The Income Tax Department vs M/S Jenious Clothing Private Ltd
2022 Latest Caselaw 4199 Kant

                              1



       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

           DATED THIS THE 11TH DAY OF MARCH, 2022

                           BEFORE

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

          CRIMINAL REVISION PETITION NO.388/2021

BETWEEN:

THE INCOME TAX DEPARTMENT,
BY ITS INCOME TAX OFFICER (TDS),
WARD -2(1), HMT BHAVAN,
NO.59, BELLARY ROAD,
BANGALORE-560032.                              ...PETITIONER

            (BY 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.     S. 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 S. ANNAMALAI, ADVOCATE AND
              SRI BHAIRAV KUTTAIAH, ADVOCATE)

     THIS CRIMINAL REVISION PETITION IS FILED UNDER
SECTIONS 397 READ WITH 401 OF CR.P.C PRAYING TO SET ASIDE
THE ORDER OF DISCHARGE OF SECOND RESPONDENT HEREIN BY
                                  2



THE SPL.COURT FOR ECONOMIC OFFENCES AT BENGALURU DATED
07.12.2019 IN C.C.NO.90/2019.

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

                            ORDER

Heard the learned counsel for the petitioner and the

learned counsel for the respondents.

2. The present petition is filed praying this Court to set

aside the order dated 07.12.2019 discharging respondent No.2

herein in C.C.No.90/2019.

3. The factual matrix of the case is that accused No.1 is

a Company and the allegation is that it had not remitted the

deducted TDS of the financial year 2016-17 within the stipulated

period of time. It is also alleged that accused No.2 has been

vicariously made liable for the offence committed by accused

No.1. It is contended that in the complaint, it is averred that

accused No.2 is the Managing Director of accused No.1 and is

responsible for the day-to-day business and conduct of accused

No.1 vide notice dated 21.10.2018 issued under Section 2(35) of

the Income Tax Act, 1961 ('the said Act' for short). The same

has been denied by accused No.2 contending that he is only a

Director of accused No.1 and not the Managing Director. An

application was filed before the Trial Court for discharge

contending that he is not the Managing Director of accused No.1

and only Director and hence not falls under charging 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 with. Accused No.2 cannot be treated as

Principal Officer of accused No.1. The Trial Court after

considering the grounds urged in the petition and also the

contents of the complaint and also considering the material

available on record, allowed the application and discharged

respondent No.2. Hence, the present revision petition is filed

before this Court.

4. The main contention of the learned counsel for the

petitioner is that in Ex.P.2, a specific averment is made in

column No.4 that he will be treated as Principal Officer and also

referred the proviso under Section 276B of the Act in the notice

itself and considering the said proviso, it is made clear that each

of the Directors, person responsible for payment of TDS is

deducted, any other person who was in charge and was

responsible for the Company for conduct of the business of the

Company is also required to separately show cause as to why

should not be treated as Principal Officer and co-accused along

with the Company and be proceeded against under Section

276B/276BB read with 278B of the Act. When this specific

averment is made in condition No.4 of the notice dated

09.10.2017, now the respondent cannot contend that the said

notice is not in compliance with Section 2(35) of the said Act.

The learned counsel would contend that the Trial Judge without

looking into the contents of the documents, erroneously comes

to the conclusion that the same is not in compliance of Section

2(35) of the said Act. Without the notice under Section 2(35)(2)

of the said Act, accused No.2 cannot be tried as an accused

along with accused No.1. The very approach of the Trial Court is

erroneous.

5. Per contra, the learned counsel for the respondents

would submit that nowhere in the said notice Ex.P.2, it is made

clear that he is in charge of the affairs of the Company or in

connection with the management or administration of the local

authority. The Trial Court while considering the material on

record, particularly in paragraph No.17 considering Ex.P.2,

rightly comes to the conclusion that nothing has been stated that

respondent No.2 has been in charge of the day-to-day affairs of

accused No.1 and hence it does not require interference of the

Court.

6. Having heard the learned counsel for the petitioner

and the learned counsel for the respondents and also on perusal

of the material available on record, particularly the grounds

urged in the application for discharge and also the contents of

the complaint, the Trial Court in detail discussed considering the

factual aspects of the case and also the judgments which have

been relied upon in paragraph Nos.7, 8 and 9 and considering

the principles laid down in the judgments referred therein and in

paragraph Nos.11, 14 and 15 comes to the conclusion that

notice which is relied upon by the petitioner which is marked as

Ex.P.2 is not in consonance with Section 2(35) of the said Act. I

have already pointed out that there must be a clear averment in

the notice while treating him as the Principal Officer of accused

No.1. There must be a specific averment in the notice that he

was in charge of the day-to-day affairs of accused No.1

Company and the same is missing in the notice. Only referring

the proviso under Section 276 of the said Act in paragraph No.4

of Ex.P.2, asked respondent No.2 that he is also responsible for

non-deduction and depositing of the TDS amount and also asked

for only show cause notice why he cannot be treated as Principal

Officer and no specific averment is made that he has been in

charge of the affairs of accused No.1. When such averments are

missing, the Trial Court has not committed any error in

considering Ex.P.2 and making an observation that even it is not

stated that accused No.2 had been in charge of the day-to-day

affairs of accused No.1. The notice Ex.P.2 was also taken note

of by the Trial Court and comes to the conclusion that he was

only asked to show cause why prosecution should not be

initiated against him for the offence punishable under Section

276B of the Act, but nothing contains with regard to the contents

of Section 2(35) of the said Act. When such being the factual

aspects of the case, I do not find any error committed by the

Trial Court in discharging respondent No.2 in coming to the

conclusion that nothing is found on record that he has been in

charge of day-to-day affairs of accused No.1. Hence, I do not

find any merit in the petition to invoke the revisional jurisdiction.

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

following:

ORDER

The petition is dismissed.

Sd/-

JUDGE

MD