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D.C. Goel and ors. Vs. B.L. Verma and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberCriminal Revision Nos. 49 to 55 of 1971
Judge
Reported in[1974]93ITR63(Delhi)
ActsIncome Tax Act, 1961 - Sections 276, 276(B) and 279(1); Code of Criminal Procedure (CrPC) , 1898 - Sections 205, 242, 247 and 537
AppellantD.C. Goel and ors.
RespondentB.L. Verma and ors.
Appellant Advocate K.L. Arora, Adv
Respondent Advocate D.C. Mathur, ; R.N. Dixit, H.K.L. Sabharwal, ; C.L. Prem
Excerpt:
.....242, 247 and 537 of criminal procedure code, 1898 - seven composite trials with common issue - accused deducted income tax at source from salary paid to employee but failed to deposit same with department within period specified under rule 30 (1) (b) - statutory obligation to deposit within one week of deduction - trial court convicted accused for offence under section 276b - appeal against order - juridical person cannot be imprisoned or prosecuted for purpose of conviction under section 276b - trial court erred in ignoring this aspect - conviction of all accused set aside. - - ' 8. if it be taken that the court had passed the afore-quoted order after considering the prayer contained in paragraph 10 of the complaint, then it would be safe to conclude that the court granted a..........been deposited on the 11th of june, 1968. that was much before the 31st of march, 1970, on which date the complaint was purported to have been signed by the income-tax officer. there was no explanationn in the complaint as to why as soon as the defaults in making the requisite deposits to the credit of the central government occurred, the prosecution in respect of each of the offence was not launched. on a bare reading of the concerned provisions it becomes clear that whenever a deduction of income-tax at the source is made from the salary of a particular employee, which is to be deposited to the credit of the central government, within the prescribed period and the deposit is not made, the person responsible for the default incurs a distinct liability for being punished under the act......
Judgment:

Pritam Singh Safeer, J.

1. These seven petitions being Criminal Revisions Nos. 49 to 55 of 1971, which this order will dispose of, result from the recommendation made by an Additional Sessions Judge, Delhi, on 18th July, 1971, under Section 438 of the Criminal Procedure Code that the sentences awarded to the respondents be enhanced so as to make them in conformity with the provisions of Section 276B of the Income-tax Act, 1961 (hereinafter called ' the Act ').

2. There are distinguishing features, which will be noticed, but the common contentions raised in these matters deserve to be dealt with in one place.

3. The first of these petitions, i.e., Criminal Revision No. 49 of 1971, arises out of a complaint dated the 31st of March, 1970, preferred under Sections 276(d)/276B read with Sections 192(1) and 200 of the Act in which Shri D. C. Goel, Income-tax Officer, figured as the complainant and the accused were Messrs. Gurdas Kapur and Sons (Private) Ltd. and Shri B. L. Verma, who was described as secretary-cum-general manager of accused No. 1. In paragraph 1 of the complaint it was stated that the Commissioner of Income-tax, Delhi, had directed the complainant under Section 279 of the Act to prosecute the accused. The complainant alleged that the accused who were responsible for paying salaries to their employees were required by Section 192(1) of the Act to deduct income-tax at the source which they were under a statutory obligation to deposit within the prescribed period to the credit of the Central Government and that period, it was asserted, according to Rule 30(1)(b) of the Income-tax Rules, 1962, was of one week from the date of deduction.

4. In paragraph 6 of the complaint it was alleged that during the financial year 1967-68; the accused had deducted a sum of Rs. 4,586 out of the salaries paid to the employees. No details of the dates of deductions or the names of employees to whom the salaries had been paid were given.

5. Although the tax deducted from the salary of each employee was to be deposited to the credit of the Central Government within the prescribed period instead of stating the details of offences which were as many as the defaults in making the deposits, in paragraph 6 of the complaint only the periods of deductions, and the amounts of tax deducted were mentioned. In the ultimate column therein it was stated that the entire amount of Rs. 4,586 which had become due had been deposited on the 11th of June, 1968. That was much before the 31st of March, 1970, on which date the complaint was purported to have been signed by the Income-tax Officer. There was no Explanationn in the complaint as to why as soon as the defaults in making the requisite deposits to the credit of the Central Government occurred, the prosecution in respect of each of the offence was not launched. On a bare reading of the concerned provisions it becomes clear that whenever a deduction of income-tax at the source is made from the salary of a particular employee, which is to be deposited to the credit of the Central Government, within the prescribed period and the deposit is not made, the person responsible for the default incurs a distinct liability for being punished under the Act. The complaint did not contain a narration of the commission of the offences which were numerous and each one of which remained undescribed.

6. In paragraph 10 of the complaint it was stated that the complainant was instituting the complaint as a public servant in his official capacity and as he had to attend to important Government work, his personal attendance deserved to be dispensed with and that the case be proceeded with in his absence.

7. The complaint was not filed by the Income-tax Officer. It was filed by the counsel engaged by him. On the filing of the complaint, the Judicial Magistrate dealing with it passed the following order on 31st March, 1970:

'Presented to-day by Shri K. L. Arora, advocate, for the complainant. This is a complaint by a public servant in his official capacity as Income-tax Officer. No preliminary enquiry is, thereforee, necessary before summoning the accused. Accused be summoned for May 4, 1970.

Personal attendance of the complainant is exempted and he is permitted to appear through his counsel.'

8. If it be taken that the court had passed the afore-quoted order after considering the prayer contained in paragraph 10 of the complaint, then it would be safe to conclude that the court granted a conditional exemption.

9. While directing that the summons be issued for 4th May, 1970, considering that the complaint was filed by a public servant in his official capacity, the court dispensed with the personal attendance of the complainant imposing the condition that he was permitted to appear through his counsel.

10. There is no subsequent order on the record disclosing that at any other stage the trial court passed any order of exemption. The afore-quoted order passed on 31st March, 1970, did not accept the request to proceed with the case in the absence of the complainant. Even if an extended meaning is given to the order, the court was to proceed with the complaint only when the complainant was to be present through his counsel. The order did not provide that the complaint was to be tried in the absence of the complainant as well as his counsel. The afore-quoted order was passed as soon as the complaint was presented. Section 247 of the Code which may be noticed is:

'247. If the summons has been issued on complaint, and upon the day appointed for the appearance of the accused, or any day subsequent thereto to which the hearing may be adjourned, the complainant does not appear, the Magistrate shall, notwithstanding anything hereinbefore contained, acquit the accused unless for some reason he thinks it proper to adjourn the hearing of the case to some other day:

Provided that where the Magistrate is of opinion that the personal attendance of the complainant is not necessary, the Magistrate may dispense with his attendance, and proceed with the case.'

11. The provision would apply where summons has been issued on a complaint and the date is one appointed for the appearance of the accused. It would also apply to any subsequent date to which the hearing may have been adjourned.

12. The order passed on 31st March, 1970, while directing that summons be issued, was not an order under Section 247 of the Code.

13. Turning to the provisions under which the complaint had been filed Section 276(d) of the Act was amended by Act 19 of 1968 with effect from 1st April, 1968. Originally clause (d) in Section 276 was as follows:

'276. If a person fails without reasonable cause or excuse--...

(d) to deduct and pay tax as required by the provisions of Chapter XVII-B or under Sub-section (2) of Section 226.'

14. The effect of the amendment was that the words 'by the provisions of Chapter XVII-B or' were deleted. While causing the deletion the following provision was inserted in the Act as Section 276B :

'276B. If a person, without reasonable cause or excuse, fails to deduct or after deducting fails to pay the tax as required by or under the provisions of Sub-section (9) of Section 80E or Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which may extend to six months, and shall also be liable to fine which shall be not less than a sum calculated at the rate of fifteen per cent. per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid.'

15. It came into effect from the 1st of April, 1968.

16. In paragraph 6 of the complaint out of which Criminal Revision No. 49 of 1971 arises no distinction was observed as to whether by the defaults which continued till the 11th of June, 1968, the accused had become punishable under Section 276B of the Act or for some prior period they remained liable under Section 276(d) thereof.

17. While passing the order on 31st March, 1970, which is in similar language in all these cases, the trial court did not state as to for which offence the accused were being summoned.

18. The record shows that the accused appeared on 4th May, 1970. Section 247 of the Code became applicable at that stage. A notice was given to the accused by the Magistrate on that date, the terms whereof are almost similar in all these cases. It was stated in the notice :

'It is alleged against you that you were under a statutory obligation to deduct income-tax from salaries of the employees while making payment and deposit the same within seven days of such deduction in the Government account.

It is further alleged that for the financial year 1967-68, a sum of rupees 4,586 was deducted as income-tax from the salaries of the employees but the same was not deposited in Government account within seven days from the date of the deduction but was actually deposited on June 11, 1968.

It is further alleged that thereby you are guilty of an offence under Section 276(d) read with Section 276B of the Income-tax Act, 1961.

thereforee, you are require (sic) to show cause why you should not be convicted of the said offence and punished accordingly.

Sd.

(Manjula Mahajan)

Judicial Magistrate, 1st Class,

Delhi.

Dt. 4-5-70.'

19. The notice did not state the particulars as to on which dates salaries were paid to any particular employees and any specified amounts were deducted'at the source towards income-tax. The complaint itself lacked the requisite particulars. It was stated that a total sum of Rs. 4,586 had been deducted from the salaries but was not deposited in Government account within seven days from the date of deduction, but it was not stated in the notice as to when each separate offence had been committed by making the default in not depositing within the requisite period the amount deducted at the source towards income-tax from the salary of any particular employee.

20. The amount of Rs. 4,586 consisted of numerous deductions, each one of which was to be separately deposited within the requisite period and each default constituted a separate offence. Without stating the particulars of even a single offence, on the basis of a defective allegation it was asserted that an offence had been committed under Section 276(d) read with Section 276B of the Income-tax Act, 1961. The accused were then required to show cause why they should not be convicted. If anything, the notice was full of illegalities. No person could be at the same time guilty of an offence under Section 276(d) as well as under Section 276B of the Act. Even where a default had been committed before the 1st of April, 1968, if the tax deducted remained undeposited before the 1st April, 1968, the offence became one under Section 276B of the Act. The court below never paid any attention to sections 276(d) and 276B of the Act.

21. It is significant that the record does not show the presence of either the complainant or his counsel on the 4th of May, 1970, when the afore-quoted particulars were stated to the accused. Section 242 of the Code is as follows:

'242. When the accused appears or is brought before the Magistrate, the particulars of the offence of which he is accused shall be stated to him, and he shall be asked if he has any cause to show why he should not be convicted ; but it shall not be necessary to frame a formal charge. '

22. When would the accused appear before the court where summons has been issued That would be on the date appointed in the summons issued upon taking cognizance of the complaint. Section 247 of the Code became applicable at the stage at which the court was to state under Section 242 thereof, the particulars of the offence to the accused in order to ask him if he had any cause to show why he should not be convicted.

23. With the benefit of the order passed on 31st of March, 1970, allowed to the complainant, he was to appear through his counsel in the course of the proceedings initiated by his complaint. The combined effect of Sections 247 and 242 of the Code was that the complainant or his counsel should have been present before the Magistrate at the time when the obligations of Section 242 of the Code were to be discharged. On the 4th of May, 1970, when disregarding Section 246 particulars of the offence were stated to the accused, in the absence of the complainant and his counsel, Shri B. L. Verma, accused No. 2, made the following statement:

'I plead guilty to the offence. It is a technical lapse. The firm have always been regular in paying the tax deducted but it appears due to some mistake of an employee who was responsible for doing it a little delay has occurred. Even before the complaint was filed the entire amount was paid.'

24. Even where a confession is made it is the duty of a court to acquaint itself with the particular provision under which an accused person can be convicted. In complete disregard of Section 276B of the Act the trial court recorded the following judgment on 4th May, 1970 :

'


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