Vicarious criminal liability for company offences requires specific pleadings that a director was in charge of business at the relevant time.

A director who had resigned before the relevant default period could not be prosecuted for the company's alleged offence under Section 276B because the record showed she was no longer in office when liability arose. Vicarious liability under Section 278B also required specific pleadings that she was in charge of and responsible for the company's business at the relevant time, or that the offence occurred with her consent, connivance, or neglect. As the complaint alleged only that she was a director and contained no such foundational averments, the prosecution was not legally sustainable and was set aside.

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Issues: (i) Whether the petitioner, having ceased to be a director before the relevant assessment year, could be prosecuted for the alleged offence under Section 276B of the Income-tax Act, 1961. (ii) Whether the complaint contained the requisite averments to fasten liability on the petitioner under Section 278B of the Income-tax Act, 1961.

Issue (i): Whether the petitioner, having ceased to be a director before the relevant assessment year, could be prosecuted for the alleged offence under Section 276B of the Income-tax Act, 1961.

Analysis: The documentary material showed that the petitioner had resigned as a director before the period relevant to the alleged default. In a prosecution founded on company liability, continuation of proceedings against a person who was not in office at the relevant time could not be sustained when the record itself established cessation of directorship.

Conclusion: The issue was answered in favour of the petitioner. The prosecution could not continue against her on the basis that she was a director at the relevant time.

Issue (ii): Whether the complaint contained the requisite averments to fasten liability on the petitioner under Section 278B of the Income-tax Act, 1961.

Analysis: Vicarious criminal liability under Section 278B is not automatic for every director. The complaint must contain specific averments that the person was in charge of and responsible for the conduct of the business of the company at the relevant time, or that the offence occurred with consent, connivance, or neglect. The complaint in question contained no such allegation against the petitioner and merely described her as a director. The legal position on analogous vicarious liability provisions also required such foundational pleadings.

Conclusion: The issue was answered in favour of the petitioner. The complaint was deficient and could not sustain the prosecution under Section 278B.

Final Conclusion: The criminal proceedings against the petitioner were not legally maintainable and were set aside on both grounds.

Ratio Decidendi: In a company prosecution, vicarious liability cannot be presumed against a director unless the complaint specifically pleads that the person was in charge of and responsible for the company's business at the relevant time or that the statutory requirements for deeming liability are otherwise satisfied.

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