TMI Blog2023 (12) TMI 988X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer has served a notice of his intention of treating him as the principal officer thereof. In order to treat a person as a Principal Officer as defined under section 2(35)(b) of the I.T. Act, he must be a person connected with the management or administration of the company, and Assessing Officer must have served upon him a notice of his intention of treating him as the principal officer of the company. In the present case, it is not the case of respondent No. 1 that the notice as contemplated by Section 2(35) of the I.T. Act has been served upon the petitioner. Although, the petitioner is not classified under Section 2(35)(a) as an individual who can be treated as a principal officer without notice, but he falls under the category of persons specified under Section 2(35)(b), where he can be treated as a principal officer only upon service of notice to prosecute him under the purview of Sections 276-B and 278-B of the I.T. Act. Though the Department claimed that it sent the notice to the assessee company and its directors, the fact remains that it was never delivered to the petitioner. Further, the record does not indicate that the Department took any steps t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (for short, the I.T. Act ). 4. Mr Vineet Naik, the learned Senior Counsel appearing on behalf of the petitioner, submitted that the petitioner served as an independent, non-executive, and nominee director on the Board of S. Kumar Nationwide Limited (for short, the company ) from 27 June 2007 to 12 November 2011. For the financial year 2008- 2009, the company failed to deposit the TDS amount of Rs. 2,98,29,252/- to the credit of the Central Government within the prescribed period; however, this amount was subsequently paid by the company in September 2010. He further submitted that the petitioner became aware of the Criminal Case and the orders passed thereunder only on 5 September 2022, when he received a copy of the summons dated 3 August 2022. 5. The learned Senior Counsel submitted that the learned Magistrate issued the process mechanically and without any application of mind against the petitioner. He submitted that the learned Magistrate failed to appreciate that the complaint does not contain any specific averments or unambiguous allegation qua the petitioner s role in the commission of the alleged offence. His main contention is that the petitioner is not the princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Counsel appearing on behalf of respondent No. 1, submitted that the learned Magistrate has rightly issued a process against the petitioner. He stated that before initiating the prosecution under Sections 276-B and 278-B of the I.T. Act, respondent No. 1 sent a notice under Section 2(35) of the I.T. Act to the assessee company on 16 December 2013 to nominate the principal officer. After the company nominated Jagadeesh Shetty as a principal officer, the department rejected the nomination as Mr Shetty was not a director at the time of the offence. The Department then issued another notice under Section 2(35) of the I.T. Act on 22 January 2014, granting the assessee company another opportunity to nominate the principal officer. The notice stated that if the Department did not receive a reply, it would treat all thirteen directors of the company as principal officers and initiate appropriate action without further intimation. 8. The learned Counsel further argued that before filing the complaint, the Department followed all necessary procedures, and accordingly, sanction was granted by the CIT (TDS). The petitioner, a non-executive independent director of the company, reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he company referred to in sub-section (2), shall be liable to be proceeded against and punished in accordance with the provisions of this Act. Explanation . For the purposes of this section, (a) company means a body corporate, and includes (i) a firm; and (ii) an association of persons or a body of individuals whether incorporated or not; and (b) director , in relation to (i) a firm, means a partner in the firm; (ii) any association of persons or a body of individuals, means any member controlling the affairs thereof. 11. The term person is defined under section 2(31) of the I.T. Act and includes a company. As per sub-section (35) of Section 2 of the I.T. Act, principal officer 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 administration of the local authority, company, association or body upon whom the Assessing Officer has served a notice of his intention of treating him as the principal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5)(b) of the I.T. Act was delivered to the accused or not. Needless to state that an order of issuance of process is not an empty formality and requires the Magistrate to apply his mind before issuing the process. Passing orders of issuance of a process without appreciating the statutory provisions and cautiously examining the material on record may put the wheels of criminal law in motion and summon an innocent individual to stand trial. Such orders are liable to be quashed and set aside. 16. In the present matter, this Court has not discussed and dealt with the other grounds of the petition mainly because this Court is satisfied that the statutory requirement of service of notice as contemplated by Section 2(35)(b) of the I.T. Act is not complied with. This non-compliance goes to the root of the matter and dents the prosecution against the petitioner. 17. For all the above reasons, Criminal Case No. 52/SW/2014 filed before the learned Additional Chief Metropolitan Magistrate, 38th Court, Ballard Pier, Mumbai, and the Orders dated 18 February 2014 and 21 July 2022 passed thereunder are quashed and set aside qua the petitioner only. 18. The present petition stands allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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