C. Sambasiva Rao V. The Deputy Commissioner of Income Tax

CRLP/42/2019

AI Insights

The case involves M/s. Vijay Home Appliances Limited, a company accused of failing to pay self-assessment tax for the assessment year 2014-15. The directors of the company, C. Sambasiva Rao and S. Gajendran, were implicated under Sections 276C(2) and 278B of the Income Tax Act, 1961, for their alleged roles in the tax evasion. The directors filed a petition under Section 482 of the Cr.P.C. to quash the criminal proceedings against them, arguing that they were not responsible for the day-to-day operations of the company and thus not vicariously liable for the company's actions. The court, after examining the complaint and the roles of the directors, concluded that they were indeed responsible for the company's affairs and upheld the proceedings against them.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 692811 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 11-07-2022
• Assessment Year: misc
• Other Referred Cases: Neeta Bhalla Vs. S.M.S. Pharmaceuticals Limited, S.M.S. Pharmaceuticals Limited vs. Neetha Bhalla, K. Subramanyam vs. Income Tax Officer, State vs. K. Subramanyam
• Laws Referred To: Income Tax Act, 1961, Criminal Procedure Code
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: A REDDY
• Keywords: Criminal Petition; Economic offences; Quash Proceedings; Self-assessment tax; Vicarious Liability
• Section: 271(1)(c); 279(1); 276C(2); 482; 278B; 279(2); 140-A

Judgement Text

"[ 32se I IN THE HIGH COURT FOR THE STATE OF TELANG ANA AT HYDERABAD MONDAY, THE ELEVENTH DAY OF JULY TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE DR. JUSTICE D.NAGARJUN '1. C.Sambasivq Rao, S/o. Veera Raghavaiah, Director, M/s. Vijay Home Appliances Limited, 2. S.Gajendran, AND ...PET|T|ONERS/A3 & A4 The Deputy Commissioner of lncome Tax, Circle-1 7(2), Room No. 913, gth Floor, Signature Towers, Opp. Botanical Garden, Kondapui., Hyderabad. ...neSpOflOef.ff Between: CRIMINAL PETITION NO: 42 OF 2019 Petition under Section 482 of Cr.P.C praying that in the circumstances stated in the Memorandum of Grounds of Criminal Petition, the High Court may be pleased to quash the C.C.No. 273 of 2017, taken cognizance U/Ss. 276 C (2) Nw.278 B of the lncome Tax Act, 1961, on the file of the Special Judge for Economic Offences at Nampally, Hyderabad, in respect of the petitioners (A3 and A4) and pass such other order or orders. l.A. NO: 1OF 2022 Petition under section 482 of Cr.P .C praying that in the circumstances stated in the Memorandum of Grounds of criminal Petition,the High court may be pleased to extend the interim order granted on 3-3-2020 in l.A.No.1/2020 in Crl.P.No.4212019 until further orders by this Hon'ble Court l.A. NO:2 oF 2022 Petition under Section 482 ot Cr'P'C praying that in the circumstances stated in the Memorandum tf Grounds of Criminal Petition,the High Court may^ be oleased to extend tre interim-oiJer granted on 21.04.2022 in l.A.No.1/2022 in 6rrF.r.ro.+Zlzo19 until further orders by this Court This Petition coming on for hearing,upon perusing the Memorandum of Grounds of Criminal i\"iiiion \"na \"rpon hearinq the arguments of STi.A.HANUMANTHA REDDV\" Adt;'it for the PetitiJners and of the None Appeared for the sole ResPondent' The Court made the following: ORDER ---=-- I I THE H( NOURABLE DR. JUSTICE D. N,qGARJIJN C RIMINAL PETITION No.42 OF 2019 ORDER This peti:ion is filed by the petitioners/A3 and A,4 to quash the pro,:eedings in C.C.No.273 of 2Ol7 whrch was taken cognizance urLder Sections 276-C(2) read with 2788 of the Income Tax I ct, 196 1 (for short, .,the Act,') on the complaint filed by the D epuer Commissioner of Income Tax. 3 2 The cor: tents of the complaint in brief as under: A1 is a company registered under the Irrcli;ur Companies Act, 1956 I raving its registered office zrt petitioners I rerein are the Directors of .A1 shown as Ai, and A4, along with another accused. A2 stated to have been c ied and the same was recorded in the proceedings sheet on l:;.12.2O17. Al company has been manufacturing electric honLe appliances in the name of rijay Home Appliances Limited. 4. .A1 c rmpany has filed lncome tax returns for the assessment yeqr 2074_15 on 10.o3.201s declarirrg the total rncome as I1s.3,97, Hlderabad. The company and are 65,300A an{ as per t}re returns filed by rt, I -- I ') tax to a tune of Rs. l,Sg,55,O1g/_ lr,as fell due. However, Al company has paid only Rs.gg,750/_ thereby the balance of Rs. 1,57,65,230/_ has to be paid. Al company and its Directors evaded to pay the tax assessed as per the serf-assessment tax thereby the company and its Directors are liable for punishment under Sectio n 2 6C(21read with 2TBB and 21gt_ of the Act. Respondent/complainant has filed a complaint under section 200 cr.p.c., aleging that the accused have committed the offence punishable under Sectio ns 2Z6C(2) and 278 B of the Income Tax Act, which was taken on liie by the learned Special Judge for Economic Offences, Hyderabad, as C.C.No.273 of 2017. Aggrieved by the same, the petitioners have filed this petition to quash the same on the following grounds: 5. The petitioners are mere Directors arrd they are no way responsible for the day to day affairs of the company. There is no averment in the complaint as to a specific and categorical role played by the petitioners to make them vicariously liable. The Directors shall be in-charge of the day to day affairs of the company in order to make them liable' The complaint must specilicaliY allep e r.hat at the tlme were in-charge and were responsible for the busitress. of offence, the Petitloners conduct of the 6. The resprndent/income tax department has filed the counter statinl, that the petitioners' company has failed to pay the self-assess ment tax prior to flling of returns of income tax' which is manc atory under Section 140-A of the Act' Whenever an offence is < ommitted by the company, the persons' who are responsible to the company, including the Directors, are liable for prosecution. As per Section 27 8B of the Act, the Directors are liable to p rove that the offence was committed without their knorvledge ar d that they have exercised their due diligence to prevent the c rmmission of offence in order to ge1. the relief from the liability. It is mentioned further that in tlre l.rial Court PWs. 1 and I I were examined-in-chief and posted for cross- examination rf the accused. At this stage, this petition is filed 7. As per Section 278-8 of the Act, u'here an oflence is committed by a compaly, every person, who at the time of >f the offence, was in_charge ancl respons ible fOf com mrssion the company for the conduct of the business as uelj as the l .+ company shall be deemed to be guilty of the offence. The petitioners being Directors were responsible for the affairs of the company and for the conduct of the business. The petitioners have not filed any evidence to show the specific role being played by each of the Directors. Therefore, prayed the court to dismiss the petition. 8. The assessee has filed the returns of the income without paying self-assessment tax admitted by the company and not complied with the provisions of Section 140-,{ of the Act. After receipt of the assessment order, notices under Sections 156 and.271 (1)(c) of the Act were issued, but, the assessee has not paid the demand of tax. Subsequent to that a notice under Section 279(l of the Act was issued to the assessee, on which the accused has sought for time and accordingly, one more opportunity was given to the assessee by fixing date of hearing as 08.07.2016. In spite of it, the assessee has not availed the opportunity, thereby orders have been passed under Section 279 ll of the Act authorDing the complainant to file the complaint before the trial court. g. Heard both sides and perused the record' 5 1 0. No I,, thr point for determination is u,1'rether the proceedings agi.inst the petitioners in C.C.No .273 of 2Ol7 can be quashed? i 1. The cont rntion of the respondent/complainant Income Ta-x Departmer t is that A1 company, which has to pay income tax of Rs.1,5B 55,018/-, has paid only Rs.89,750/- keeping a balance of Rs. 1,57,65,230/- for the assessment year 2014-15 and thereby cr mmitted default under Section 140-A of the Act as A I compar y was supposed to pay the self-ai;sessment tax before filing ol returns. Admittedly, A1 compar.:y has not paid the tax as rec uired under Section 140A. 'l'here is no dispute that the petitir ners a,re the Directors of A1 Company. 12. The mrLin ground on which the petitioners have challenged thr: prosecution is that in order to fasten the liability under Section 27 6C(2) of the Act, the complainant has to prove that the peti ioners being Directors were in_charge and that they are respr nsible to the day to day activities of the company. According to the petitioners, the respondent/ department has not mentione, I in the complaint filed before the tna,l Court that the petitioners being Directors were in_charge and responsible '- \"nr- 6 for the conduct of the business of the company. It is further submitted by the learned counsel for the petitioners that the petitioners, being the residents of Chennai, were not participating in the day to day affairs of the company. Therefore, sought for quashment of the complaint. 13. The complaint filed by the respondent/depa-rtment was taken cognizance against the accused for the offence under Section 276C(21 read with 27BB of the Act and numbered as C.C.No.273 of 2017. At the description paragraph i.e., para No.2 of the complaint the petitioners were shown as Directors of the company and that they are responsible for the day to day affairs of the companY. 14. Now it is contended by the learned counsel for the petitioners that in order to fasten the liability, the complainant has to prove that the petitioners were not only responsible for the day to day allairs of the company but also prove that they were in-charge' It is submitted further that company must specifrcally mention that the petitioners were in-charge and responsible for ttre comPany' I l Section 27 38 of the Act runs as under: \"2788. 3 C)ffe: rccs by companies ( l_] Where ar offence under this Act has been committed l)y a company, ev:ry' person rvho, at the time the offence was oornmitted, rvas rn charge of, and was responsible to, the compa:rj for the conduct of tl e business o[ the company as well as the company shall be deemed ro be guilty of the offence and shall be liable to be proceeded at ;ainst and punished accordingly: Prov ded that nothing contained in this sub- s(:ction shall render any such person liable to any punishment if he p::oves that the offence was committed without his knowledge or that he had exercised a!. due diligence to prevent the commission of such offence. l2l Notwith itanding anything contained in sub- section (1), where an offence un ler this Act has been committed by a comp:rnv and it is proved thr t the offcnce has been committed with thc (:onsent or connivancr of, or is attributable to any neglect on the part of, any director, r ranager, secretary or other o{ficer of the companl,, such director, r ranager, secretary or other officer shall also be deemed to be guitty ,.f that offence and shalt be liable to be proccecled against and punis red accordingly. (3) Where an offence under this Act has been committed by a person, being a company, and the punishment for srrch \"offence i\" imprisonr rent and fine,,then, without prejudice to th(, provisions ::Y'::: in sub-section . (t ) or sub.section (2), such r:ompa ny shall De punrst ed with fine and every person, referred to in sub-iection (1), or-the di rctor, manager, secretary or other officer of the company referrcd-o in. sub-section (2), :1\"]i be liable to U\"-pro\"\"\"j\"\"a ,grir,\"t and puni;hed in accordance wilh the pro.,risions .i,-nf\"l\"a\" Explana ion.- For the purposes of this section,_ (4) 'com )any means a body corporate, and includes_ a firm; and an -association of persons or a bo(l) of individuals whether incorporated or not; an(l (!| \"dire :tor', in relation to- f_1,\" nr*, means a partner in the firm; !!l any association of n ;i;.;;;:#ffi iff ;:ffif ,ftaro-r-i\"aiviouars,means I tl I I I 15. In order to fasten the liability, the person rvho alleged to have committed the offence must be in-charge of and was responsible for the conduct of the business of the compa_ny at the time of commission of offence. In the case on hand, the complainant has specifically mentioned at para 2 of the complaint that the petitioners are the Directors of the company and they are responsible for the day to day affairs of the compaJry. 16. It is mentioned by the learned counsel for the respondent/complainant that the charges have already been framed by the trial Cotrt and PWs. 1 and 2 were examined in chief, however, cross examination by the petitioners is deferred and after deferring, this petition is Iiled for quashment of the complaint. 17. Therefore, the question falls for consideration of the Court is whether absence of a phrase that the petitioners are 'in- charge of and were responsible\" for the day to day affairs is a fatal to the complainant and the complaint can be quashed under Sectiot 4S2 Cr.P.C, * \"* _ 8 .... 9 i8. Learned c lunsel for the petitioners has relied upon the judgment of the High Court of Andhra Pradesh in Neeta Bhalla Vs. S.M.S. I'harmaceuticals Limited, Hyderabad and anotherl. Thir ; case was decided by this Court when almost similar questiot I came before the Court seeking quashment of a complaint und,:r Section 138 of the Negotiabie Instrument Act (for short, \"the NI Act\")' The issue in the said case was whether the Directors lf the company can be made liable rvhen the company has , dlegedly committed the offence' This Court has ultimately helc at paragraphs 32 and 39 as under: \"32 An alalysis of the judgments relerred to herernabo 'e would in clear terms reveal the legal position that in order t ) fasten vicarious liability against a dirt:ctor of the company there must be c1ear, specific and unambiguous allegation i nrade in the complaint. It is not as if every d ector of the acc rscd-company czrn be roped in automatically and be proceedec against for the ofence committed by the compary under ser tion 138 of the Act. The complainant r:ar proceed against o rly such persons who at the time tJ e offence was committe, I by the company v/ere in .charge o1' and were responsib .e to the company for the conduct of it.s business. Such per;ons could be directors, managers, secretary or the other offi ,ers of the company. Such persons 'in charge\" must meal th rt they were in overa-ll control of the day-to-day business of the company or frrm, as the case may be. A complain based on wild imaginations is not a complaint at all in the r ye of law. The accusation against ea<:h of the director/i rerson/accused must be speci{ic a,nd unambiguous. The role rlayed by each of the accused must be clearly stated in the cor eplaint. The complaint if read as a whole must clearly ,.1,.,.1:.^j :: 1*. ohy:d by each of thb directors of the company :,J.i;\"\".;[ \"iri\"\"TXi...\"ommirted by rhe compiuy under 1l]y rnartistic expression used tn 27 (A.P.) 2002 (t) ALT (Crt.) I 1t) drafting the cornplaint quashing ,rr\" prl\"l\"ji-cannot by itsclf be a r comprarnanr .- n. o\"Jgl:.,but'\"i\"\";il\" \":J\"*'H:: lT ali the directorl \"iinl.l_Il\"_\" ro la.unch proseculion againsr ro'\"aution i\"\"i;\" '#;;::pTv Mthoul rhere bein ov them at r he mare;ia/nj' it\"\"rt^\"uo'' til::' ;\"\" ;*\"': 5Lt;; commiucd br',;\"'.;;#.1?i:t 'r Lime' when rhe offcnce is pcrson or o\".\"\"\"., 1\"\"'if,lly' No prosecution would lie agairrst a in the comptar:ri; ;;; \"\"UT: mav be on the srmple accusariorr executi*e ii.\"\"i.. ..'#'.Hrson or persons wcre rhe director, rjme when ,h;;tT;;;;rrrcer of.rhe compa.ny at r]re marerial :l:..\",H-.lff \"X.ii,;Ji,,\"*:Tt'::,HJff :Tf ::\"il;n procedure crJ\" \"..rra u1ler section 482 of the criminal enquiry b fi;; ;;;'r\"\"?t '.o,.t']tv undertake any roving allegations-;;;;:.il.:o th: Futh or otherwise or thi cannoj undertake il ;;:# :t\"T\",H f :i:f 1,; ;l;i:** un_ambiguous allegations \"r\" -\"a\" ug;'r\"; \";;.f\"d.: persons arrayed as accused in the compl-ai\"i \"U*i lr_r\" iotf .ptay\"a .t the materia.l time when tfr .ff\"\"\"\" i\"- \"\"rri-iild U, *\" ::Tpi\"y. Mere repetirion of the words i\"\"o.po..^t.?i, \".\",io. l4l of rhe Act would not meet tfr. .\"qrl.e-iiiirii\"* ,o .op\" in any and every director. or other .S.\"r: ;;;.]'\"\"\"..,rr of the company as the case may b9. Th\".\" ;;\";B; something more clearly stated in the. complaint. e trrJ lielation uy merely repeating those magc words mentioned in section 141 of the Act would rlot be enough. But in case where the complaint discloses the factual foindation \"g\"i\"J *r\" persons T3y:d as accused, the High Court in \"r\".\"'i\"\" of iis-int e...rt jurisdiction cannot interdicith\" fr.th\". \"\"ql_,i.v \"\"J t.i\"f. 39. The crucial issue is as to whether the petitioner herein, at the material time, when the offence was c-ommitted by the compaly, was in charge of ' and responsible to the business of A- l-company. The document upon which reliance is sought to be placed would in no manner advance the case of the respondent/complainant. The same is not at all relevant to decide the question as to whether the petitioner herein was responsible at the material time for the offence committed by the A- 1-company.\" 19. l,earned counsel for the petitioners has also reiied upon the authority of the Hon'ble Apex Court in S.M.S. 1l Pharmaceutice ls Limited vs' Neetha Bhalla and another2' wherein the Hc n'b1e Supreme Court has decideC the issue as to whether the es sentia] averments to be made irr a cornplalnt filed under Section 138 of the NI Act' in case if the comparry is stated to havt been committed the offence' Paragraph 8 of the said judgmen ' reads as under: ' 8. rh : officers *',', : Tl:l:-l:'.\"\"'l\"oT:'\":?\";*J: ,.'fr\";';:l ::U*l:T'-,-#ffl .1.J:i:::''\"\"':\"y*i;=\":\"S*llt'\": ::;;;;'i'1\"' t\" it\"=.Jn'ient to simplv lt\"tl-'f,'ru',, at the Lime il# .r]:\".'m ft *T :il'$ii f\";i;#t1 ::*': l: ]ial'^ t o 'r'i\"' ;t mav bc worthwhile\" t9 n director 'rr \" -;;;?' \"' rne wora^'airector\" rs delined in Section ztlgt of th;\"do;panies Act' 1956 as under: 'director includes €mY Person e fositiott of director, by whirtever There j s a whole chapter in the Companir:s Act 'rn directors' #H ' \" 'bffii\"' u. -s\"ttitt\" - ist to- zsz reft:r 1'o powers of Board rf Directors' A perusal of these provisions shows that what a Board of Directors is empowered to do in relation to a i-lic r* *\"\"*p\"r,y depettds upon the role ar-rd {unctions assign :d to Directors as per the'Memoiandurn a'rrd Articles of e=\"oi.i ,tiott of the company There is nothing which suggests ;;;;y by being , iit\"tto. in a Company, one is supposed i. Ji\", ,f,'*\"g\" prr.ti\",-.t* functions on behalf of a comparry' It happe rs tiat a person may be a director in a company but he may r ot know anything about day-to-d:ry funcl-ioning of the \"oripr rry. As a diiector he may be attentling rn':etings of the Board of Directors of the Company where usu,alty they decide policy matters and guide the course of business of a compaly. It m€ y be that a Board of Directors m.Iy appoint sub- cornm.trees consisting of one or two diredors out Of the BOafd of the Cornparty who mav be. made responsible for dity_to_ d.ay runcrir ns of the compary. Ir.\". ,'.\"iJi ..r'_.i-ri.i, fr* p*t \"2-113], c :cupYing th r ame called:\" I ' (2oos) I scc Bg ! : I 1) of resolutions of Board of Directors of a Company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs. We have discussed about the position of a Director in a company in order to illustrate the point that there is no magic as such in a particular word, be it Director, Manager or Secretary. It all depends upon respective roles assigned to the olficers in a company. A company may have Managers or Secretaries for different departments, which means, it may havc more than one Manager or Secretary. These olficers may also be authorised to issue cheques under their signatures with respect to alfairs of their respective departments. Will it be possible to prosecute a Secretary of Department-B regarding a cheque issued by the Secretary of Department-A which is dishonoured? The Secreta-ry of Department-B may not be knowing anlthing about issualce of the cheque il question' Therefoie, -.r\" ,-,*\" of a particular designation of al o{Iicer without more, may not be enough by way of an averment in a complaint. When- the requirement in Section 14 1' which ;;i;;J\" the liability to offrcers of a companv' is that such a nerson should. be in charge of and responsible to the company il;;;;;,-;;;;;;.\"\"; o\"r th\" \"o.',p,''v' how can a person be ;;b;i;; a\" [abilitv of criminal piostiution without it being ##i; i-lr\"\"l\"-pi-\"t ir'\"t he sltisfies those requirements ? Not every person connecJ *ittt a Compnay is- made liable under SecLion la t' Liabruiv is \"^\"t orr pti\"ot'\" wtro may have \".rn.,n*- a Oo with the ti\"-I]\"attion complained of'. A person who is in charge of \"d ';;;;iC;'i\" 'oi'a\"o of business ^of ;;\"\";;;;;\"'1i \"^t\"\"uik\"ow whv'the cheque in questlon H\" i\"Jff \"\"J*nv it got dishonoured.'' paragraPh 3O held as under: 20. Learned counsel for the petitioners has also relied upon the judgment in S'M'S' Pharmaceuticals Limited vs' Neetha Bhalla and anothera' wherein the provisions of Section 138 of the N.I. Act were challenged and the Honlcle Court at 3 (200?) 4 SCC 70 I j-l \"30. It is, therefore, an authority for the ;lroposition that t.Ile Hig h Court is not completely denuded of ils pow€r to exercise inh :rent jurisdiction for the sccond time.\" 21. Learned ( ounsel for the petitioners has submitted that Section 278-8 tf the Income Tax Act and also Section 141 of the N.i. Act a'e almost similar, except the fact that in the beginning of tt e provision so far as Section 279-8 of the Act is concerned, it r hows where an offence under this Act has been committed by ,r company, whereas in case of Section 141 of the N.I. Act, it is mentioned that if the person committing an olfence under Section 13g is a compan)., and rest of the provisions arr identical. In order to demonstrate that the authority sub nitted by him decided under Section l3g of the N.I. Act can a.lso be made applicable to the case on hand under the Act, lear red counsel has also filed anot.her authority decided by t}: Madras High Court in K. Subramanyam vs. fncome Tax (rflicer+, wherein it is held at paras 5, 6 and 7 as under: \"5. The .efore the petitio rer and responsible at the time of there is no the co to the compan al.legati mmrssion of the on m the com plaint y for the ofltnce was conduct of that 1n charge r ,f the businr ss. What is dieged in the complarnt ;s that the second anr i conduct o third accu sed are responsible to Lile first acr:used firrn 16a 16,. time the offe f the busIN nce was comrni ess. The coin platnt does not show that at the e Mad. .5j-.i l99l SCC Onlil tted the third I l1 accused was in cha-rgc of and was rcs.nnc;hr^ .^ ., Ior thc conduct of rrri ausin\"*\"'*;,,:^\"r^\",j\",:,c to rhe company iff .'i:X ::,.; I f * I*\"{ : : i ;: \";,, I_,ilX #i l;i,\"?; ; P.y^, *\" *\",a \" ;ii-\"i',lg:l*;;: Hl,Y?:,e\"Ro,, \"; ure t rhe nrm. rwo ugredients haue io n\" -,,l]ll\"' 'rr. Lne complaint. Thcse fl :n::H:*Iiil;.5*\";\",:\".n:Hi:1,1fl!\":l,iJ,#: --_ v vrq(;rrcg rater on. 1,1*ils;i\"'*:#tll-ffi ,;t,q,-,,,-\"\"'Ltffi _ ,.What then r :H,-# iT,\" r tir #=\";ti:,,i :? ;1 ffil\"\"\"r : incl;des ;-i; o. o,I-'t o\" noticed that the 'c, musl appry ,o u ar.\"1il-\"lsociatioi';; il\" \".\"#iTJ; rr\"\" ;\" \"i, jrgJ * ur c.ctor ltl-charge and a partner of a context a person ,in lslness' It seems to us that in the 'r, o r a u. I \"' \"i\", ,,':ff ,-:;, H ii ff #,H:;T,r\"il::: of the company or fir1,_.this inferenci follovis from the wording of Section 23C(21.\" 7 There is no allcgation that rhe third accu se/ petitioner herein had control of tie day-to.day husiness of trrJ'.ompa.,y or..f1.- on_thc particular date. - Learned \"\"\"\"\".f for the *qf\"\"l a-lso relied upon the judgment ,.pori.i- ,, ,lou., (!.{.) u, State, (1985) L.W. Crt. 4|-lstigarauetu.rT. it \" tearned Judge in the_ above-quoted judgment -observed t-irat ..a perusat of the complaint shows that ihe allegation so far as these petitioners are concerned a-re vague \"_.ra th\"y are impleaded just because they are directors of the company. It is not even averred in the complaint as to the part played by the petitioners in ttre business. There a-re not even allegations regarding the part played by these petitioners in tJle business except that tlrey are mere directors. None of them is managing director, and the managing director, if any, has not been impleaded as an accused. In these circumstances, the prosecution against the peLitioners, who are mere directors, is not sustainable.\" 22. Therefore, the complainant is expected to rnention in the complaint the petitioners, being the Directors' \"were in-charge --,= l and resPonsible ' to the company for the conduct of the business. In t re complaint though the second limb of the phrase is menti'rned, the first limb of the said phrase that the petitioners were in-charge of is missing' 23- Further, r rhether the complainant is required to mention both the limbs of the phrase specihcally or if he narrates the incidents of inr olvement of the accused in the day to day affairs of the compa ry to hold that though there is no specific averment that the petitioners were in-charge, the averments made before tt e Cor-rrt would reveal that thel, are rn-charge. 24. The raticna-l in the judgments cited above is that in order to fasten the :riminal liability against the petitioners, the de_ facto complair ant must allege that the petitioners rrre in_charge and responsit Ie for the day to day allairs of the company. Paragraphs 2 :Lrrd. 6 of the complaint filed before the Court by respondent Nc '1' discrose that the accused are the Directors of I the company e nd they are responsible for the da1. to day affairs of the cornpa ny for ayerr,enrs in t ?e \"o*, nout'nr of the bu . >/arbt are *\",,:.;;;*r:, ::, t 16 contention of the learned counsel for accepted. .E However, it is to be noted that year 2079, whereas the de_facto accused made their the petitioners can be this petition is filed in the evidence of the respondent/complainant was also commenced, PWs. I and 2 were examined_in-chief and at the time of cross_ examination, the petitioners have fiied this compiaint before this Court seeking qu4shment of proceedings. 26. The petitioners are expected to approach this complaint before the trial Court in 2072. case, cognizance was taken complainant has filed the After filing of the summons were issued, after appea_rance, charges were framed and Court without any complaint. delay i.e., Then this at the initial stages of filing of the Court would have considered the pleadings available basing on the complaint filed by the de_facto complainant in the trial Court, but, as observed above, as on the date of fiIing of this complaint, the material available before the Court, as filed by the complainant themselves are the complaint, charges framed by the trial Court and examination_ in-chief of pWs. 1 and 2. AIt these documents are required to be t1 consLdered no ,v to consider the case of tl-re pr:titioners. As already obser;eci, the averments of the comolaint though Cisclose that t re accused persons are responsibie fbr lhe day to day affairs of t he company, what is missing is thrLt tht:y are \"rn- charge of the company\". However, the charges framed by the trial Court ar r relevant to consider at this stage. The trial Court has frz med charge 1n respect of the pe,ti tioners also. ..ST CONDLY: Thi t 1.ou A3 and A4 being the Directors of A1 cornpany was in-ch arge of ald was responsible for the condr.rct of the business rf A1 company wiflfuly ald deliberately lailed to pay the tax lJ rbility on the admitted income for the assessment year 2O1t -15 in spite of show cause notice zurd that you have committe, I zrn offence punishable under Section 2711C{2) rlw. 2788 of h come Tax Act, 196 I and within my cogni;ar-rce. An I I direct that you shall be tried belore this Court for the a-forer rentioned charges.\" 27. Therelor e, the tria,l Court has framed the <:h arge that the petitioners wt re in-charge of and responsible lor the :onduct of the business and that cha-rge was put to trial. Therefore, considering tl re fact that the charges are specifically framed as required und 3r Section 27 88 of the Act and trial has a,lso commenced, his Court is of the opinion that at this stage, the petitioners re luest for quashment of the complaint cannot be I Charge No.2 r rns as under: I I i8 considcred and the petitioners are at liberty to take all thc defences that they have taken here before the trial Court at-rd the trial Court basing on the material avajlable before it would pass appropriate order. 28. In the result, the criminal petition is dismissed. Miscellaneous petitions, if any, shall stand closed Sd/.P.PADN/ANABHA R Y ASSISTANT REGI RAR //TRUE COPY/i SECTION OFFICER To 1 The Deputy Commissioner of lncome Tax Circle -17(2), Room No'913, 9th Fiooi, Sign'ature Towers, Opp: Botanical Garden, Xondapur, Hyderabad' One bCio Sri A.Hanumantha Reddy, Advocate IOPUCI Two CD Copies One Spare Copy 2 o 4 Ki.r. ( v-\"- HIGH COURT DATED:1110712021 ORDER CRLP.No.42 of 201) .4. . r)' ..J,q' I ?fl, i ll i 19 $ DISMISSED. q 10$l'- .A 9t "