2023 (4) TMI 900 - HC - Income Tax

Court dismisses challenges to delayed tax complaints under Income Tax Act. Age exemption denied; principal officer status determined at trial.

M/s. Bharathiraja Hospitals and Research Centre Pvt. Ltd., Dr. C. Natesan, Dr. Vasanthi Natesan Versus Deputy Commissioner of Income Tax, TDS Circle – 1, Chennai

The Court dismissed the Criminal Original Petitions challenging complaints under the Income Tax Act for delayed tax deposit. Petitioners above 70 sought ... Offence u/s 276 B r/w 278 B - after deducting the tax at source, the petitioners failed to deposit the tax to the credit of the Central Government within the prescribed time - Proceedings against the company and Persons aged above 70 years - Department had issued a circular stating that the instruction that a person above 70 years shall not ordinarily be prosecuted is subject to Clause 4 in the said circular which states that notwithstanding the other provisions, the Commissioner of Income Tax (CIT) can sanction the prosecution keeping in view the nature and magnitude of the offence. HELD THAT:- The general rule that persons above 70 years cannot be prosecuted is subject to exceptions and in this case, the Commissioner of Income Tax (CIT) considered that this is a fit case for launching prosecution. The other submission of the learned counsel for the petitioners is that there is no averment to show as to how petitioners are either principal officer or persons in charge of and responsible for the conduct of the business of the company. This Court finds that this issue was decided by the Honourable Apex Court in Madhumilan Syntex Ltd., and others vs. Union of India and another [2007 (3) TMI 670 - SUPREME COURT]. Hence, this Court is of the view that the points raised by the petitioners have to be adjudicated only before the trial Court. The petitioners 2 and 3 are at liberty to submit before the trial Court that their case would not fall within the exceptions and that they are entitled to the benefit of the circular which restricts initiation of prosecution against persons above 70 years of age. It is needless to say that they would also be entitled to show that they were not in charge and responsible to the company for the conduct of its business, before the trial Court. Therefore, this Court is not inclined to entertain these petitions. Since the petitioners 2 and 3 are admittedly aged above 70 years, their appearance before the trial Court is dispensed with unless, the learned Magistrate considers their appearance necessary for the progress of the Trial. Criminal Original Petitions are dismissed Issues Involved:The judgment involves challenges to complaints under Section 276 B r/w 278 B of the Income Tax Act, 1961 for delayed deposit of tax deducted at source, with a focus on the age of the petitioners and their roles as principal officers.Issue 1: Prosecution of Petitioners 2 and 3The petitioners argued that, being above 70 years, they should not be prosecuted as per CBDT instructions. They cited relevant judgments and circulars to support their stance. However, the Income Tax Department contended that the Commissioner of Income Tax had sanctioned the prosecution based on the nature of the offence. The Court noted that the general rule exempting individuals above 70 from prosecution has exceptions, and the Commissioner's decision was valid in this case. It was emphasized that the determination of whether the petitioners were principal officers should be made during the trial, as per legal precedent.Issue 2: Role of Petitioners as Principal OfficersThe petitioners contended that there was no allegation in the complaints to show that they were principal officers of the company. They referenced a previous judgment and argued that without evidence of their roles, prosecution should not proceed. The Court referred to a Supreme Court judgment which stated that the determination of a person's responsibility under the Act should be addressed during the trial. Therefore, the Court held that this issue should be decided by the trial Court, allowing the petitioners to present their case and establish their lack of involvement in the company's business conduct.Separate Judgment:The Court dismissed the Criminal Original Petitions, allowing the petitioners 2 and 3, who were above 70 years, to be exempt from appearing before the trial Court unless deemed necessary by the Magistrate for the trial's progress. The decision emphasized that the issues raised by the petitioners should be addressed during the trial proceedings, where they can assert their arguments regarding age exemption and lack of involvement in the company's business operations.