Director liability for tax default requires specific material showing control, responsibility, or consent, connivance, or neglect.

Directors cannot be prosecuted for alleged TDS default unless the complaint and supporting material specifically show that they were in charge of and responsible for the company's business at the relevant time, or that the default occurred with their consent, connivance or neglect. General attribution to the company and its directors is insufficient where the record indicates that compliance was handled by local officers and consultants and the directors were concerned mainly with policy matters. A prompt deposit after the default was noticed further weakened any inference of deliberate involvement. On these facts, the prosecution against the petitioners was quashed and the cognizance order could not stand.

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Issues: Whether the criminal proceedings and cognizance for alleged default in depositing tax deducted at source were liable to be quashed against the directors in the absence of specific material showing that they were in charge of and responsible for the conduct of the company's business or that the default occurred with their consent, connivance or neglect.

Analysis: For fastening liability on directors under the provision dealing with offences by companies, there must be a clear basis showing that the individual directors were in charge of and responsible for the conduct of the business at the relevant time, or that the offence was committed with their consent, connivance or neglect. The materials referred to in the complaint attributed the default generally to the company and its directors, but the record indicated that the day-to-day affairs and income-tax compliance were handled through officers and consultants at Patna, while the petitioners were residing elsewhere and were concerned with policy matters. The delayed deposit was made soon after the default came to light, which further weakened the inference of deliberate involvement by the petitioners. In these circumstances, the allegations did not sufficiently establish the statutory ingredients required to continue the prosecution against the petitioners.

Conclusion: The proceedings were liable to be quashed against the petitioners, and the cognizance order could not be sustained as against them.

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