The Income Tax Department vs M/S. Jenious Clothing Private Ltd
2022 Latest Caselaw 3823 Kant

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       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 7TH DAY OF MARCH, 2022

                          BEFORE

           THE HON'BLE MR. JUSTICE H.P. SANDESH

          CRIMINAL REVISION PETITION NO.397/2021

BETWEEN:

THE INCOME TAX DEPARTMENT
BY ITS INCOME TAX OFICER (TDS)
WARD-2(1), H.M.T BHAVAN
NO 59, BELLARY ROAD
BANGALORE-560032
                                            ... PETITIONER
(BY SRI T.N.C.SRIDHAR, ADVOCATE FOR
SRI JEEVAN J NEERALGI, ADVOCATE)

AND:

1. M/S. JENIOUS CLOTHING PRIVATE LTD
NO 1-35/5/1, INDUSTRIAL SUBURB
TUMKUR ROAD, YESHWANTHPUR
BANGALORE
(A COMPANY REGISTERED UNDER COMPANIES ACT
REP BY ITS MANAGING DIRECTOR - SUNIL V RAHEJA)

2. SUNIL V RAHEJA
MANAGING DIRECTOR
M/S JENIOUS CLOTHING PRIVATE LTD
NO 1-35/5/1, INDUSTRIAL SUBURB
TUMKUR ROAD, YESHWANTHPUR
BANGALORE

                                          ... RESPONDENTS
(BY SRI BHAIRAV KUTTAIAH, ADVOCATE AND
SRI S.ANNAMALAI, ADVOCATE)
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     THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTION 397 OF CR.P.C PRAYING TO SET ASIDE THE ORDER OF
DISCHARGE OF 2ND RESPONDENT HEREIN AND ETC.


     THIS CRIMINAL REVISION PETITION COMING ON FOR
ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:



                          ORDER

Heard the learned counsel appearing for the petitioner and

the learned counsel appearing for the respondents.

2. This revision petition is filed challenging the order

dated 07.12.2019 passed by the Trial Court discharging the

respondent No.2 herein in C.C.No.89/2019.

3. The factual matrix of the case is that the proceedings

was initiated against the second respondent herein who was

arraigned as accused No.2 before the Trial Court invoking

Section 276B of the Income Tax Act (for short 'the Act') wherein

an application was filed for discharge of the respondent No.2

herein of the offence punishable under Section 276B of the Act

contending that accused No.2 is not the Managing Director of

accused No.1 but he is only the Director of accused No.1 and

hence, falls under the charge of Section 2(35)(b) of the Act,

which requires a notice to treat him as the Principal Officer of

accused No.1. The mandatory requirement is not complied;

hence, accused No.2 cannot be treated as Principal Officer of

accused No.1. The notice dated 21.10.2018 cannot be

considered as the notice under Section 2(35) of the Act. It is

contended that Income Tax Officer (TDS) do not have the

jurisdiction to issue such notice. The Commissioner of Income

Tax (TDS) did not issue the show cause notice to accused No.2

before according the sanction. Accused No.2 was not involved in

day-to-day affairs of accused No.1. The complaint was filed

without the direction of the Officers stated in the proviso

annexed to Section 279(1) of the Act, hence, the prosecution is

not valid. Even if the offence is committed, it is without the

knowledge of accused No.2 and hence, he is not liable for any

punishment in view of the proviso attached to Section 279B of

the Act. The qualified person in the Accounts Department of

accused No.1 was entrusted with the responsibility of deducting

TDS and remitting the TDS. Accused No.2 has not signed on

Form No.16A. It is contended that single order of sanction is

passed for the entire financial year, but the TDS returns and

statements are filed once in a quarter. The complaint is not filed

within 30 days from the date of passing the sanction order and it

is contrary to the Standard Operating Procedure.

4. The complainant has filed statement of objections

before the Trial Court contending that all the procedure and legal

requirements have been followed and whether there existed

justifiable reasons for not remitting the TDS or accused No.2 was

not in-charge of the affairs of accused No.1 is a matter of trial

and prayed to dismiss the application.

5. Based on the contention taken by the respondents

herein and also the statement of objections of the petitioner

herein, the point that arise for the consideration is whether

accused No.2 proves that there are no evidence to frame the

charge against him along with accused No.1 for the offence

punishable under Section 276B of the Act. The Trial Court while

answering to the said point, came to the conclusion that there

are no material to prima facie hold that accused No.2 was

treated as the Principal Officer of accused No.1, so as to try him

along with accused No.1 for the offence punishable under

Section 276B of the Act and consequently, the application filed

under Section 245 of Cr.P.C was allowed and accused No.2 was

discharged and hence, the present revision petition is filed

before this Court.

6. The learned counsel appearing for the petitioner

would vehemently submit that the Court below has committed

an error in coming to the conclusion that there are no prima

facie material to hold that respondent No.2 herein was treated

as Principal Officer of respondent No.1 company so as to try him

along with respondent No.1. Hence, the very approach of the

Trial Court is erroneous. The Trial Court has held that no notice

is issued to respondent No.2 herein and the same is mandatory

under the Act and the Trial Court also relied upon the judgments

passed in ITO vs Roshini Cold Storage and Homi Phiroze s State

of Maharastra rendered by Madras high Court and Bombay High

Court. The Trial Court has held that notice issued under Section

2(35) of the Act which is served on respondent No.2 cannot be

considered as notice issued under the said Section since it is not

stated in the said notice that respondent No.2 herein was in-

charge of day-to-day affairs of the company or not. The very

finding of the Trial Court is erroneous and the very approach of

the Trial Court is that the notice issued under Section 2(35) of

the Act was valid and legally sustainable one and the same has

not been considered by the Trial Court in a perspective manner

and hence, it requires interference of this Court.

7. After hearing the matter, this Court directed the

petitioner to place the document at Ex.P2 to see whether

anything is stated with regard to the compliance of Section 2(35)

of the Act and the learned counsel produced the document and

submits that in terms of the letter dated 21.10.2018, for having

not remitted the amount, notice was issued and show cause

notice was also given.

8. Per contra, the learned counsel appearing for the

respondents would submit that the Trial Court having considered

the grounds urged by the respondents and also the contention of

the complainant, in detail discussed in paragraphs 7 to 15 and

while arriving for conclusion taken note of Ex.P2 and in

paragraph 17 it has been observed that in terms of notice only

accused No.2 was asked to why the prosecution should not be

initiated against him for the offence punishable under Section

276B of the Act and Ex.P2 notice cannot be considered as the

notice under Section 2(35) of the Act, accused No.2 cannot be

tried as accused along with accused No.1 and hence, ordered to

be discharged accused No.2 and hence, there is no merit in the

revision petition to exercise the revisional jurisdiction.

9. Having heard the respective counsel appearing for

the parties and also on perusal of the material on record, no

doubt, in terms of Ex.P2 notice the averment is made that it is

seen from the records that the respondent No.2 had deducted

tax of Rs.4,69,806/- and not remitted the same to the Central

Government account within the time and hence in paragraph 3

of Ex.P2 also stated with regard to the punishment provided and

also asked to show cause for non-payment of the amount. First

of all, the very contention of the respondent No.2 before the

Trial Court is that he is not the Managing Director of accused

No.1 and he is only a Director of accused No.1 and hence, as per

Section 2(35) of the Act, which requires a notice to him as

Principal Officer of accused No.1. The mandatory requirement is

not complied with and the very contention is also that the notice

given in terms of Ex.P2 is not in compliance of Section 2(35) of

the Act. The Trial Court also taken note of the judgments

referred supra while coming to such a conclusion and in

paragraph 17 the Trial Court categorically held that Ex.P2 notice

cannot be considered as the notice under Section 2(35) of the

Act. This Court also directed the petitioner counsel to place the

said document to see whether the said notice is in compliance of

Section 2(35) of the Act or not and on perusal of the said

document dated 21.10.2018, I do not find any error committed

by the Trial Court in coming to the conclusion that Ex.P2 is not in

compliance with Section 2(35) of the Act and the very reasoning

given by the Trial Court is not suffers from any perversity or

illegality and the scope of the revision is if the order passed by

the Trial Court is not in pursuance of the provisions and suffers

from any illegality and correctness, then only the Court can

invoke the revisional jurisdiction. The reasons assigned by the

Trial Court, while coming to the conclusion that Ex.P2 is not in

consonance with Section 2(35) of the Act, is not suffers from any

illegality and correctness. Hence, I do not find any grounds to

entertain the revision petition and set aside the order of the Trial

Court.

10. In view of the discussions made above, I pass the

following:

ORDER

The revision petition is dismissed.

Sd/-

JUDGE

SN