B. Teja Babu, V. Dy. Commissioner of Income-tax,

CRLATR/53/2018

AI Insights

The case involves M/s Chitravathi Agro Farms Pvt. Ltd. and its directors, who were convicted for willful evasion of tax under Sections 276-C(2) and 278-8 of the Income Tax Act, 1961. The appellants argued that they did not have the funds to pay the tax on the due date and that there was no willful evasion. The trial court had found them guilty based on the evidence presented, which included the company's financial activities and failure to respond to tax demands. The High Court, after reviewing the grounds of appeal and the evidence, decided to set aside the trial court's judgment and remand the case for a fresh evaluation.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 740022 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 17-06-2022
• Assessment Year: misc
• Other Referred Cases: Akkinapalli Sujatha (smt.) and others v. State of Telangana, Public Prosecutor, Pooja Ravinder Devidasani v. State of Maharashtra, National Small Industries Corporation v. Harmeet Singh, Gunmala Sales Private Ltd. v. Anu Mehta, Pepsi Foods Ltd. v. Special Judicial Magistrate, Alka Khandu Avhad v. Amar Syamprasad Mishra and another
• Laws Referred To: Income Tax Act, 1961, Code of Criminal Procedure
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Assessee Lawyers: VINOD DESHPANDE
• Keywords: Criminal Appeal; Economic offences; Income Tax Return; Penalty; Prosecution; Willful evasion of tax
• Section: 143(1); 115JB; 221(1); 374(2); 281-B; 276-C(2); 278-8; 140-A(3)

Judgement Text

". criminal Appear Under section 374 (2) of cr.p.c. aggrieved by the Judgment dated 0941-2o14inc.c.No.11Bof 2o1'r on thefireof theCourtof ftre speciatiuole for Economic Offences at Hyderabad. Between: r shri B. Teja.Babu_s/o. B. Ramaringa Raju, aged about 30 years, Director of M/s. Chikavathi A.gro Farms pvt. Ltd., H.No.' t-tr-tg2, Ftar N6.201, Kr;;|, A-r;;; Shamlal Buildings, Begumpet, Hyderabad-500016. . Appellant / Accused No. 3 AND i l Dy. Commissioner_of lncome-Tax,, Centrat Circte-8, Aayakar Bhavan, Room No.g05, 8th Floor, Basheerbagh, Hyderabad-500004. IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD FRIDAY, THE SEVENTEENTH DAY OF JUNE TWO THOUSAND AND TWENTY TWO PRESENT THE HONOURABLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL fi RANSFER) Nos. 53 and 80 OF 2018 Criminal Appeal (TR).No. 53 of 2018: ..RESpONDENT/ Complainant Counsel for the Petitioner: Sri VINOD KUTVAR DESHpANDE, SENTOR . COUNSEL FOR SRI. V SURENDER RAO Counsel fcjr the Respondent: SRI B. NARASTMHA SARMA, SC FOR t.T. CRIMINAL APPEAL ). NO:80 OF 2018 Crl. Appeal Under Section 374 (21 of Cr P,C. aggrieved by the Judgment dated 09-01-2014 in C.C.No. 118 of 2011 on the fite of the Cou( of the Special Judge for Economic Offences at Hyderabad. Between: 1. M/S Chitravathi Agro Farms Pvt. Ltd.. H.No. 1-11-192. Ftat No, 2O1, Kamah Arcade, Shamlal Buildings, Begumpet. Hyderabad-500016, Rep. by G.N. Rama Raju, 2. Namburi Rama Raju S/o. Venkata Ra;u, aged about 49 years, Director of M/s. Chitravathi Agro Farms Pvt. Ltd , H.No. .l-1 1-192, Flat No. 201, Kamala Arcade, Shamlal Buildings, Begumpet. Hyderabad-500016. 3, K.Goapala Krishnam Raju, Director of M/s. Chitravathi Agro Farms Pvt. Ltd., H.No. 1-1 1-192, Flat No. 201, Kamala Arcade, Shamlal Buildings, Begumpet, Hyderabad-500016. ...Appellant / Accused 1, 2 & 4 AND Dy. Commissioner of lncome-tax, Central Circle-8, Aayakar Bhavan, Room No.805, 8th Floor, Basheerbagh, Hyderabad-500004. ...RESPONDENT/ Complainant Counsel for the Petitioners: SRI VINOD KUMAR, DESHPANDE SENIOR COUNSEL FOR SRI. G ASHOK REDDY Counsel for the Respondent: SRI B. NARASIMHA SARMA Standing Counsel for lncome Tax. The Court delivered the following: Judgment THE HOT{'BLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL ITR Nos.53 and 8O of2O18 COMMON JUDGMENT: CrI.A.(TR).No.8O of 2OlB is filed by Al, A2 and A4 i.e., Company and its two Directors respectively, whereas CrI.A.(TR).No.53 of 2018 is irled by A3, who is another Director of A 1 /company, being aggrieved by the conviction and sentence imposed by the learned Speciai Judge for Economic Offences at Hyderabad in C.C.No. 118 of 2Ol I vide Judgment dated O9.OL.2OL4, wherein Accused Nos. I to 4 were found gr-rilty of the offences punishable under Section 276-C(21 read u'ith Section 278-8 of the Income Tax Act, 196 I (tor short, \"the Act\") consequently accused No. I was sentcnced to pay fine of Rs.1O,OOO/- and in default o[ payment of fine to initiate appropriate proceedings as required under Section 421 of Cr.P.C., whereas Accused Nos.2 to 4 s,ere sentenced to undergo rigorous imprisonment for a period of one ycar each and to pay fine of Rs. f O,OOO/- each and in default ol pa'yment of fine by accused Nos.2 to 4, to undergo simple imprisonment for a period of one month each. ) 2 Since the issues invoh,ed in these appea.Is are one and the same, both the appeals are being disposed of by rhis comrllo1) judgment. 2. For convenience, the parties herein ane referreri to as they are arrayed before the tdal Court. i.e., Appellarrt No_ I as Accrrsed No. I /Company and Appellant Nos.2 to 4 as Accused Nos. 2 lo 4. 3 . The gcrresis of these cases, which . leacl ttre appella:r ts accused to prefer these appeals, are narratecl in brief as uniler: i) Accused No. 1/Company - M/ s Ch itravathi Agro F-arms Private Limited, which was registered undcr- Lhc Companies Act with the Registrar of Cr.rmpanies .rt H1,derabad as Private Limited Company, was engaged in the business of acquisition and sale of lands. Appeltant Nos. 2 to 4 herein are the Directors of Accuseci No. l/Company. iil Accused No.l/Company has acquired [ands to ar-r extent o[ Ac.33.10 guntas in Sy.Nos.2O S, 206 ancl 207 u nde5_ the limits of Bachupally Mandal, Ranga Reddr 3 District during the financial years 2OO2-2OO3 and developed the said lands by incurring some amounts during the financial years 2OO2-O3 to 2OO7 -OB. Accused No.l/Company has floated 6 companies by name M/s. Beas Green Fields Private Limited and five others with IOO% holding in the year 2O06-07 and sold lands under 9 different sale deeds for ttre financial year 2OOT 'O8 and claimed exemption of such transfer by invoking provisions untler Section 47 of the Act. iii) For the assessment year 20OB-09, accused No.1'/company has filed incorne tax returns on 30.O9.2008 under Ex.Pl by showing taxable income as Nil and book prolit under Section 115J8 as Rs. 15,30,71,3721-, which is more than regular incorrle. Since the book profit was more than regular income, the sa-me has bee n taken for the purpose of taxation and tax liabitity was arrived at Rs.l,73,42,987 /-. i*r) Accused No.l/Company is expected to pay the incorne tax either by wa-y of a-dvance ta-x as required under Section 2O8 of the Act or at least along \"vith filing ol 4 return s in terms of Section 14O-A of the Act. As per Section 143 ( I ) of the Act, the tax liabiliry of Accused No. I was arrived at Rs.2,17,62,L44 /- by rhe respotrde nt/complainant emd raised a dema_nd under Section 156 read with Section 143 of the Act and issued an intimation to Accused No. 1/Company under Ex. p2. Accused No.l/compaly was required to pay the ttuy demandccl u,ithin 30 days of service of notice, but it has cornmirtcd default. v) Respondent/complainant has issued show-cause notice under Section 22L (l) of the Act urlder Ex. p5, whcreiu thc appellalts r.vere asked to show cause as to r.r.hl penall_ ' should not be levied for committing defar-rlt in payment of tax. As there was no response from the appellants, thc complainant has issued another sho , cause noticc dated 01.09.2010 under Ex.p6 under Section 140(4,)3 read u,irh Section 221 (Il of the Act. FinaJIy, one more o pportunitl, u,as also given by the Department bv giving anothcr shorr,-cause notice dated lZ .O9.2OlO (Ex. p7) under Scction 221 (1) read with Section 140(A)3 of thc Act An opportunity of being heard was also given by the respondent/complainant to Accused No. I /Company fixing the date of hearing AS 2I.O9.2OIO, but there was no response, on which a penalty of Rs.35,OO,OOO/- ras imposed by way of order d.ated 22.09.2O10 (Ex.PS) under Section 221 read with Section 140-A(3) of the Act and the said proceedings were served on accused No.1 on 23.O9.20tO. 4. Considering the willful evasion of payment of tax, the respondent/complainant has decided to initiate prosecution and accordingly a notice was issued to accused No.1/company and other Directors under Section 276-C(21 of the Act, as to why prosecullon shall not be initiated against them for r.villful evasion of the tax. All of them have given reply stating that there was no intention to evade payment of tax.. Another notice was issued to accused No.1/Company and its directors under Exs.P10 to P13 dated O4. 1O.2O 10 asking them as to why prosecution shall not be initiated under Section 27 6-C(21 of the Act. Again replies were filed by accused No.1/company and its Directors / accuscd 6 Nos.2 to 4 under Exs.Pl4 to Pl7 stating that there .{,as no intention of n illful evasion of tax- 5. As Accused No. 1/Company arrd its Directors/ accused Nos.2 to 4 have not paid the tax in response to the demald notice issued under Section 143 (l) of the Act and also failed to pay the penalty, the re spondent/complainant after obtaining sanction order dated 25.02.2011 for launching of prosecution hled a complaint belore the Special Court for Economic Offences against accused No.1 and accused Nos.2 to 4, tJle other Directors, alleging that ttrey have committed offence punishable under Section 276 C(21 rcad rvirh Section 2ZB-B of the Act, as they have rvillfutly evaclccl tax even though they were having sufhcient resources. 6. The Special Court for Economic Offences took cognizance of the offences against Accused No.l/Compaly and its Directors i.e., Accused Nos. I ro 4, under Section 2Z 6=C(21 read with Section 278-8 of the Act ancl charges were framed against them under Section 276 - C(2) read with Section 2Z g_B(L) of the Act and all the accusecl have pleaded not guilty of the charges ancl claimed to be tried. 7 7. In order to prove the charges leveled against the appellants, the respondent/complainant has examined PWs.l to 3 and got marked Exs.Pl to Pl8. After closure of evidence of the complainant, the incriminating evidence elicited against the appellants was read over and explained to ttrem under Section 313 of the Cr.P.C., for wtrich all of them have denied and reported that they did not choose to examine any witness on their behalf. However, they got marked Exs.DI to D3 on their behalf. 8. The substance of the evidence of PWl is that after receiving o[ returns o[ income tax hled by accused No.1/company, thc responcie n t/ complainant has processed the same under Section 1a3( i ) of thc Act and issued intimation determining the total taxable income as Rs.15,30,71,372/- and tax liability AS Rs.2,I1,67,144 l-. The evidence of PW2,/Income Tax offtcer is to the extent [hat he has considered the annual report of accused No.1/compan_v for the linancial year 2OO7 -O8 under Ex.P3 and bank account statements of accused No.1/Company with the AXIS Bank Limited under Ex.P4 and found that accused No. l/Company did not pay the tax returns in spite of having 8 surplus and suflicient funds. pW3 is the Income Tax Officer, who has succeeded PW2_ His evidence is that he has passed penalty order under Ex.P8 imposing penalty of Rs.35 lakhs and raised demand under Ex.p9 and the same was served on the accused. He also deposed that as there ,,vas no response from the accused, show cause notices under Section 276-C of the Act were issued against all thc accused through which accused were informed that the departmcnt is initiating criminal proceedings and consequently the de pa_rLrnent has filed the complaint. 9. After full-Iledged triat, on considering the entire material on record, the tria-l Court has lound Accused No.l /Company and A2 to A4, the DirecLors of A I <.ompany, guilty of the offences punishable under Secrions 276 C(2) and 27g_B of the Act and were sentenced as stated supra. Aggrieved by the said jtrdgment and conviction of Special Judge lor Economica_l Offences at Hyderabad, the present appeals are filed originally before the Metropolitan Sessions Judge Court at Hyderabad. 10 The erstwhite High Court for the States of Telangana and Andhra Pradesh has issued circular ROC.No.34, Criminal Section/20 t 7, dared 28.O8.2O I 7, ,\"vherein it is clarified that 9 against any orders passed by the Special Judge for Economic Offences, Hyderabad, in the State of Telangana and Visakhapatnam in the State of Andhra pradesh, the High Court has the jurisdiction to entertain the appeals, not the Sessions Court. In view of the said circular, these appeals filed by the appellants have been transferred from Metropolitaa Sessions Judge Court, Hyderabad, to the High Court for the State of Telangana. 11. The summarlr of grounds of appeal as filed by the appellants in brief are as under: a) The trial CourL has failed to see that accused No. 1/company was not having funds to pay the tax on the due date as reflected in Ex.P4-bank statements. b) The trial court has misconstrued the presumption under Section 278-E ot the Act and erred in holding that the burden of proof is on the accused to prove that tLrere was no willful evasion of payment of tax. c) The trial Court erred in holding that the accused failed to prove non-existence of culpable mental state in non-payment of 10 taxes on the date of filing retr-rrns and as on the date of demald notice arrd that the triai Court tailed to appreciate that in spite of not having any cogent eviclence to show that all the accused have willfully evaded the tax, the trial Court has concluded that accused have committed rvi[ful evasion in payment of tax. d) The trial courr failed to see that alt the assets belong to accused No.1/Company were attached unrler Section 281-B of the Act ald due to paral-vzing of linancial activities of accused No.1, tax could not be paid in tirrre. e) The Trial Court should not have concluded that accused Nos.2 to 4 are responsible for day to cla-i, alfairs of accused No' l/company and shourd have takcn i.tc consideration the notices issued under Section 278 B o[ the Act proposing the prosecution clid not reler accused Nos. 2 to 4 as principal officers and thereby accused Nos.2 to 4 should have been acquitted. 12 Heard Sri Vinod Kumar Deshpande, learned Senior counsel for the appellants and Sri B. Narasiri-rha Sharma, leamed Standing counsel lor the income tax department, considered the ll entire material on record, relevant provisions of the Act and the authorities cited. 13. Now, the points for determination in these appeals are: 1) Whether the conviction judgment dated 09.0 1.2014 in C.C.No.118 of 2011 on the frle of Special Judge for Economic Offences at Hyderabad against the appellants carr be set aside? 5 2l Whether the appellants committed will[ul evasion of tax? accused have 3) To what relieP 14. [t is submitted by the appetlants in the grounds of appeal that the Respondent lncome Ta;< Department has not placed suflicient material to show that appellant No.1 Company has committed willful default, to fastcn the liability under Section 276 C of the [ncome Tax Act. Ttre question of willful default comes, when appellant No.l Company is having suflicient funds to its credit and deliberately chooses not to pay the tax or diverts the funds for other purposes, According to the appellants they ) 12 rvere not having funds to pay the tax, thereby, contended that there was no u.illful default committed by them. 15. PW3 in his cross examination admitted that appeliant No. I Company v,ias not havir-rg funds as on the clate of trling of the returns. It is also the case of the appellants that the Respondent - Income Tax Department has not placed any material to show that inspite of having sufhcient funds, the appellant No. 1 compafly has deliberatel.y evaded in paymcnt of t.a_x, thereby the appellants. were not having amy culpable merltal state to cvade the tax deliberately. 16. According to the appeltant lJo.l compan,v has iiled IT returns on due date declaring the income ta_x as,,ni[,' by showing book proht under Section l1SJB of the Income Ta_< Act. As per the returns, the book prohts were found to be more tharr regula_r income. According to one of rhe grounds o[ appeal, evcn though book profrts were found to be more than income, as there were no funds in the account oi the appellant No. I company, could not pay the tax. The triat Court in its order has observed t.hat though appellant company lvas not having the lrquicl cash as on the date of filing of returns, it (company) n as having reserves. 1 13 which were diverted to other concerns without bothering the tax liability on book profits in terms of Section 115JB of the lncome Tax Act. Thus, even the trial Court has concluded that the appellant No. I Company had no liquid funds to pay the tax as on the date of filing of returns. It is mentioned in the grounds of appeal that even though the book profits were more than regular income, appellant No.1 Company was not in a position to pay the tax, thereby, appellant No. I company has not committed default willfully. L7 . It is also admitted fact that atl the assets of appellant No. 1 Company were attached under Section 28 1B of the Income Tax Act and thereby there was no financial activity of the appellant No.1 Company. Thus, there rvas no occasion for appellant No.1 Company to have any funds to its credit. Further, M/s. MaSrtas properties Limited also requested lor raising o[ the attachment of the properties in order to execute the sale cleeds in favour of the purchasers so that the sale proceeds can lce paid direcfly to the department on behalf of the appetlant NI o.l company. M/ s' Maytas properties Limited also requested to ra-ise the attachment of five acres belonging to M/ s.Chitravath i Agro Farms Private r4 Limited for disposal by Revenue Deparlment 1e 5s adjustect against the outsternding ta_x demand of ali the 19 companies including appellant No.i cornpan'vicre letter dated 11.03.20r 1. 18. it is also mentioned in the grouncl of appeal that cven thougtr appellant No.l company has transferred the land in favour of subsidiary company, it does not arnount to transler as per Section 45 read urith Section 47 (ivl of the [ncome Ta_x Act and thereby appellant No.1 c6mp41.y is not tiable to palr tax. 19. The other aspect raised by the appeltalts in the grourids of appeal is that when appellant No. 1 Company 6a, \"4 bmitted income tax returns, surplus amouni r,r,as claimed io lle excolptcd uncler capital gains as per Section 45 reacl with Section 4 / r.,1 of the Income Ta>r Act and therebv the liability of ta;,r strould not be levied on the said surplus amount. 20. It is also not in dispute that M/s. Maytas pr.)perties Limited has requested the Respondent - lncome Tru< Depzlrtment lor adjustment of TDS refund of income ta< and adjustr:nent ol refund of income tax dues of Rs. I I .45 crores vicle letter s dated 22.O2.2O1O and 11.O3.20I1 in favour of appellant No. I 15 company. The trial court in its judgment at page 15 para No.33 has observed that nothing has been placed on record to show that the department was in fact any due of any refunds to M/s. Maytas properties Private Limited and whether such refunds were fortified by passing appropriate refund orders. However, on perusal of the letters dated 22.O2.2OLO and 11.03.2011 addressed by the M/s.Maytas Properties Private Limited, the endeavour of appellant No.l Company is very clear that in the most possible manner the tax liability was to be pard. This court is of the opinion that if really the intention of appellant No.l company was not to pay the income tax and evade the same willfulltj the letters dated22.O2.2O1O and I t.03.20lt addressed by M/s. Maytas Properties Limited requesting the clepartment to adjust TDS refr:nd of the tax liability could not have been addressed. 21. Another contention raised in the grounds of appeal is that accused Nos.2 to 4 are not responsible for day to day affairs of appellant No. I company and that there is no material placed before the trial Court to establish that accused Nos.2 to 4 are responsible for day to day affairs of appellant No. i company and 1 ') t6 that unless there is specilic resolution authorizing one of the directors as principle offlcer, all the directors of the company are principle officers of the company, thereby, the observation of trial Court that unless restricted by the provisions of the Companies Act, all the directors are authorized to alo a1l the acts and therebv accused Nos.2 to 4 are principal officers is erroneous. 22. tn Akkinapalli Sujatha (smt.l and others v. State of Telangana, Public Prosecutor, High Court of Telangana, Hyderabad and anothert, wherein it was held as follows: \"1O. In POOJA RAVINDER DEVIDASANI u. STATE OF MAHARASHfRAI the Supretne CourT nrade tlrc folLouLing obseruations: \"... Time and again, it has been asserted by tlris Courl that onlg those persons who utere tn charge of and responsible for the conduct of the business of the Compang at the time of commission of an offence uill be tiable for criminal action. A Director, ulho uas not in cLnrge of and_ was not responsible for tLrc conduct of the business of the CompanA at the releuant time, utilt not be Liable for an offence tlnder Section 141 of the N.l. Act.\" 202 L r2) AI-l (crL l2 ta (S It.) L7 In National Small Industies Corporation (supra) this Court obserued: Sectton 741 is a penat proui-sion creating uicarious liabilitA, and uhich, as per settled lanu, must be strbtlg construed. It is therefore, not sufficient to make a bald cursory statement in a complaint ttat the Director (arraged, as an accused) is in clnrge of and responsible to the compang for the condtrct of the business of the companA witlnut angthing rtare as to the rote of tlte Director. But the amplaint sLauld spell out as to l'nu.t and 1 (2O14) 16 SCC 1 6 in uhat manner Respondent 7 u.ns in chorge of or was responsible to the a@used Compang for tlrc conduct of its business. This is in consonance with stict interpretation of penal stadttes, especially, tuhere such statutes create uicarious liability. A company mag haue a number of Diectors and to make ang or all the Directors as accused in a complaint merelg on tLe brrsis of a statement that theA are iru charge of and responsible for the conduct of the business of the ampang wttlnut angthing more is not ct sufficient or adequate fulfillment of the require ments Under Section 741. 27. Unfortunatelg, tle High Court did not d.eal tlre i.s,sue in. a proper perspectiue and committed error in drsmlssfng tle utrit petitions bg hr,tlding that in tle Complaints filed by the 18 Respondent No. 2, specific auerm.ents utere made against the Appellant. But on the contrary, taking the complaint as a tuhole, it can be infered that in the entire complaint, no specific role is attibuted to the Appellant in the commission of offence. It is settled law that to attract a- case Und.er Sec.tion 141 of the N.l. Act a spectfi.c role must Lwue been pLayed bg a Director of the Compang for fastening uicctnotts hability. But in thi.s case, tle Appellant u.tos netther a Director of tLe accused Company nor in charge ol or inuolued in the dag to do-g affairs of the <)ompantl at th_e time of comni,ssion oJ'the alleged offen.ce. There * not euen a u,'hisper or shrecl of eutdence on ,-ecord to slriu' that ttere is an.q acl conmiLtcd bg tlrc Appellant fiom which a reasonable itkrence can be drqutn that the Ay:pelktnt coulcl be uicariouslg LeM liable for the oJfr:nc<: tutth tuhtch she is charged.\" t t In POOJA RAVINDER DEWDASANTs case- ( I supra), the Suprem_e Court allouted the quash petition not onl.u on th.e ground. that th.ere is no speciJic role attributed to the appeltant but o,lso on the ground that the appellant has resigned as Direclor much prior to is suance of tLe clwque. TLte Supreme Court taking into consideration its earlier decr-slon-s in Nationctl Smatl Industries Corporation u. Ilarrneet Singh panital [(2O10) 3 SCC 33O]; 19 Gunmala Sales 7 Priuate Ltd. u. Anu Mehta [(2O15) I SCC 1O3l and Pepsi Foods Ltd. u. Special Judicial Magistrate (1998) 5 SCC 3431, reiterated the ratio that a complaint, uh.ere no specific rol-e is attibuted to the Director - Accused, i.s liable to be quashed.' 23. In Alka Khandu Avhad v. Ao.ar Syamprasad Mishra and another2, it was held by the Honourable Supreme Court as foliows: \"8.1 Sectton 141 of tLe NI Act i.s relating to the offe nce by cnmpanies and it cannot be made appLicable to the indiuiduaLs. Learned counsel oppeaing on beLnlf of tle original ampLainant has sub mitted tlwt \"Company\" rLeans aruA bodA corporate and includes, a firm or oth.er association of indiuiduals and therefore in case of a joint liabiLitg of tu.to or more persotls it u,till fall within \"other ossociation of ind.iuidual.s\" and therefore with the aid of Section 141 of the NI Act, the appellant who is jointlg liabl,e to pag tle debt, can be prosecuted. The aforesaid cannot be accepted. Two priuate indiuiduals cannot be said to be \"other association of indiuidual.s\". Therefore, tLrcre is no question of inuoking Sectian 741 of tle NI Act 2Or l 12) i Lr'(crl ){sq 69 (D B I 20 agalnst the appelLctnt, as tLrc liabilitg is the indiuidual Liabilitg (r,ag be a joint ttabitities), but cannot be said to be the offence committed. bg a componA or bg it corporate or firm or other assoclafions of indiuid_uats. TLe appeltant heretn is neither a Directrtr nor a partne_r in any firm utho hns issued the appeLlant cannot cheque. 'fherefore, euen the be conuicted uith the aid of Section 141 of the N! A<:t. Tiuzrefore, tLrc High Court ha-s cornmitted a qraue error in not quashinq tLE complaint agains! t h.r: ,-lppeLlant for tlrc offence punishable uncler Sect.iort I3g r/ u.t Section 141 of the NI Act. The cnmiruti contplairt frLeC against the appellant for Lhe ofkn<:e punishable unrier Seetion 138 r/ w Sectlon l t l of th.e Nl Act, tLerefore, can be said to bc ctbusc of process of lara ond. therefore the same is requrrerl to be quashed. and_ set asid.e. i 24. On considering tt-re ratio laici dou,n by the Honourd.ble Apex Court in the decisions reported above, it is clear that the prosecution must specific:allv rnention in the complaint as to the role played by the appellant in the management of the company. Merely saying that rhe appcllants are responsible for the day_to_ day affairs ot the Lccused No. I Company is not suffiiient. tt is also expected to .rllege rhat the appellants are in_charge of a t 2l particular branch / wing/ unit of appellant No. 1 Company. Merely saying that all the directors are in-charge and responsible for the day-to-day affairs of the appellant No. I compaly will not serve the purpose. 25. Appellarrt No.l company has frled an application under Section 39 I of thc Code of Criminal procedure a-long w.ith the appeal for recerVing (i) Dossier Reports of the appellant company for tlre assessmenr year 2OOB-O9, (2) Files pertaining to TRO Proceedings pcrtaining to the appellant cornpany and (3) entire proceedings pcrtaining to the sanction order in the appeal. It is subrnitted [rv thc learned counsel for the appellants that sanction rvas accorded lor prosecution without assigrring cogent reason s and r n order to prove that tJ:e appellants have not willfully cvaclcd the payment of taxes, tl:e liles pertaining to the said order ernd all communications between the assessing officer and rhc sanctioning authority are crucial documents_ Considcring the same and on hear-ing botJ: sides, this Court is of the opinion that these documents are very relevant to consider tlre gr ounds rarsed in the appeals on hand, thereby these docunrcnI s arc rccerved. '22 26. In view of the above cliscussion and on perusal of the groi:nds of appeal, it is evident that the appellalts have raised certain substantial issues including that the appellant Company has not committed wiliful delault, as admittedly there were no funds to the credit o[ appellarrts; the request of M/s. Maytas hoperties Limited to rarsc the artachlnent of lands, so that sale proceeds can be paricl dull torvards income tax on behalf of the appellants, but same 14/zl s nor c.rnsrdcred; the appellant Ncs.2 to 4 a-r:e not the principle olliccr s :urcl thereby they cahnot be held to be responsible lor tlr{, ;rc[s committed by the company; appellant No.1 comparrr,' tr:rr; lilccl 11- returns on due date declarir'rg the income ra- .is rul\" as book prof'it under Section IISJB of the Income Tax Ar:r. F urthcr, the appellants have flled petifion under Section 39 I oI rirc Code of Criminal Procedure to re.eiie (1) Dossier Report s o[ the appellant company for t]re assessment year' 2OO8 Oq. Ql Files pertaining to TRO Proceedings pertaining ro rhe appellanr company and (3) entire proceedtngs pertaining to rhc s:rncrion order in the appeal and accordingly the said docurncnts tvcrc received iEl : a 23 27 . Con sidering the above, this Court is of the considered opinion that the tria_l Court is required to be directed to re-consider all the issues that. are raised by the appellant in this appeal and the documents liled under Section 391 of tl\"e Code of Criminal Procedure and give Iinding afresh by gir.ing opportunity to both sides. 2a. Accordingly, both these criminal appeals are disposed of setting aside the conviction and sentence dated O?.OL.2OL4 recorded by Special Court lor Economical Offences at Hyderabad and C.C.No. I 18 of 201 I is remanded back to the trial Court with a direction to considcr the complaint afresh in accordance r,r,ith law, after giving an opporrunity to both sides to adduce further evidence, if an,y. Horn,cvcr, the trial Court shall not be influenced by the comments and observations, if any, made by this Court touching merits of t-he case while passing orders. As a sequel. pcnding miscellaneous applicarions, if any, shall stand closed. //TRUE COPY// \"'rBi.i?H'S[\"'\"$ sEcrrot #ER l:lx::nii'.'di,:1ffii[il'J:ffii:in.:H';.:.:;:i:\"'il:il] Roo\"n No '8O5 ' Bth Floor 3. One CC to SRI.V SURENDER RAO, Advocate tOpUCl 4. One CC to SRI.B NARASTMHA SARMA, Advocate tOpUCl 5. One CC to SRl. c. ASHOK REDDY, Advocate 6. Two CD Copies kul pr Ur,- HIGH COURT DATED: 1710612022 COMMON JUDGMENT c Rr M r N AL nen enl(rnaru s re n) Nos. 53 and 80 OF 2018 DISPOSING OF THE BOTH TR. CRL.APPEALS ,..-) r1 o F 1 1l ..1r' ', 1$8 , i $l 4fi =.:',,.,.'.: t 1,3 h- "