| Case ID |
23060781-a407-4e73-8162-4d041ddffe6f |
| Body |
View case body. Login to View |
| Case Number |
Criminal Appeal Nos. 210 AND 211 OF 1970 AND 43 AN |
| Decision Date |
Jun 01, 1971 |
| Hearing Date |
|
| Decision |
The appeals against the finding of the lower court that no offence was committed by the accused under section 276B could summarily be dismissed as the grounds alleged were not sustainable. It was not proved by the prosecution that the accused had committed an offence punishable under the law in force at the time of the commission. They were, therefore, protected by the bar of article 20(1) of the Constitution. The managing director is not one of the persons falling under the category enumerated under section 2(35)(a) or 2(35)(b). The persons taken in under clause (a) are 'the secretary, treasurer, manager or agent.' Under the Indian Companies Act, manager and managing director are two different entities. So the managing director cannot be equated with the manager. The appellate judge, had brought the respondent under clause (b) as 'a person connected with the management or administration of the company.' Even if the respondent was construed as one entrusted with or entitled to the management of the company, he should have been served with a notice by the ITO of his intention to treat him as the principal officer in order that he may be brought under clause (b) of section 2(35). Such a notice was evidently not given in the instant case. It would, therefore, be wrong to say that the respondent, 'J' was the principal officer of the company at the relevant time. In the statement field by the Secretary of the Company before the ITO 'J' was described as the principal officer. The statement of course, was not signed by 'J'. In the statement, 'D' was shown as 'director/secretary/principal officer.' The person who was responsible for signing this statement has not been examined it could not be said under what circumstances the statement was submitted and what prompted the secretary to describe them as principal officers. In the circumstances no guilt could be fastened on the respondent by virtue of his being the principal officer for purposes of the Act. Dividend is distributed, as seen from section 194 of the 1961 Act, by payment in cash or issue of cheque or warrant. But the mode indicated in the aforesaid statement was that the amounts were credited in the accounts of the shareholders. This could not be treated as an approved mode of distributing dividend. Therefore, evidence was lacking as to whether any tax was deducted from the dividend. For the accused to be hauled up under the penal provisions of the Act, the prosecution must show that the deductions were made by the particular officer and he failed to pay it to the credit of the Central Government; in other words, the offence is one attaching personally to the offender and not to the company as such and unless the prosecution succeeds in showing that the deduction was made by the particular accused no conviction could be entered on them. The offence, if at all, was committed under section 51 of the 1922 Act, which could not survive so as to be made subject-matter of a complaint under 1961 Act, as under latter Act section 276(d) requires that deduction and payment of tax should be one under provisions of Chapter XVII-B of 1961 Act. That requirement being absent, the charge was bound to fail and in confirmation of the order of acquittal, these appeals were dismissed. |
| Summary |
In the case of Income Tax Officer v. Joseph, the Kerala High Court addressed the prosecution of office bearers under the Income-tax Act, 1961, specifically sections 276(d) and 276B. The case revolved around allegations of failure to remit tax collected on dividends distributed to shareholders. The court found that the prosecution failed to establish that the accused were principal officers as defined by the law and that the mode of dividend distribution was not compliant with legal requirements. Consequently, the court upheld the acquittal of the accused, emphasizing the necessity for clear evidence that the tax deductions were made and not remitted. The decision underscored the principles of personal liability in tax matters, distinguishing between individual and corporate responsibilities, and reaffirmed protections under constitutional provisions. This ruling has significant implications for corporate governance and tax compliance in India, particularly for managing directors and officers in similar situations. |
| Court |
Kerala High Court
|
| Entities Involved |
Ettumanoor Motors (P.) Ltd.
|
| Judges |
K. Sadasivan, J.
|
| Lawyers |
V. Parameswara Menon for the Appellant.,
K. Sukumaran for the Respondent.
|
| Petitioners |
Income Tax Officer
|
| Respondents |
Joseph
|
| Citations |
1972 SLD 412 = (1972) 83 ITR 362
|
| Other Citations |
Harakchand Ratanchand v. UOI AIR 1970 SC 1453
|
| Laws Involved |
Income-tax Act, 1961,
Income-tax Act, 1922
|
| Sections |
276B,
276(d),
51
|