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Issues: (i) Whether the criminal prosecution in C.C. No.29/2015 against the petitioner for alleged non-remittance of TDS (offences under Section 276B read with Section 278B of the Income-tax Act, 1961) should be quashed; (ii) Whether the Official Liquidator (respondent No.3) is required to consider and act upon the petitioner's representation dated 20.09.2018; (iii) Whether the respondent No.2 (Assessing Officer) should be directed to reassess the respondent No.3 Company for the financial year 2010-11 or whether the petitioner has an alternative statutory remedy.
Issue (i): Whether the criminal prosecution in C.C. No.29/2015 against the petitioner should be quashed.
Analysis: The assessment orders under Section 201(1) and 201(1A) of the Income-tax Act, 1961 remained in force and steps for recovery and prosecution under Sections 276B and 278B are permissible while an assessment order stands. The petitioner had avenues of statutory appeal and the appellate remedies were not pursued to finality; the Tribunal dismissed the petitioner's challenge in limine on locus standi grounds. Quashing of prosecution would require demonstrating absence of legal basis for proceedings or that statutory remedies foreclosed judicial review; neither consequence was established to the extent of wholly terminating prosecution.
Conclusion: The petition for quashing the criminal prosecution is not granted; however, precipitative action against the petitioner is restrained temporarily pending consideration of the representation by respondent No.3.
Issue (ii): Whether the Official Liquidator (respondent No.3) is required to consider and act upon the petitioner's representation dated 20.09.2018.
Analysis: The Official Liquidator assumed management of the company upon winding up under the Companies Act, 1956 and thereby bears responsibility to consider challenges to assessment orders affecting the company's liabilities. The petitioner presented a representation asserting an erroneous TDS declaration and requested prosecution/assessment be revisited; the Official Liquidator had not acted. A direction to consider the representation is a remedial measure within supervisory jurisdiction to address the procedural lacuna that placed the petitioner in a catch-22 between appellate non-prosecution and criminal exposure.
Conclusion: Respondent No.3 (Official Liquidator) is directed to consider the petitioner's representation dated 20.09.2018 and take appropriate steps within two months of receipt of a certified copy of the order; respondent No.3 may consider filing appeals against the orders of the Appellate Authority and the Income Tax Appellate Tribunal while doing so.
Issue (iii): Whether respondent No.2 should be directed to reassess the company for FY 2010-11 or whether the petitioner must pursue statutory remedy under Section 260A of the Income-tax Act, 1961.
Analysis: Reassessment or modification of assessment is a remedy under the Income-tax statute and the statutory appellate route under Section 260A is the appropriate forum to challenge orders of the Appellate Authority and the Tribunal. The Court is not empowered in writ proceedings under Article 226 to substitute the statutory appellate mechanism where the petitioner has available remedies. The petitioner, as former director, had locus to pursue the statutory appeal earlier and remains obliged to invoke Section 260A or have the Official Liquidator do so on behalf of the company.
Conclusion: The court does not direct reassessment; the petitioner is permitted and directed to file an appropriate appeal under Section 260A of the Income-tax Act, 1961 within the prescribed period and is informed that until respondent No.3 considers the representation, respondent Nos.1 and 2 shall not take precipitative action against the petitioner; if no appeal is filed within two months, criminal proceedings shall continue.
Final Conclusion: The petition is allowed in part by directing respondent No.3 to consider the representation and by granting a limited interim restraint on precipitative action against the petitioner pending that consideration; the petition is otherwise refused and statutory appellate remedies under the Income-tax Act, 1961 remain available to the petitioner.
Ratio Decidendi: Where a company is wound up and an Official Liquidator is in charge, the Official Liquidator must consider bona fide representations to prosecute or challenge tax assessments affecting the company; when statutory appellate remedies under the Income-tax Act, 1961 are available, a writ court will not substitute those remedies but may direct the Official Liquidator to act and grant a limited interim restraint on precipitative action.
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