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A. R. LAKSHMANAN, J. :

The ITO, Headquarters, TDS, and the ITO, Salaries Circle, Madras, have preferred three complaints before the Addl. Chief Metropolitan Magistrate, (Economic Offences I) Madras-8, against the respondents herein under ss. 276B and 276B r/w s. 278B of the IT Act, 1961 (hereinafter referred to as the Act) for their failure to deduct income-tax at source from the interest amounts paid to various persons as per s. 194A of the Act. The 1st respondent is the firm and the 2nd respondent is the partner of the 1st respondent firm.

2. The 1st respondent-company in EOCC Nos. 232 to 360 of 1987 (Crl. R. C. No. 417 of 1987) furnished its return of income, which was signed by the 2nd respondent, in the form of trading, P&L a/c and balance sheet for the accounting year 30th Sept., 1982 (asst. yr. 1983-84) on 30th Dec., 1985. In the statement accompanying the return, the firm claims to have paid interest to the extent of Rs. 6,64,565-98 to various parties. Of these, there were payments over Rs. 1,000 in aggregate during the financial year in respect of 68 parties. The respondents have failed to deduct tax of Rs. 2,400, on the interest credited to Sri Finance Corporation on various dates. Since the 1st respondent had failed to deduct the tax at source as per the provisions of s. 194A of the Act, show cause notice under s. 276B of the Act was issued on 31st Oct., 1986 calling for the assessees explanation for non-deduction of tax at source under s. 194A of the Act. There was no response from the firm. For the failure on the part of the 1st respondent-firm to deduct tax at source from the amount of interest paid to the creditors and thereafter to remit the same within seven days from the last day of the month in which deduction was made or within two months of the expiration of the month in which the date of crediting to the parties, amount falls to the credit of the Government of Indias account as stipulated in r. 30(1)(b) of the IT Rules, 1962, which is without reasonable cause or excuse, the Department seeks to prosecute the 1st respondent-firm under s. 276B of the Act. The 2nd respondent being the managing partner of the 1st respondent-firm at the material time, is responsible for the conduct of the business of the firm, and has committed the offence under s. 276B r/w s. 278B of the Act. Therefore, the above complaint was filed requesting the trial Magistrate to take the complaint on file, issue process to the accused/respondents and deal with them in accordance with law.

3. The 1st accused/1st respondent in CC Nos. 361 and 362 of 1987 on the file of the Addl. Chief Metropolitan Magistrate (Economic Offences-I), Madras-8 (Crl. R. C. No. 415 of 1987) is a partnership firm carrying on the business of marketing quality eyewares and the 2nd accused, who is its partner, has signed the firms annual return in Form 24, under s. 206 of the Act. For the asst. yr. 1986-87, relevant for the financial year ended 31st March, 1986, the firm filed an annual return in Form No. 24 under s. 206 of the Act on 21st April, 1986. It also furnished the particulars in Form No. 24. According to the particulars furnished, even though the employees had a taxable income, tax was not deducted at source in accordance with the provisions of s. 192 of the Act. Therefore, a letter was issued on 17th Feb., 1987 by the complainant to the assessee-firm requiring them to furnish monthly remittance particulars. The assessee in its reply dt. 20th Feb., 1987 has stated that since the annual income under this head does not exceed the minimum amount liable to tax, the monthly remittance particulars in Form No. 24 are shown as Nil. It is stated that the failure on the part of the firm to deduct tax at source under s. 192 of the Act and to remit the same within the time stipulated is an offence punishable under s. 276B of the Act. The 2nd accused/respondent being the partner of the 1st accused firm who had signed its annual return in Form No. 24 and answerable to the 1st accused firm for the conduct of the business of the firm is equally liable under s. 276B r/w s. 278B of the Act.

51. The decision reported in G. Anantharamiah vs. ITO (supra) was decided by K. Swamidurai, J. In that case, the 1st accused was a partnership firm carrying on business as film exhibitors. The 2nd accused is the managing partner and the 3rd accused was the joint managing partner of the 1st accused firm and the 4th accused was an employee of the 1st accused firm, in charge of financial borrowings, bank transactions, interest payments, etc. The ITO Madras-34, filed a complaint under s. 276B r/w s. 278B of the Act for failure to remit tax deducted at source to the credit of the Govt. of India within the time prescribed under s. 200 of the Act r/w 30(1)(b)(2) of the IT Rules, 1962. The main contention raised by the 4th accused was, that he was not the person responsible to and is in charge of the company for the conduct of the business of the company as well as the company and so, he should not be charged for the alleged offences. The learned judge, after referring to ss. 200, 276B and 278B of the Act, and following the decision in 1990 LW (Crl) 478 (supra) held that the prosecution has failed to prove that the 4th accused is a person responsible for payment of tax deducted to the Government and is also a person in charge of and responsible for paying the said amount. Therefore, the learned judge held that the charge as against the 4th accused under ss. 276B and 278B of the Act is not maintainable.