Delhi District Court
Ito vs . Elbee Services Ltd. & Ors. on 7 August, 2013
IN THE COURT OF SH. DEVENDRA KUMAR SHARMA
ADDL. CHIEF METROPOLITAN MAGISTRATE (Spl. Acts) CENTRAL TIS
HAZARI COURTS, DELHI
ITO VS. ELBEE SERVICES LTD. & ORS.
CC NO. 46/4
ORDER ON CHARGE
1.Vide this order I shall dispose the application filed on behalf of accused no. 4 for discharge u/s 245 Cr.PC as well as pass the order on charge.
2. Succinctly stated, the facts of the case are that the present complaint was filed u/s. 276B r/w Section 279 of the Income Tax Act, 1961(hereinafter to be referred as I.T Act) with the allegation that on verification of records, it was found that the accused company did not file any TDS return for the financial year 200102. Therefore, a survey operation u/s. 133A of the I.T. Act was carried out on 22.10.02. During the course of survey operation, the factum of non deposit of TDS was found correct. Further it was noticed that said mistake was not a solitary mistake arising out of oversight or ignorance of law but it is well calculated strategy to defraud the revenue. This was clear from the books of the accused company that entire TDS deducted for financial year 200102 and from the period 01.04.02 till 21.10.02 under several heads was not deposited in Govt. account. Statement of Mr. Dipyendu Roy, Accounts Manager of the company was recorded and it was stated on behalf of accused that due to financial crisis and acute shortage of funds, same could not be ITO VS. M/S. ELBEE SERVICES LTD. 17 deposited according to provisions of the Act. The accused company was supposed to deposit the TDS but it failed to discharge its duty. Further during the course of survey operation, it would came to the knowledge that accused company is not depositing the TDS at its various locations i.e. Mumbai, Chennai and Kolkata as well and is thus a habitual and willful defaulter. Hence, present complaint was filed.
3. In support of allegation in the complaint, complainant Mr. Kamal Khanna was examined as PW1 who deposed moreover the same facts as alleged in the complaint. Mr. Ramesh Chander was examined as PW2. He also deposed on the line of complainant. Witness PW1 proved the sanction order dt. 13.05.05 as Ex.PW1/A and complaint as Ex.PW1/B. He also proved the statement of Mr. Dipyendu Roy, Account Manager of the accused company as Ex.PW1/C. Witness PW2 proved the documents i.e. survey operation u/s 133A of IT Act as Ex.PW2/A, proceedings dt. 21.10.02 as Ex.PW2/B and statement of Account Manager of the accused company already Ex.PW1/C.
4. An application on behalf of accused no. 4 was filed after completion of pre charge evidence for discharge stating therein that applicant was only a nominee director and thus, have no role to play in day to day affairs of the company and there is no evidence against the applicant/accused no. 4. In support of his claim and contention, applicant/accused no. 4 has placed reliance upon the judgments as under:
ITO VS. M/S. ELBEE SERVICES LTD. 27
1. S.M.S Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr reported in 2005 III AD (CR.) S.C. 593.
2. Raminder Kaur Narula Vs. Prem Chemicals P. Ltd. reported in Crl. Misc. Case 2690/2004.
3. Vidyawati Kanodia Vs. Local Health Authority reported in 2002 Cr. L.J. 471
4. Shakti Travels & Tours Vs. State of Bihar & Anr. reported in 2003 SCC (Cri) 1217.
5. Pepsi food Ltd. & Ans. Vs. Spl. Judicial Magistrate & Ors. reported in 1998 SCC (Cri.) 1400.
6. Sabitha Ramamurthy & Anr. Vs. RBS Channabasavaradhya reported in 2006(3) JCC (NI) 247
7. J.B. Garg Vs. State reported in 2006(3)JCC 245
8. Saroj Kumar Poddar Vs. State (NCT of Delhi) & Anr. reported in 2007II AD (SC) 61
9. J.N. Bhatia & Ors. (Col.) Vs. State & Anr. reported in 2007 III AD (Delhi) 142.
10. SMS Pharmaceuticals Ltd. Vs. Neeta Bhall & Anr. reported in 2007 (1) JCC (NI) 73.
11.N.K. Wahi Vs. Shekhar & Ors.(SC) reported in 2007(1) JCC (NI) 112.
12.K. Srikanth Singh Vs. North East Securities Ltd. & Anr. reported in 2007 IV AD (Cr.) SC 357.
13.Maksud Saiyed Vs. State of Gujrat & Ors. reported in 2007 V AD (Cr.) SC
277.
14.Ashwani Dewan Vs. State & Anr reported in 2007 (2) JCC (NI) 204.
15.Charanjit Singh Vs. DB. Merchant Banking Services reported in 2001[1] JCC (DEL) 297.
16. Order passed by Hon'ble High Court of Delhi in case titled as Sandeep Jain Vs. M/s. ECE Industries in Cr. MC No. 1822/13 dt. 06.05.13.
5. On the other hand complainant has placed reliance upon the judgment titled as Geethanjali Mills Ltd. Vs. V. Thiruvengadathan.
6. I have heard the rival submissions advanced on behalf of parties as well as written arguments filed on behalf of parties. I have gone through the relevant case law.
ITO VS. M/S. ELBEE SERVICES LTD. 37
7. Before considering the rival contention, it would be appropriate to reproduce the relevant provision for ready reference of I.T. Act:
"[276B. Failure to pay tax to the credit of Central Government under Chapter XIID or XVIIB. If a person fails to pay to the credit of the Central Government,
(a) the tax deducted at source by him as required by or under the provisions of Chapter XVIIB; or
(b) the tax payable by him, as required by or under,
(i) subsection (2) of section 115O; or
(ii) the second proviso to section 194B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.]
279. Prosecution to be at the instance of [Chief Commissioner or Commissioner]. A person shall not be proceeded against for an offence under [section 275B,] section 276, section 276A, section 276B, section 276BB, section 276C, section 276CC, section 276D [section 277, section 277A or section 278], except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority.
"[278E. Presumption as to culpable mental state.(1) In any prosecution for any offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.
8. The present case was filed against the accused no. 1 being the company and accused no. 2 to 4 being the director of the company as per allegation in the complaint. Accused no. 3 has already been discharged by the Ld. Predecessor vide order dt. 24.04.12.
ITO VS. M/S. ELBEE SERVICES LTD. 47
9. Case of the accused no. 4 is that he was only the nominee director and thus was not involved in day to day affairs of the company. In support of his contention, it is submitted that neither in the complaint nor even in the examination in chief of PW1 and PW2 any role has been assigned to the accused regarding his involvement in day to day affairs of the company. It is further submitted that even there is no averment in the complaint or in the evidence at precharge stage regarding the status of accused no. 4. Even witness PW1 in his testimony has admitted that in the complaint, it is not mentioned as to in which capacity accused no. 4 has been implicated though he has stated that that he has enquired from the Mumbai office regarding status of accused no. 4 in accused company. A list was sent from Mumbai office mentioning the name of directors but no such list is filed on record. He further admitted that he has not verified from ROC regarding the status of accused no. 4 being the director of accused no. 1 i.e. M/s. Elbee Services Ltd.. He has further admitted that even in the statement of Account Manager Ex.PW1/C, name of accused no. 4 is not specifically mentioned.
10. On the other hand it is submitted on behalf of complainant that in view of presumption arising out of the Section 278E of I.T. Act regarding mensrea, the crimimal liability should be attached with accused no. 4.
11. However, this court is not in agreement of the said contention for the reason that the presumption is rebuttable one. The witness appearing on behalf of ITO VS. M/S. ELBEE SERVICES LTD. 57 complainant himself admitted that they do not know about the status of accused no. 4 and thus the presumption so arising stands rebutted.
12. Moreover, the contention raised on behalf of complainant that even admission of applicant/accused no. 4 in his own application being a nominee director is sufficient to fasten the criminal liability at this stage of framing of charge in view of the judgment relied upon by the complainant is concerned, with due respect, the judgment has no application to the facts and circumstances of the present case. In the present case the pre charge evidence has already been recorded as discussed herein above and nothing incrimating has come on record to show that accused no. 4 was liable for day to day affairs of the company. Nor there is any such document to show that accused no. 4 was responsible for day to day affairs of the company. Thus, in the circumstances accused no. 4 cannot be saddled with any liability for any default committed by the accused company. In the judgment relied upon by the complainant it is clearly mentioned that accused has prayed to the Hon'ble High Court for quashing of the petition prior to recording of any evidence and in view of presumption u/s 278E of IT Act, it was held that question of involvement of the accused in day to day affairs of the company can not be decided at this stage without evidence.
13. Thus, in view of the aforesaid discussion application filed on behalf of accused no. 4 for discharge is allowed and accused no. 4 stands discharge.
ITO VS. M/S. ELBEE SERVICES LTD. 67 Bail bond, if any, of accused no. 4 stands cancelled.
14. So far as accused no. 1 and 3 are concerned, there are sufficient material available on record to prima facie show that accused no. 1 failed to deposit the TDS amount within prescribed period and accused no. 3 is the Managing Director and was responsible for day to day affairs of the company in view of statement Ex.PW1/C. Thus, prima facie case is made out against them to frame charge u/s. 276B r/w Section 278E and 279 of Income Tax Act. Put up for framing of charge on 26.08.13.
Announced in the open court on 7th August, 2013.
(DEVENDRA KUMAR SHARMA)
ACMM(SPL ACTS), CENTRAL
DELHI/07.08.13
ITO VS. M/S. ELBEE SERVICES LTD. 77