TMI Blog2022 (7) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... the Company M/s ASM Traxim Pvt Ltd. It is crystal clear that the sanction has been accorded for the prosecution only of the person named as the assessee , namely the Company M/s ASM Traxim Pvt. Ltd. There is no sanction qua the petitioner, even as a person being a director/being responsible to the conduct of the business of the company. It cannot be held that the observation in para no.10 of this sanction, that the petitioner had verified the returns filed by appending his digital signatures, would tantamount to sanction qua him. That would be stretching language too far. Since the law provides that without sanction u/s 278B of the IT Act, the Department cannot proceed against a person found liable to prosecute him for the offence under Section 276 CC of the IT Act, the present prosecution must fail qua the petitioner. In the absence of a specific sanction for prosecuting the petitioner, the learned ACMM could not have taken cognizance of the complaint against him and then framed charge against him. The edifice built without foundation must crumble. The complaint and all proceedings emanating therefrom, including the impugned orders qua the petitioner Vipul Aggarwal, sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MM (Spl. Acts) concluded that the contentions raised by the petitioner that there was no willful default on the part of the accused persons to file the ITR was their defence and that since the law provided for presumption (under Section 278-E) of the culpable mental state of the accused, and since the presumption could be rebutted only by the accused during trial, there was sufficient material to frame the charge. It framed charges under Section 276-CC read with Section 278-B of the IT Act against both, the Company and the petitioner. 4. Aggrieved by the decision of the learned ACMM (Spl. Acts), the order dated 25th May, 2017 was challenged by the way of a revision petition where it was argued that there was no loss caused to the Government Exchequer because the return had been filed with a delay of mere ten days; the sanction was defective as it did not disclose the role of the petitioner No.2 before the Revisionary Court, i.e., the present petitioner; and that no offence was made out against the present petitioner, as he was not responsible for the conduct of the business of the company. The learned Spl. Judge (PC Act) (ACB-5) also concluded that this was to be decided only du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine Ltd., (2013) 4 SCC 505, Income Tax Officer v. Delhi Iron Works (P) Ltd., 2010 SCC OnLine Del 3921 and Income-Tax Officer v. Autofil, 1990 SCC OnLine AP 388. 11. Per contra, Mr. Zoheb Hossain, the learned counsel for the respondent contended that the notice dated 26th July, 2013 was addressed to the Managing Director/Principal Officer of the company and the response was by the petitioner when he filed the ITR for the assessment year 2012-13 on 12th August, 2013 with his digital signatures. It is also pointed out that the petitioner has never disclosed as to who else, other than him, was the person-in-charge or responsible for the day-to-day affairs of the Company or was its Principal Officer. According to the learned counsel for the respondent, the very fact that it was the respondent alone who responded to the notice sent to the Principal Officer, led only to one presumption and that was the one drawn by the courts below to the effect that the petitioner had been the one in charge of the affairs of the Company at the relevant time. 12. Learned counsel for the respondent also pointed out to the provision of Section 278-E of the IT Act which provided that every person i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 142(1)(i) of the IT Act has to be issued. The second requirement is that prosecution could be only with the previous sanction of the appropriate authority under Section 279 of the IT Act. While the petitioner claims neither condition stands fulfilled in this case, the respondent claims full and complete adherence to the procedure prescribed. From the record it is evident that the notice that was served by the respondent under Section 142(1)(i) in the present case, was admittedly, addressed to the Managing Director/Principal Officer/ M/s ASM Traxim (P) Ltd. The previous notice dated 26th July, 2013, requiring the filing of the return in accordance with the provisions of Section 140 of the Act by 2nd August, 2013, was addressed to the Principal Officer of M/s ASM Traxim (P) Ltd. 16. Section 2(35) of the IT Act reads as under:- Section 2 (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 admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Section 140 of the IT Act cannot be an estoppel against such Director, here the petitioner, on the principles of holding out. The decisive factor is the intention of the Assessing Officer and not any act performed by the Assessee. The intention must be duly conveyed. 22. Therefore, the argument that because the petitioner had responded to the notice dated 26th July, 2013, he would be debarred from raising the objection that he had not received any notice that the Assessing Officer had intended to treat him as the Principal Officer, cannot be accepted. It has to be held that whenever an Assessing Officer intended to treat a Director as a Principal Officer, he has to serve a notice and it is only if there is an acceptance of such treatment by the noticee, including by not objecting to it, that such a Director would become a Principal Officer under the IT Act and not otherwise. 23. However, there is force in the submission of the learned counsel for the respondent that under Section 278B, every person who at the time of the commission of the offence was in-charge of the company or responsible for the conduct of its business would be deemed to be guilty of the offence. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint under the above referred sections for AY 20l1-12 against the company ASM Traxim Pvt Ltd in the court of competent jurisdiction at my instance. Thus, the sanction is specifically to institute a criminal complaint against the Company M/s ASM Traxim Pvt Ltd. It is crystal clear that the sanction has been accorded for the prosecution only of the person named as the assessee , namely the Company M/s ASM Traxim Pvt. Ltd. There is no sanction qua the petitioner, even as a person being a director/being responsible to the conduct of the business of the company. It cannot be held that the observation in para no.10 of this sanction, that the petitioner had verified the returns filed by appending his digital signatures, would tantamount to sanction qua him. That would be stretching language too far. 26. Since the law provides that without sanction u/s 278B of the IT Act, the Department cannot proceed against a person found liable to prosecute him for the offence under Section 276 CC of the IT Act, the present prosecution must fail qua the petitioner. In the absence of a specific sanction for prosecuting the petitioner, the learned ACMM could not have taken cognizance of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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