9911796707
TMI Blog2003 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... s as well as against Sri L.K. Khosla, chairman and managing director of accused No. 1-company as well as Gayatri Khosla another director and one Yogesh Khosla the whole time director of accused No. 1-company before the Additional Chief Metropolitan Magistrate, 47th Court, charging them under section 276B read with section 278B of the Income-tax Act, 1961. Summons were issued to all the accused persons including the present applicants. On receipt of summons the applicants herein (accused Nos. 4, 5, 6 and 7) filed applications, for discharge before the Metropolitan Magistrate Court, on October 31, 1996. By his order dated November 30, 1996, the magistrate rejected the discharge applications filed by the applicants/accused Nos. 4, 5, 6 and 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used No. 1. They are only the non-executive directors of the company. Accused No. 2, L.K. Khosla, is the chairman and managing director and accused No. 8. Yogesh Khosla, is a whole-time director of the said company and, hence, the liability for deducting income-tax and crediting to the Central Government is that of accused Nos. 2, 8 and the company, accused No. 1. It is also contended that no notice was given by the Commissioner of Income-tax to the applicant/accused prior to his granting sanction to prosecute the accused under section 279(l) of the Act. Principles of natural justice require that the notice ought to have been given to the applicants by the Commissioner before according sanction. The aforesaid submissions were made by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal officers of the said company. Reliance is placed on section 2(35) of the Income-tax Act which states who is the principal officer and makes it obligatory on the part of the Assessing Officer to serve notice on the said officer of the company of his intention to treat him as the principal officer of the company. It is submitted that in the present case no notice as such was served upon the applicants by the Assessing Officer disclosing his intention of treating the applicants/directors as principal officers of the said company. It is further contended that in the complaint filed by the Commissioner of Income-tax it was not enough for the complainant merely to state that the accused/directors are in charge of and responsible for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perhaps the firm and the principal officer, if any, alone would be liable." The learned magistrate in rejecting the application for discharge has observed that unless and until the prosecution has been given an opportunity to lead evidence, it cannot be determined at the stage prior to the framing of the charge as to whether accused Nos. 4 to 7, the applicants herein were not in charge of the conduct of the business of the company, and accordingly held that the authority referred to by the applicants, viz., Shital N. Shah v. Income-tax Officer [1991] 188 ITR 376 (Mad) cannot be relied upon. In the said case the Madras High Court observed: "...if the payer is a company, the company itself including the principal officer thereof will be th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm. The complaint filed by the Commissioner of Income-tax states that accused Nos. 2 to 9 at the material time were in charge of and responsible to accused No. 1 for the conduct of its business and therefore legally liable under section 194C(l) read with section 204 of the said Act to deduct income-tax and to pay the tax so deducted to the credit of the Central Government within one week from the last date of the month in which the deduction is made. Apart from the averment that the accused/applicants were in charge of and responsible to the company for the conduct of its business there is no material whatsoever which prima facie shows that the applicants/accused were in fact in charge of the affairs of the company and responsible for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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