B. Suryanarayana Raju, V. Dy COmmissioner of Income-tax,

CRLATR/62/2018

AI Insights

The case involves M/s. Nallamala Agro Farms Pvt. Ltd. and its directors, who were convicted by the Special Judge for Economic Offences at Hyderabad for willful evasion of tax under the Income Tax Act, 1961. The appellants challenged the conviction, arguing that they did not have the funds to pay the tax on the due date and that there was no willful evasion. The High Court found that the trial court did not adequately consider the appellants' financial constraints and the lack of specific roles attributed to each director in the company's day-to-day affairs. The court also noted that the prosecution did not sufficiently demonstrate that the appellants had the funds and deliberately chose not to pay the tax.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 726600 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 17-06-2022
• Assessment Year: misc
• Other Referred Cases: Akkinapalti Sujatha (smt.) and others v. State of Telangana, Public Prosecutor, High Court of Telangana, Hyderabad and another, POOJA RAVINDRA DEWDASANI v. STATE OF MAHARASHTRA, National Small Industries Corporation v. Harmeet Singh Pannal, Gunmala Sales Pvt. Ltd. v. Anu Mehta, Pepsi Foods Ltd. v. Special Judicial Magistrate, AIka Khandu Avhad v. Amar Syamprasad Mishra and another
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: B SARMA
• Assessee Lawyers: VINOD KUMAR DESHPANDE
• Keywords: Criminal Proceedings; Economic offences; Income Tax Return; Penalty; Willful evasion of tax
• Section: 143(1); 208; 115JB; 221(1); 374; 281-B; 276-C(2); 140-A; 278-3

Judgement Text

"; a ; ; I I I i I I t t I i t I 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 CRIM INAL APPEAL (TR) Nos : 19 and 62OF 2018 Crl.A.fiR) No. 1 9 of 2018 : Counsel for the Appellant : Sri Vinod Kumar Deshpande, Senior Counsel for . SRI. GASHOKREDDY Counsel for the Respondenti SRI B. NARASIMHA SARMA, SC for INCOME TAX Crl.Appeal Under Section 374 ol Cr.p.C aggrieved by the Judgment daJed 09-01-2014 in c.c.No. 117 of 2011 on the file of the court of the Speciat Judgdfor Economic Offences at Hyderabad. Between: '1. M/s. Nallamala Agro Farms Pvt. Ltd., Flat No..|02, Dhanuniava Nest. Raiiv Nagar, Yousufguda, Hyd_erabad-45, Rep. by Shri D.V.S.Subbi Ralu, Slo. t_ate D.K. Raju, aged about 45 years. 2 P V:Q.^S1Qba Raju,, Director of M/s. Nallamata Agro Farms pvt. Ltd., Ftat No.'102, Dhanunjaya Nest, Rajiv Nagar, yousufguda; Hyderabad_4s. 3. M.S.uryalgrayana Raju,, Direcot of M/s. Nallamala Agro Farms pvt. Ltd., Flat No.102, Dhanunjaya Nest, Rajiv Nagar, yousufguda, Fyderabad-45. - - ' ... Appellants / Accused Nos. 1, 2 & 5 AND D^y. Commissioner of lncome-tax,, Central Circle-g, Aayakar Bhavan, Room No.g05, 8h floor, Basheerbagh, UyaeraOaO-SOOOO+. - -' -'- ...RESpONDENT/ Comptainant Crl.A. TR) No. 62 of 2018 : ( crl.Appear under section 324 of cr.p.c aggrieved by the Judgment dated 09'01-2014 in c.c.No. 117 of 2011 on the file of the court oithe Special Judge for Economic Offences at Hyderabad. Between: P, Py,ryrlflulqna Raju,, Director of M/s. Naflamata Agro Farms pvt. Ltd., Flat No. 102, Dhanunjaya Nest. Rajiv Nagar, yousufguda, Hyder;bad_45: ' Namb^uri Rama Raju,, Director of M/s. Nallamala Agro Farms pvt. Ltd., Flat No. 102, Dhanunjaya Nest, Rajiv Nagar, yousufguOi, Hyderanad_+t. ' -' ... Appellants / Accused Nos. 3 & 4 I 2 AND Dy. Commissioner of lncome{r.r, g_e1la] Circle_B, Aayakar Bhavan, Room No.805, 8\"' floor, Basheerbagh, Hyderab;d-500004. ...RESpONDENT/ Comptainant counsel for the Appelant : Sri vinod Kumar Deshpande, senior counser for SRI. G ASHOK REDDY Counsel for the Respondent: SRI B. NARASIMHA SARMA, SC for INCOME The Court delivered the following: Judgment THE HONOURABLE DR. JUSTICE D.NAGARJUN CRIMINAL APPEAL ITRI Nos.lj a d ,62 qf 2OlA COMMON JUDGMENT: Cr1.A.(TR).No.19 of 2018 is filed by Al, A2 a\"nd A5 i.e., Company and its two Directors respectively, whereas UrlA-.(TR).No.62 of 2OlB is liled by ,4.3 and A4, ',vho are ol-her i)iicutors c-rf Al/company, being aggrieved bv rhe conviction and sentc ce impost:d by the learned Special Juilge for Dconomic Offe r:es at I{yderabad in C.C.No .1L7 of 201 I vidc Judgment clated 09.01.2014, rvherein Accused Nos. 1 to 5 rvcre found guilty of the offenccs punishable under Section 276-C(21 read with Section 278--13 of the lncome Tax Act, 1961 (for short, \"the Act\") cocsequentl-y accused No.I rvzrs sentenced to pay fine of Rs. i0,OO0/ - and in default of payment of hne to initiate zrppi-opriate procecdings as required under Section 42I of Cr.P.C., whereas Accused Nos.2 to 5 were sentenced to undergcr rlgorous imprisonmerrt for a period of one year each ald to pay fine of Rs.10,000/- each and in default of payment of hne by accnsed Nos.2 to 5, to undergo simple imprisonment for a period of one month each. 2 Sincc tl-re issues inrroh,ed in these appeals are one and the same, both the appeals arc being disposed of by this common judgment. 2. For convenience, the parties herein are referred to as they are arrayed before the lrial Court. i.e., Appellant No.1 as Accused No.1/Company and Appellant Nos.2 to 5 as Accused Nos. 2 to 5. 3. The ge ncsis of thesc cases, which led the appellants_ accused to prefer these appeals, ale narrated in brief as under: i) Accused No.1/Company - M/s Na[amala Agro Farms Private Limited, which was registered under the Companies Act with the Registrar of Companies at Hyderabad as Private Limited Compaly, was engaged in the business of acquisition and sale of lands. Appellant Nos. 2 to 5 herein are the Directors of Accused No.1/Company. ii) Accused No.l/Company has acquired lards to an extent of Ac.50.60 guntas in Sy.Nos.203, 191, 202 and.2O4 under the- lirnits of Bachupalty Mandal, Ranga Reddy 3 District during the financial years 2OO|-2OO3 and developed the said lands by incurring some amounts during the financial years 2001-02 to 2OO7-08. Accused No.l/Company has floated 8 companies by name M/s. Karanja Agro Farms Private Limited and seven others with 1OO% holding in the year 2006-07 and sold lands under 9 different sale deeds for the financial year 2OOZ-O8 and claimed exemption of such transfer by invoking provisions under Section 47 of the Act. iii) For the assessment year 2008-09, accused No. 1/cornpany has Iiled income tax returns on 30.09.200g under Ex.Pl by showing taxable income as Nil and book profit under Section 115JB as Rs.2O,46,76,320/-, which is more than regular income. Since the book profit was more than regular income, the same has been taken for the purpose of taxation and tax liability was arrived at Rs.2,31,89,827 l-. ir) Accused No.l /Company is expected to pay the income tax either by way of advance tax as required under Section 2O8 of the Act or at least atong with filing of I I returns in terms of Scction 140-A of the Act. As per Section 143 (1) ol the Act, the tax liabilit5. of Accused No.1 was arrived at Rs.2,83,03,180/- by the respondent/ complarnant and raised a demand under Section i 56 read with Section 143 of the Act and issued an intimation to Accused No. 1/Company under Ex.P2 Accused No. 1 / companv was required to pay the tax demanded within 30 davs of service of notice, but it has committed default v) Respondent/ complainant has issued show-cause notice under Section 221 (11 of the Act under trx.P5, wherein thc appellants vvere asked to show cause as to why penalty should not be levied for committing default in payment of tax. As there was no response from the appellarts, the complainant has issued another show- cause notice dated 01.09.2010 under Ex.P6 under Section 22I (ll read with Section 143-4 of the Act. Finally, one more opportunity was also given by the Department by giving another show-cause notice dated 17.O9.20LO (Ex.P7) under Section 221 (l) read with Section 143-4 of the Act. ..'../ / / t* 5 An opportunity of being heard was also given by the respondent/complainant to Accused No. I /Company fixing the date of hearing as 2l .O9 .2O l O, but there was no response, on which a penalty of Rs.45,00,000/_ was imposed by way of order dated 22.09.2010 (Ex.pg) under Section 22I read with Section 140-4.(3) of the Act and the said proceedings were served on accused No.I on 2s.o9.201o. 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. l/company and other Direcrors under Section 276_C(21 of the Act, as to why prosecution sha_ll not be initiated against them for willful 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.l/company and its directors under Exs.pro to p14 dated 04. 10.20 10 asking them as to why prosecution shall not be initiated under Section 276-C(2) of the Act. Again replies were filed by accused No. 1/company and its Directors/accused 6 Nos.2 to 5 under Exs P15 to Pi9 stating that there was no intention of willful evasion trf tax 5. As Accused No 1/Company alld its Directors/ accused Nos.2 to 5 have not paid the tax in response to the demand notice issued under section 143 (1) of the Act and also failed to pay the penalty, the respondent/ complainant after obtaining sartction order dated 25'02 2011 for launching of prosecution filed a complaint beforc thc Special Court for Economic Offences against accused No l atld accused Nos'2 to 5' the other Directors, alleging that thc-t' hat'e committed offence punishable under Section 276-C(21 read ri'ith Section 278-8 of the Act' as they have willfullY evaded sufficient resources' tax even though theY were having 6. The Special Court for Economic Offences took cognizance of the offences against Accusecl No' 1/Company and its Directors i.e., Accused Nos' 1 to 5, under Section 276-C(21 read with section 278-8 of the Act and charges were framed against them underSection2T6_C(2)readwithSection2Ts-B(| oftheAct anda]ltheaccusedhavepleadednotguiltyofthechargesa]1d claimed to be tried. ...r / -- . :-- /' 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 p2O. After closure of evidence of the complainant, the incriminating evidence elicited against the appellants was read over and explained to them under Section 313 of the Cr.P.C., for which all of them have denied and reported that they did not choose to examine arry witness on their behalf. However, they got marked Exs.Dl to D3 on their behalf. 8. The substance of the evidence of pWl is that after receiving of returns of income tax filed by accused No. l /company, the respondent/complainant has processed the same under Section 143(1) of the Act and issued intimation determining the total taxable income as Rs.20,46,76,320/_ and tax liability as Rs.2,83,03,180/-. The evidence of pW2 /lncome Tax officer is to the extent that he has considered the annuar report of accused No.l/company for the financia.l year 2OOZ_Og under Ex.p3 and bank account statements of accused No.l/Company with the AXIS Bank Limited under Ex.p4 and found that accused No. I /Company did not pay the tax returns in spite of having 3 surplus and sufficient fr-rnds PW3 is the lncome Tax Officer' who has succeecled PW2 Hr s evidence is that he has passed penalty order under Ex P8 imposing penalty of Rs'45 iakhs and raised demand under Ex Pg ir'nd the same u'as ser-ved ou the accused. He also deposed that as there was no response from the accused, show cause notices under Sectiorl 276-C of the Act were issued against all the accused through u'htch accused were informecl that the departmenr is initiating criminal proceedings ald consequently the depart.ment has hled the complaint' g. After full-fledged triai on considering the entire material on record, the trial Court has found Accused No ' I / Company and A2 to A5, the Directors of A1 compary, guiltY of the offences punishable under Sectio ns 276-C(2 an'd' 278-8 of the Act and were sentenced as stated supra' Aggrieved by the said judgment and conviction of Special Judge for Economical Offences at Hyderabad, the present appeals are filed originally before the Metropolitan Sessions Judge Court at Hyderabad' 10. The erstwhile High Court for the States of Telangana and Andhra Pradesh has issued circular ROC'No'34' Criminal Section/2Ol7, dated 28.Oa.2OI7, wherein 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 appea-ls filed by the appellants have been transferred from Metropolitan Sessions Judge Court, Hyderabad, to the High Court for the State of Telangana. Il. The summary of grounds of appeal as filed by the appellants in brief arc as under: a) The trial Court has failed to see that accused No.l/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 tJ'.e presumption under Section 278-E of the Act and erred in holding that the burden of proof is on the accused to prove that there 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 r-- 10 taxes on the ciate of filing returns and as on the date of demand notice ald thzrt the trial Court failed to appreciate that in spite of not having any cogent e','idence to show that all the accused have willfully evaded the tax, the trial Court has concluded that accused have committed u'illful evasion in payment of tax' d) The trial court failed to see that all the assets belong to accused No. 1 / Company rerc attached under Section 28 1-B of the Act and clue to paralyzing of finar-rcia1 activities of accused No.1, tax could not be Paid in time' e) The Trial Court should not have concluded that accused Nos.2 to 5 are responsible for day to day affairs of accused No.l /company arrd should have taken into consideration the notices issued under Section 278-8 of the Act proposing the prosecution did not refer accused Nos' 2 to 5 as principal officers and thereby accused Nos.2 to 5 should have been acquitted' f) The Court below failed to see that when the returns were determined, the department held that since the book profit under Section 115 JB was more than regular income' they have arrived that A1 was liable to pay the tax. However, A1 was not !/ / 11 d i t x I having funds on that date ald hence, the element of mens rea is absent and hence, the Court ought to have acquitted the accused. 12. Heard Sri Vinod Kumar Deshpande, Iearned Senior counsel for the appellants and Sri B. Narasimha Sharma, learned Standing counsel for the income tax department, considered the entire material on record, relevant provisions ol the Act and the authorities cited. 13. Now, the points for determination in these appeals are: I ) Whether the conviction judgment dated O9.OL.2O|4 in C.C.No.ll7 of 2011 on the fiel of Special Judge for Economic Offences at Hyderabad against the appellants can be set aside? 2l Whether the appellants committed willful evasion of tax? accused have 3) To what relieP 14. It is submitted by the appellants in the grounds of appeal that the Respondent - Income Tax Department has not placed sufficient material to show that appellant No. 1 Company has --- t2 committed wrlllul default. to fasten the iiability under Section 276 C of the Income Ta,x Act. The question of \"r'illful delault comes, when appellant No. I Company is having sufflcient funds to its credit and deliberatelv chooses not to pay the tax or diverts the funds for other purposes. According to the appellants they were not having funds to pay the tax, thereby, contended that there was no willful default committed by them 15. PW3 in his cross examination admitted that appellant No.1 Company was not having funds as on the date of filing of the returns. It is also the case of the appellants that the Respondent - Income Tax Department has not placed any material to shoq' that inspite of having sufficient funds, the appellant No' 1 company has deliberately evaded in payment of tax, thereby the appellants were not having any culpable mental state to evade the tax deliberatelY. 16. According to the appellalt No.l company has filed IT returns on due date declaring the income tax as 'nil' by showing book profit under Section 115JB of the Income Tax Act As per the returns, the book profits were found to be more than regular income. According to one of the grounds of appeal, even though / i3 book profits were found to be more than income, as there were no funds in the account of the appellant No.l company, could not pay the tax. The trial Court in its order has observed that though appellant company was not having the tiquid cash as on the date of Iiling of returns, it (company) was having reserves, which were diverted to other concerns without bothering the tax liability on book prolits in terms of Section l i5JB of the Income Tax Act. Thus, even the trial Court has concluded that the appellant No.l 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.1 company has not committed default willfully. 17. It is also admitted fact that all the assets of appellant No. 1 Company were attached under Section 2818 of the Income Tax Act and thereby there was no financial activity of the appellant No.1 Company. Thus, there was no occasion for appellant No.l Company to have any funds to its credit. Further, M/s. Maytas I properties Limited also requested for raising of the attachment of r---I- 4 the propertics in order to execute the sa'1e deeds in favour of the purchasers so that the salc proceeds can be paid directly to the department on behalf of the appellant No' 1 company' M/s MaytaspropertiesLimitedarlsorequestedtoraisetheattachment of five acres belonging to M / s.Chitravathi Agro Farms Private Limited for rlisposal by Revenue Department to be adjusted against the outstanding tax demand of all the 19 companies including appellant No. I Company vide letter dated 1 1'03 20 1 1 1 8. It is also mentioned in the ground of appeal that even though appellant No.1 company has tralsferred the land in favour of subsidiary company, it does not amount to transfer as per Section 45 read with Section 47 (ivl of the Income Tax Act ald thereby appellant No.1 company is not liable to pay tax' Lg. The other aspect raised by the appellants in the grounds of appeal is that when appellant No.l Company has submitted income tax returns, surplus amount was claimed to be exempted under capital gains as per Section 45 read with Section 47 (iv) of the Income Tax Act and thereby the liability of tax should not be levied on the said surplus amount. 15 20. It is also not in dispute that M/s. Maytas properties Limited has requested the Respondent - Income Tax Department for adjustment of TDS refund of income tax and adjustment of refund of income tax dues of Rs. I 1.45 crores vide letters dated 22.O2.2010 and 11.03.2011 in favour of appellant No.1 company. The trial court in its judgment at Page 15 Para No.33 has observed that nothing has been piaced on record to show that the department was in fact any due of any refunds to M/s. Ma1'tas properties Private Limited and rvhether such refunds were fortified by passing appropriate refund orders. However, on perusal of the letters dated 22.O2.2OIO and 11.03.2011 addressed by the M/s. Maytas Properties Private Limited, the endeavour of appellant No.1 company is very clear that in the most possible manner the tax liability was to be paid. This court is of the opinion that if really the intention of appellant No. I company was not to pay tJle income tax and evade the same willfully, the letters dated,22.O2.2O1O and 11.03.2011 addressed by M/s. Maytas Properties Limited requesting the department to adjust TDS refund of the tax liability could not have been addressed. : * tr 4 a i I l ) --- 16 21. Another contention raised in the grounds of appeal is that accused Nos.2 to 5 arc not responsible for day to day affairs of appellant No.1 company and that there is no material placed before the trial Court to establish that accused Nos'2 to 5 are responsible for day to da1' affairs of appellant No' 1 company and that unless there is specific resolution authorizing one of the directors as principle officer, ali the directors of the company are principle offit:ers of the company, thereby, the obsen'ation of trial Court that unlcss restricted by the provisions of the Comp:-rnies Act, all the dtrectors are authorized to do all the acts al]d thereby accused Nos.2 to 5 are pnncipal officer is erroneous' 22. In Akkinapalti Sujatha (smt.t and others v' State of Telangana, Public Prosecutor, High Court of Telangana' Hyderabad and anotherr, wherein it was held as follows: \"10. In POOJA RAVINDDR DEWDASANI u' STATE OF MAHARASHTRAI the Supreme Court made the follouing ob seruations: \"... Time and again, it lns been asserted bg tLtis Court that onLg tlrcse persons who tuere in cLnrg e of and responsible for the conduct of the business of the Compang at the time of I 2o2l (2) ALr {crl.) 21.1 (s.B ) J l7 commission of an offence uill be liable for ciminal action. A Director, uho was not in charge of and was not responsible for the conduct of the business of the Compang at the releuant time, utill not be liable for an offence Under Section 141 of the N.I. Act.\" In National Small Industries Corporation (supra) this Court obserued: Section 141 is a penal prouision creating uicarious liabilitg, and which, as per settled law, must be strictlg construed. It is therefore, not sufftcient to make a bald cursory statement in a complatrtt that the Director (anaged as en accused) is in charge of and responsible to th-e company for th.e conduct of the business of the companA without anything more as to the role of the Director. But tLLe complaint shauld spell out as to tnw and 1 (2014) 16 SCC 1 6 in uthat manner Respondent 7 was in charge of or utas responsible to th.e accused Compang for tlre conduct of its business. This ls in consonance uith strict interpretation of penal statutes, espectallg, wtrcre such statutcs create uicartous liabilitg. A ompang may haue a number of Directors and to make anA or all the Directors as axused. in a complaint merely on the basis of a statement tlnt tley are in charge of and responsible for the anduct of th.e buslness of tLrc compang without anAthing more is 18 not a sufftcient or ttd r:quate fulfillment of tLe requirem.ents IJ nder St:ction ] 4 1' 27. deal the Llnfoftunclt<:1t1, the Higlt Court did issue in o ProPer PersPectiue not and comn-Litte d error in dismi'ssing th'e u)nt petitions bA holding that in the Complaints filed bg the Respondent No' 2, specific auerments utere made against the Appetlant But on the contrary ' takirug the complatnt as a uhole' it can be inferred that in the entire t:ontplatnt' rto speciJic role is attibuted to the AppellanL in the commission of offence ' It is settled lau that to attract a case (Jruder Section 141 of the N-1. Act a specific role must haue been plaged bg a Director of the Compang for fastening uicaious tiabilitg' But in this case' the Appellant uLas neither a Director of the acased Compang nor in charge of or inuolued in the dag to dag affairs of the Compang at the time of commission of the alleged offence ' There is not euen a tt''thisper or shred of euidence on record to shaut that th'ere is ang act committed bg the Appellant from uhich a reasonable inference can be dratun that the Appellant could be uicaiouslg held tinble for the offence witLt tthiclt she is charged'' 11. In POOJA RAVINDER DEVDASANI's case (1 supra)' the Supreme Court alloued tLe quash petition not onlg on the ground thnt there is t 19 no specific role attributed to the'appellant but also on the ground that the appeLlant has resigned as Director much prior to issuance of the clreque. Tlrc Supreme Court taking into consideration its earlier decisions in National Small Industies Corporation u. Harmeet Singh Panital [(2010) 3 SCC 33O]; Gunmala Sales 7 Piuate Ltd. u. Anu Mehta [(2015) -l SCC 1031 and Pepsi Foods Ltd. u. Special Judicial Magistrate ft1998) 5 SCC 3431, reiterated the ratio that a complaint, where no specifrc role is attibuted to the Director - Accused, is liable to be quashed.\" 23. In AIka Khandu Avhad v. Amar Syamprasad Mishra and anotherz, it was held by the Honourable Supreme Court as follows: \"8.7 Section 141 of the NI Act is relating to the offence bg companies and it cannot be made applicable to the indiuiduals. Leamed munsel appeartng on betnlf of the oiginal amplainant has submitted that oCompang' mearls ang bodg corporate and includes, a rtrm or other association of indiuiduals and therefore in case of a joint liabilitg of tuto or more persons it will fall utithin nother association of indiuiduals' and therefore '2o2l (2) ALr (crl XSC) 6e (D.8.) i a --r- 2A u.tith the aid of Se,:'tion 1a1 of the NI Act, the appellant tuho ls joitttltl liable to pag the debt, can be prosecuteci. The u foresaid cannot be accepted. Two priunte indiuiducrls cannot be said to be \"other association of indiutrluals\". Therefore, there is no question of inuokirul Section 1a1 of the NI Act against the appellant, as tLLe liabilitg is the indiuidual liabilitg (mag be a joint liabilities), but cannot be said to bc the offence committed bA a compan.A or bg it carporate or firtn or other associations of indutithLaLs. The appellant herein is neith.er a Director nor a partner in any firm uho has issued the cheque. Therefore, euen the appellant cannot be' conuicted uith the aid of Section 141 ofthe NI Act. Therefore, the HighCourt hns committed a graue error in not quashing the cotrlplaint against the appellant for tle offence punishable under Section 138 r/u Section 141 of the NI Act. TtLe ciminal complaint filed against the appellant for the offence punishable under Section 138 r/ut Section 141 of the NI Act, therefore, can be said to be abuse of process of law and therefore the same is required to be quaslrcd and set aside. \" 24. On considering the ratio laid down by the Honourable Apex Court in the decisions reported above, it is clear that the prosecution must specifically mention in the complaint as to the ;t--/ ffi :-* ,t' Fsi . '*,. /'/ J 2t role played by the appellant in the management of the company. Merely saying that the appellants are responsible for the day-to- day affairs of the Accused No.1 Company is not sufficient. It is a-lso expected to allege that the appellants are in-charge of a 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.1 company will not serve the purpose. 25. Appellant No. I company has filed an application under Section 39 I of the Code of Criminal Procedure along with the appeal for receiving Order passed by the Appellate Tribunal in ITA.No.0895/CrT (A)-12, HYD 2014-15, dated 3t.12.2014. It is submitted by the learned counsel for the appellants that the order passed by the Income Tax Appellate Tribunal dated 31.12.2014 the Assessing Offrcer has to re-compute the income of the assessee. Thus, the question of tax liability as per tJee fresh assessment would come into question. Hence, the prosecution initiated by the Income Tax Department on the basis of order, which is not in existence is not maintainable. 22 26. Appellant No.1 company has filed another application under Section 39 1 ol the Corle of Criminal Procedure along with the appeal for receiving (1) Dossier Reports of the appellant company for the assessment ,vear 2008-09, (2) Files pertaining to TRO Proceedings pertaining to the appellant compa-ny and (3) entire proceedings pertaining to the sanction order in the appeal' It is submitted by the learned counsei for the appellants that sanction was accorded for prosecution without assigning cogent reasons and in order to prove that the appellants have not wiltfully evaded the pavmer-rt of taxes, the files pertaining to the said order and aII communications betr'l'een the assessing officer and the sanctioning authority are crucial documents' 27 . Considering the same and on hearing both sides' this Court is of the opinion that these documents are very relevant to consider the grounds raised in the appeals on hand' thereby these docum ents are recerved' 28. In view of the above discussion and on perusal of the grounds of appeal, it is evident that the appellants have raised certain substantial issues including that the appellant Company has not committed willful dcfault, as admittedly there were no - c2 funds to the credit of appellants; the request of M/s' Maytas Properties Limited to raise [he attachment of lands, so that sa]e proceeds can be paid duly towards income tax on beha-lf of the appellants, but same was not considered; the appellant Nos.2 and 3 are not the principle officers and thereby they cannot be held to be responsible for the acts committed by the company; appellant No.l company has filed IT returns on due date declaring the income tax as 'nil\" as book profit under Section 115iB of the lncome Tax Act. Further, the appellants have filed petitions under Section 39i of the Code of Criminal Procedure to receive ( 1) Dossier Reports of the appellalt company for the assessnlent year 2OO8'O9, (2) Files pertaining to TRO Proceedings pertaining to the appellant company, (3) entire proceedings pertaining to the sanction order in the appeal and (4) Order passed by the Appellate Tribunal in ITA.No.O8gs/ClT (A)-12, HYD 2014-15, dated 31.12.2OL4 and accordingly the said documents were received. 29. Considering the above, this Court is of the considered opinion that the trial Court is required to be directed to re-consider all the issues that are raised by tl.e appellant in this .1 il il 24 appeal and the documents liled under Section 39 1 ol the Code of Criminal Procedure and qive linding afresh by giving opportunrty to both sides. 30. Accordingly, both thesc criminal appeals are disposed of setting aside the conviction and sentence dated 09.01.20 14 recorded by Special Court for Economical Offences at Hyderabad arrd C.C.No. 117 of 2Ol1 is remanded back to the trial Court with a direction to consider the complaint afresh in accordance with iaw, after giving an opportunity to both sides to adduce further evidence, if any. However. thc trial Court shall not be influenced by the comments ald observations, if any, made by this Court touching merits of the case rvhile passing orders' As a sequel, pending miscellaneous applications, if arry, shall stand closed Sd/- M, VIJAYA BHASKAR JO]NT REGISTRAR //TRUE COPY// SECTION OFFICER To 1. The Special Judge for Economic Offences , at Hyderabad (With Records if any) 2. The Deputy Commissioner of lncome Tax , Central Circle -8, Aayakar Bhavan, Room No. 805, 8'n Floor, Basheerbagh, Hyderabad - 500004. 3. One CC to SRl. G. ASHOK REDDY, Advocate IOPUCI 4. One CC to SRl. B NARASIMHA SARMA , SC for t.T. Dept. tOpUCI 5. Two CD Copies HIGH COURT DATED:1710612022 Common Judgment CRIMINAL APPEAL (TR) Nos : 1I and 62 OF 2018 DISPOSING OF THE BOTH CRL.APPEALS. ii [?3 IE il i2 v "