The Bombay High Court addressed a group of criminal writ petitions challenging the prosecution of directors of Hubtown Ltd. for delayed Tax Deducted at Source (TDS) payments. The complaints were filed under Section 279(1) of the Income Tax Act, accusing the company and its directors of failing to remit TDS within the prescribed timeframe. The Court scrutinized whether the directors could be held vicariously liable without clear statutory designations as "Principal Officers" and whether the delayed payments, which were eventually made, warrant criminal prosecution under Section 276B.

1. Introduction:

   • Overview of the legal challenge by Hemant Mahipatray Shah and others against prosecution under the Income Tax Act.
   • Mention of the consolidated petitions arising from the same set of facts.

2. Background and Facts:

   • Details of the TDS amounts delayed by Hubtown Ltd. during the relevant financial years.
   • The issuance of show-cause notices and subsequent prosecution initiated by the Income Tax Department.

3. Legal Grounds for the Petitions:

   • The petitioners argued that they were not designated "Principal Officers" under the Income Tax Act and thus should not be held vicariously liable.
   • Discussion of the statutory requirements under Section 278B, including the necessity of demonstrating that the directors were "in charge" and responsible for the company’s business.

4. Key Legal Issues Examined:

   • Analysis of Section 276B, focusing on whether delayed payment constitutes "failure to pay" under the amended provisions.
   • The significance of the 1997 amendment, which shifted the focus from mere delay to actual failure to remit TDS.

5. Arguments Presented:

   • Counsel for the petitioners emphasized the absence of statutory notices designating the directors as Principal Officers.
   • Counsel for the respondents cited relevant Supreme Court decisions supporting prosecution for delayed TDS deposits.

6. Court’s Observations:

   • The Court examined the procedural lapses, including the absence of notices treating the directors as "Principal Officers."
   • Discussion of whether the delayed TDS payments, later deposited with interest, qualify as prosecutable offenses under Section 276B.

7. Judgment and Conclusion:

   • The Court’s conclusion on the legality of the prosecution and the extent of the directors' liability under the Income Tax Act.
   • The final ruling on whether the petitions should be allowed, potentially quashing the prosecution.