Vicarious criminal liability for TDS defaults requires specific averments that a director was in charge at the time of offence.

Vicarious criminal liability under Section 278B of the Income-tax Act arises only where the complaint specifically alleges that the accused was in charge of, and responsible for, the company at the time the offence was committed. General and collective allegations are insufficient, and the complaint must set out a bare minimum factual foundation before directors can be proceeded against. The continuing-offence argument was rejected because liability under the provision is tied to the time of commission of the default; a director who joined later is not automatically liable unless the statute and the complaint clearly support that result. On the stated facts, the complaint did not disclose a prima facie case against the petitioners.

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Issues: Whether the complaint disclosed the requisite averments to fasten vicarious criminal liability on directors under Section 278B of the Income-tax Act, 1961, and whether the alleged default in deduction or remittance of TDS could be treated as a continuing offence so as to cover directors who joined the company later.

Analysis: Liability under Section 278B attaches only to persons who were in charge of, and responsible for, the company at the time the offence was committed. The complaint contained only general allegations against the accused collectively and did not contain any specific averment showing that either petitioner was in charge of the company's business when the default occurred. The Court also applied the settled principle that a complaint seeking to fasten vicarious liability must contain the bare minimum factual foundation, as explained in the context of identically worded provisions governing company offences. The argument that the default was a continuing offence was rejected. The Court held that the language of Section 278B points to liability at the time of commission of the offence, and that even if continuation of default may be relevant for some purposes, it would not automatically extend criminal liability to directors who were not on the board when the company first committed the offence. On the facts, no demand had been raised for the later period and the complaint did not make out any specific offence against the petitioners.

Conclusion: The complaint did not disclose a prima facie case against the petitioners, and they could not be proceeded against under Section 278B for the alleged TDS default.

Ratio Decidendi: Vicarious criminal liability for company offences can be imposed only where the complaint specifically alleges that the accused was in charge of and responsible for the company at the time of commission of the offence; a later joining director is not automatically liable on a continuing-offence theory unless the statute and complaint clearly support such liability.

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