Tax source default prosecutions require proper authorisation, specific pleadings, and valid procedure; vague complaints and imprisonable offences cannot convict companies.

Complaints for failure to deduct and deposit tax at source had to be instituted in compliance with the statutory authorisation requirement, and complaints filed through counsel without clear proof of proper institution were vulnerable. The criminal procedure followed was also unlawful because particulars of the offences were stated, pleas recorded, and sentences imposed in the absence of the complainant and, in several instances, the accused, without a valid order dispensing with attendance under the Code of Criminal Procedure, 1898. Each tax default was a distinct offence and vague, omnibus allegations without employee-wise and date-specific particulars could not sustain conviction. A continuing default could attract section 276B after it came into force, but a company or other juridical person could not be convicted under a provision mandating imprisonment.

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Issues: (i) Whether complaints for failure to deduct and pay tax at source were validly instituted and could sustain summoning and conviction when filed through counsel on behalf of an Income-tax Officer authorised by the Commissioner. (ii) Whether, in the absence of the complainant or his counsel, the Magistrate could state particulars of the offences to the accused under section 242 of the Code of Criminal Procedure, 1898, and proceed to record guilty pleas and sentence them under section 247 of that Code. (iii) Whether omnibus allegations covering numerous deductions without particulars of each employee, date and default could support conviction for distinct offences under the Income-tax Act, 1961. (iv) Whether continuing defaults that survived beyond 1 April 1968 attracted section 276B of the Income-tax Act, 1961, and whether companies or other juridical persons could be convicted under that provision when imprisonment is mandatory.

Issue (i): Whether complaints for failure to deduct and pay tax at source were validly instituted and could sustain summoning and conviction when filed through counsel on behalf of an Income-tax Officer authorised by the Commissioner.

Analysis: Section 279(1) permitted prosecution only at the instance of the Commissioner, which was satisfied if the Income-tax Officer acted under authorisation. The record, however, did not show proper scrutiny by the trial court that the complaints were competently preferred in the manner required by the statute, and the complaints themselves were presented by counsel rather than personally instituted in a manner showing due compliance with the authorisation requirement.

Conclusion: The complaints were not properly dealt with as to statutory institution requirements, which weighed against sustaining the convictions.

Issue (ii): Whether, in the absence of the complainant or his counsel, the Magistrate could state particulars of the offences to the accused under section 242 of the Code of Criminal Procedure, 1898, and proceed to record guilty pleas and sentence them under section 247 of that Code.

Analysis: Section 247 required the complainant's presence at the stage when the accused appeared, unless the court recorded a proper order dispensing with attendance and giving reasons. Section 242 required particulars of the offence to be stated to the accused, not merely to counsel, unless the accused was lawfully exempted from appearance. The trial records showed that particulars were stated and pleas were taken when the complainant and, in several cases, the accused were absent, and no valid order under section 247 justified that course. The illegality was not curable under section 537 because it went to the jurisdiction and legality of the trial procedure.

Conclusion: The procedure adopted under sections 242 and 247 was illegal and vitiated the convictions.

Issue (iii): Whether omnibus allegations covering numerous deductions without particulars of each employee, date and default could support conviction for distinct offences under the Income-tax Act, 1961.

Analysis: Each failure to deposit tax deducted from a particular salary on the due date constituted a separate offence. The complaints and notices did not specify the employee-wise deductions, dates of deduction, or the individual defaults. They merely aggregated amounts over financial years. Such pleadings did not disclose distinct offences with sufficient certainty to found a lawful conviction, and section 234 of the Code of Criminal Procedure, 1898 also could not justify a composite trial on vague and undisclosed defaults.

Conclusion: The omnibus complaints were defective and could not sustain the convictions.

Issue (iv): Whether continuing defaults that survived beyond 1 April 1968 attracted section 276B of the Income-tax Act, 1961, and whether companies or other juridical persons could be convicted under that provision when imprisonment is mandatory.

Analysis: A default in depositing tax deducted at source was a continuing omission, and where it subsisted after section 276B came into force, that provision applied to the continuing offence. However, section 276B mandated rigorous imprisonment and fine; therefore a company or other juridical person, which cannot undergo imprisonment, could not be validly prosecuted and convicted under that section. The trial court also imposed imprisonment in default of fine on companies, which was legally impermissible.

Conclusion: Although continuing defaults could attract section 276B, the convictions could not stand because juridical persons were improperly convicted under a provision mandating imprisonment.

Final Conclusion: The convictions were vitiated by defective complaints, illegal procedure in stating particulars and taking pleas, and misapplication of the penal provision to juridical persons, so the recommended enhancement was refused and the convictions were set aside.

Ratio Decidendi: In prosecutions for failure to deduct or pay tax at source, each distinct default must be specifically alleged and proven, the accused must be proceeded against through lawful compliance with sections 242 and 247 of the Code of Criminal Procedure, 1898, and a provision mandating imprisonment cannot be used to convict a juridical person incapable of such punishment.

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