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Commissioner of Income-tax Vs. Jagdish Lal Behl and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberCriminal Appeal Nos. 1207 and 1208 of 1977
Judge
Reported in(1980)15CTR(P& H)281; [1983]139ITR622(P& H)
ActsIncome Tax Act, 1961 - Sections 276, 276B and 278B; Indian Penal Code (IPC), 1860 - Sections 409; Constitution of India - Article 20
AppellantCommissioner of Income-tax
RespondentJagdish Lal Behl and ors.
Appellant Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Respondent Advocate H.L. Sibal,; S.S. Ratna and; Arvind Goel, Advs.
Excerpt:
.....of limitation for filing an appeal would commence from the date when the parties concerned acquire knowledge of passing of the said order. - ' 3. on this basis, it has been argued that the company on its own showing had failed to make the deposits of the tax deducted at source......unable to agree with the view taken by the learned chief judicial magistrate that the company had paid no salaries to its employees. ex. pc/1 also shows that even though the deductions were made with reference to the earlier periods of time, some of the deposits in respect thereof were made in the year 1969. this shows that the ingredients of the offences in question stood established on record by the document produced by the company itself.5. so far as the liability of the directors of the company is concerned, we might add that section 278b which was brought on the statute book with effect from october 1, 1975, by the taxation laws (amendment) act, 1975, makes only the director who was in charge of the business of the company guilty of the offences in question. since the offences were.....
Judgment:

M.R. Sharma, J.

1. This judgment will dispose of Criminal Appeals Nos. 1207 and 1208 of 1977 as the complaints involved therein disclose common questions of law. The ITO, Central Circle II, Ludhiana, filed a complaint under Section 276 (b) and (d) read with Section 276B of the I.T. Act, 1961 (hereinafter called the Act), and Section 409, IPC, against the respondents alleging therein that since the deductions made at source had not been deposited in the Government treasury, the respondents be tried and punished in accordance with law. The learned Chief Judicial Magistrate, Ludhiana, who tried the case held that respondents Nos. 1 to 3 being directors of the limited company in Criminal Appeal No. 1207 of 1977 were not liable to be prosecuted under the law as there was no evidence to show as to who was responsible for making payment of salaries concerned and since there was no evidence of actual disbursement of the salaries, the offence in question was not established against any of the respondents.

2. Mr. Awasthy, the learned counsel for the Revenue has drawn our attention to the following admission made by the respondent-company in its communication Ex. PC/1 :

' As humbly submitted hereinabove due to extreme finance shortage experienced by the concern since assessment year 1965-66 no regular payments of salary could be made every month to the employees. There was considerable and varying delay in payment of salaries of various employees, Thus, this information cannot be furnished datewise in respect of each employee. Whenever the salaries were paid, the concern did not have enough finance to pay the full salary. Thus only net salary after reducing the tax payable therefrom was paid to the employees. However, tax payable on the salaries of the employees has been paid into the treasury as per details given above.'

3. On this basis, it has been argued that the company on its own showing had failed to make the deposits of the tax deducted at source. About the liability of the directors, it was submitted that the directors of a limited company were officers of such a company and any default committed by the latter could also visit the directors with evil consequences.

4. In the face of the admission of the company extracted above, we are unable to agree with the view taken by the learned Chief Judicial Magistrate that the company had paid no salaries to its employees. Ex. PC/1 also shows that even though the deductions were made with reference to the earlier periods of time, some of the deposits in respect thereof were made in the year 1969. This shows that the ingredients of the offences in question stood established on record by the document produced by the company itself.

5. So far as the liability of the directors of the company is concerned, we might add that Section 278B which was brought on the statute book with effect from October 1, 1975, by the Taxation Laws (Amendment) Act, 1975, makes only the director who was in charge of the business of the company guilty of the offences in question. Since the offences were committed in the year 1965-69, we cannot apply the principle enshrined in this section to create ex post facto offences. To do so would tantamount to acting contrary to the clear mandate contained in Article 20 of the Constitution. Mr. Awasthy has submitted that even prior to the coming into force of Section 278B of the Act, position of law was the same. We are, however, of the view that if the Legislature itself thought of clarifying the position of law, it would not be proper for us to assume something to be in existence and then to go on to punish a person for a criminal offence. We, therefore, affirm the view taken by the learned Chief Judicial Magistrate and decline to allow the appeal as against the respondents Nos. 1 to 3, but we see no reason why respondent No. 4, i.e., the company itself, should be allowed to escape liability. Consequently, we hold this respondent guilty under Section 276 (b) and (d) read with Section 276B of the Act and order it to pay a fine of Rs. 200 only.

6. For similar reasons. Criminal Appeal No. 1208 of 1977 is dismissed qua respondents Nos. 1 to 5 and is allowed qua respondent No. 6, i.e., the company, which is convicted of the same offence and is ordered to pay a fine of Rs. 200 only.

7. The two appeals stand disposed of accordingly.


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