall be proceeded against for an offence under Section 276-B. The second part, that is, the proviso to sub-section (1) of Section 279 specifies that the Chief Commissioner or as the case may be, the Director General may issue such instructions or directions to the Income Tax authorities as he may deem fit for institution of proceedings under this subsection. 14. The contention of the learned counsel for the petitioners that it is only on the instructions or direction of Chief Commissioner or Director General, the Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to deduction of tax at source and remittance of the same to the account of the Central Government. Therefore treating petitioner No. 2 as the Principal Officer of petitioner No. 1 company for the purpose of initiation of criminal proceedings is contrary to law. I decline to accept this contention of the learned counsel for the petitioners. Admittedly the annual report of petitioner No.1 company specifies that petitioner No. 2 is the Chairman and Chief Executive Officer of petitioner No. 1 company. In the complaint it is specifically pleaded that petitioner No. 2 being the Principal Officer of petitioner No.1 company is directly responsible for the default in deducting the tax at source and non-remittance of the same to the account of the Central Government. It is contended that petitioner No. 2 is responsible for the day-to-day conduct and business of petitioner No. 1 company. By treating petitioner No. 2 as the Principal Officer of petitioner No.1 company under Section 2(35) of the I.T. Act proceedings are initiated. The Supreme Court in the case of Madhumilan Syntex Ltd., and others Vs. Union of India and another (2007) 290 ITR 199 (SC) held as under: 43. From the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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