TaxTMI 
TaxTMI 
TaxTMI 
1994 (3) TMI 9
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....), Special Range, Trichur. Annexure-A in these cases is a copy of the complaint laid against the firm and the petitioners as its partners. In the complaints it is alleged that the first accusedfirm failed to deduct income-tax at source during the assessment years 1983-84 to 1988-89 as required under section 194A(1) in respect of interest credited to the accounts of the firm without reasonable cause or excuse and that the firm as also the petitioners as partners who were in charge of and responsible for the conduct of the business of the firm have committed offences punishable under section 276B(ii) read with section 278B of the Income-tax Act, 1961. But then it is submitted by the petitioners that though they are partners of the firm they a....
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....e company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly." Under the proviso to sub-section (1), no person shall be liable for any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence with respect to commission of the offence. Under sub-section (2),-- "....where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be de....
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..... By virtue of section 2(35) of the Act, partners do not come within the definition of "principal officer" unless the Income-tax Officer had served notice of his intention to treat them or any one of them as the principal officer of the firm connected with the management or administration. It seems necessary that the complainant must allege and show by some acceptable materials that the partners concerned were in charge of and responsible for the conduct of the business of the firm to make them also vicariously responsible along with it. A mere allegation to that effect will not be sufficient. There should be credible materials to show their active involvement in the conduct and management of the business of the firm. Short of stating that ....
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....o be vicariously liable. In these circumstances, therefore, we find ourselves in complete agreement with the argument of the High Court that no case against the directors (accused Nos. 4 to 7) has been made out ex facie on the allegations made in the complaint and the proceedings against them were rightly quashed. " The order of the High Court relating to the directors was quashed. The proceedings were ordered to continue against the company and the manager. In Municipal Corporation of Delhi v. Purshotam Dass Jhunjunwala, AIR 1983 SC 158, the facts were slightly different. The Food Inspector, Municipal Corporation of Delhi, purchased samples of milk toffees for analysis and they were found adulterated by the public analyst. They were manu....
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....ision makes it abundantly clear that, if the payer is a company, the company itself including the principal officer thereof will be the 'person responsible for paying'. If that be so, it is fairly apparent that the company itself including the principal officer thereof were liable for prosecution for the alleged contravention. Section 2(35) would then step in to find out as to who the principal officer would be. Section 2(35) makes it clear that the partners of the firm do not fall within that fold unless the Income-tax Officer had served a notice on any of them of his intention of treating them as the principal officer of the firm, connected with the management or administration thereof. Under section 278B, the basic requirement is that th....