TMI Blog2021 (8) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... ccused Company. In view of the aforesaid Judgments of National Small Industries Corporation Limited vs. Harmeet Singh Paintal and another [ 2010 (2) TMI 590 - SUPREME COURT ] the proceedings against the petitioner in C.C.No.80 of 2019 on the file of the IV Additional District Judge-cum-Special Judge, Economic Offences Court at Visakhapatnam under Section 276B of Income Tax Act, 1961 has to be quashed on both grounds, namely, that the petitioner was not a Director of the company at the relevant point of time and there are no allegations of any nature against the petitioner required under the provisions of Section 278B of the Income Tax Act, to rope the petitioner into the complaint. Accordingly, the criminal petition is allowed quas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second proviso to section 194B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine. 4. The Income Tax Officer (T.D.S.), T.D.S.Ward-1, Vijayawada on the allegation that an offence has been committed under Section 276B of the Income Tax Act had filed C.C.No. 80 of 2019 against the said Andhra Hospitals Eluru Private Limited and three other persons, including the Petitioner herein, by describing them as Directors of the Company. 5. The petitioner has now approached this Court by way of the present criminal petition for quashing C.C.No.80 of 2019 on the file of the IV Additional District Judge-cum-Special Judge, Economic Offences Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hstanding 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act. 7. Sri V.V. Anil Kumar, learned counsel for the petitioner, submits that there is no allegation anywhere in the complaint against the petitioner and she has been simply arrayed as accused No.4 with the description that she is a Director of the accused No.1 company. 8. Smt. Kiranmayi, learned Standing Counsel for the Income Tax, would submit that the first ground raised by the petitioner would require a trial as to whether the petitioner had resigned as a Director of the company or not and the production of DIR-12 Form by the petitioner cannot be looked into by the Court at this stage. She also submitted that every Director of a company has to be treated as being in charge of the business of the company and would automatically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that she had resigned as a Director of the accused No.1 company on 17.02.2016 itself. As such, she cannot be prosecuted on the ground that she is a Director of the Company at the relevant point of time.. 12. The Petition would also succeed on the second ground raised by Sri V.V. Anil Kumar. Provisions similar to Section 278B of the Income Tax Act are found in various other Acts also. Section 141 of the Negotiable Instruments Act is in pari materia similar to the provisions of Section 278B of the Income Tax Act. This provision has been considered by the Hon ble Supreme Court in National Small Industries Corporation Limited vs. Harmeet Singh Paintal and another (2010) 3 Supreme Court Cases 330. The Hon ble Supreme Court had held, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accused is a Director or an officer of a company who signed the cheques on behalf of the company then also it is not necessary to make specific averment in the complaint. (vii) The person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases . 13. The Hon ble High Court of Delhi had also considered the provisions of Section 278B of the Income Tax Act, 1961, in K.C. PALANISWAMY ANR. Vs. INCOME TAX OFFICER 2008 (106) DRJ 319 and had observed in paragraph No.14 as under: 14. Sub-section (1) of Section 278 B Income Tax Act is on the same lines as Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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