Case Note & Summary
The Income Tax Department filed a complaint under Section 200 of Cr.P.C. alleging that accused No.1 (Company) and other accused, including the respondent (Managing Director), failed to remit TDS of Rs.4,84,69,841/- deducted from employees' salaries, thereby committing an offence under Section 276B of the Income Tax Act, 1961. The Trial Court discharged the respondent (accused No.2) vide order dated 01.10.2019 in C.C. No.77/2018, holding that there was no material to show his involvement. The Income Tax Department challenged this discharge in revision before the High Court. The High Court heard both sides and examined the complaint and documents. It found that the complaint specifically alleged that the respondent was the Managing Director and principal officer responsible for TDS compliance, and that he had signed the TDS returns. The High Court held that at the stage of framing of charge, only a prima facie case is required, and the Trial Court erred in discharging the accused without considering the material on record. The revision petition was allowed, the discharge order was set aside, and the Trial Court was directed to proceed with the case.
Headnote
A) Criminal Law - Discharge - Section 276B, Income Tax Act, 1961 - Prima Facie Case - The Trial Court discharged the accused (Managing Director) for non-remittance of TDS. The High Court held that at the stage of framing of charge, only a prima facie case is required, and the material on record showed the accused was the Managing Director and principal officer responsible for TDS compliance. The discharge was set aside. (Paras 2-6) B) Criminal Procedure - Revision - Section 397 read with 401, Cr.P.C. - Interference with Discharge Order - The High Court, in revision, can interfere if the Trial Court's order is perverse or based on no material. Here, the Trial Court ignored the complaint allegations and documents showing the accused's role, warranting interference. (Paras 2-6)
Issue of Consideration
Whether the Trial Court was justified in discharging the accused (Managing Director) for the offence under Section 276B of the Income Tax Act, 1961, for non-remittance of TDS, when there was prima facie material showing his role as principal officer.
Final Decision
The revision petition is allowed. The order dated 01.10.2019 passed by the Special Court for Economic Offences, Bengaluru, in C.C. No.77/2018 discharging the respondent is set aside. The Trial Court is directed to proceed with the case in accordance with law.
Law Points
- Section 276B of Income Tax Act
- 1961
- vicarious liability of directors
- prima facie case at stage of framing of charge
- discharge only when no material
