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(xv) By letter dated 01.10.2014, the 2nd respondent threatened coercive action against the company even if it had deposited TDS to the extent of Rs.88.71 crores against an outstanding of Rs.90 crores leaving a shortfall of only Rs.1.29 cores, which too was paid in the 1st week of October, 2014. In furtherance of the show cause notice, the 2nd respondent issued an order dated 03.11.2014 under section 2(35) of the Income Tax Act, which is impugned in this writ petition, holding that the petitioner is the Principal Officer of the Company within the meaning of Section 2(35) of the Income Tax Act. The impugned order merely states, without any basis or materials whatsoever "All major decisions are taken in the company under his consent. In that capacity he is certainly associated with the management and administration of the Company". The impugned order straightaway proceeds to hold that the petitioner is the Principal Officer of the company and accordingly he is liable to be prosecuted under section 276B of the Income Tax Act,1961 for the Tax Deducted at Source default committed by the company. The impugned order does not anywhere allege that there was dishonesty or contumacious conduct on the part of the company or that there was any diversion or mis-utilization of the funds or that it was possible for the company to pay the TDS amount further or earlier but it dishonestly hope not to do so. The impugned order does not even attempt to dispute the existence of the grave financial and liquidity problems of the company. The 2nd respondent completely disregarded section 278B of the Income Tax Act, which expressly provides that only such person who at the time of the offence as in charge of and was responsible to the company for the conduct of its business shall be held guilty for the offence under section 276B of the Income Tax Act shall be liable to be proceeded against.
(iii) 1994(2) Kerala 812 [M.A. Unneerikutty And Ors. vs Deputy Commissioner Of Income Tax] wherein the High Court of Kerala held as follows:-
"3. The basic facts are not in dispute. The question for consideration in these petitions is whether there is now a case for this court's interference under Section 482 of the Code of Criminal Procedure for the reasons stated in the petitions. It has been alleged that tax was not deducted at source oh the interest credited to the accounts of the firm during the relevant period and that the petitioners as partners in charge of and responsible for the conduct of its business committed offences under Section 276B(ii) read with Section 278B of the Income-tax Act. Under Section 278B of the Act,--

The decision of the Madras High Court in Shital N. Shah v. ITO [1991] 188 ITR 376, seems to be in point. The learned judge referred to the above decisions of the Supreme Court and observed (headnote) :

"The words 'any person who is responsible for paying' found in Section 194A of the Income-tax Act, 1961, have to be read in conjunction with Section 204 of the Act which furnishes the meaning of 'person responsible for paying'. This provision 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 the prosecution must prove that the persons concerned were in charge of, and were responsible to, the firm for the conduct of the business of the firm. It is only then that they can be vicariously prosecuted along with the firm. The proviso to Section 278B(1) of the Act will come into operation only after the initial onus cast on the prosecution under the main section gets discharged."

8.3 By the impugned order dated 03.11.2014, while naming the petitioner as the Principal officer, the 2nd respondent also held that the petitioner is liable for prosecution under section 276B of the Income Tax Act. Section 278B deals with the offence committed by the companies. Therefore, it would be appropriate to extract Sections 276B and 278B, which reads as follows:-

"276B. 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 XVII-B; or