S.M. Jain @ Shetan Mal Jain … … v. 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr. M. P. No. 1784 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1786 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1788 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1790 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1791 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1792 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1798 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner 1. The State of Jharkhand Versus 2 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1932 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1937 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties With Cr. M. P. No. 1948 of 2016 ----- S.M. Jain @ Shetan Mal Jain … …. Petitioner Versus 1. The State of Jharkhand 2. The Union of India through the Deputy Commissioner of Income Tax, Ranchi … …. Opp. Parties -----
Legal Reasoning
CORAM: HON'BLE MR. JUSTICE GAUTAM KUMAR CHOUDHARY For the Petitioner For the State ----- : M/s Gulam Mustafa, Arshad Hussain & Rajeshwari Kumari, Advocates : M/s Ruby Pandey, Saket Kumar, Sardhu Mahto, Rajneesh Vardhan, Pankaj Kr. Mishra, Shailesh Kr. Sinha & Sunil Kr. Dubey, A.P.P. ----- Oral Order 06 / Dated : 18.04.2023 1. Since all these criminal misc. petitions have been preferred by the same petitioner and arise out of common issue, therefore, they have been
Decision
heard together they will be disposed of by common order. 2. All the criminal misc. petitions have been filed for quashing the entire criminal proceeding including the orders taking cognizance dated 04.10.2001, 04.10.2001, 05.10.2001, 05.10.2001, 04.10.2001, 05.10.2001, 04.10.2001, 05.10.2001, 05.10.2001 and 05.10.2001 respectively passed in Complaint Case No. 30 of 2001, 32 of 2001, 40 of 2001, 38 of 2001, 34 of 2001, 39 of 2001, 33 of 2001, 43 of 2001, 42 of 2001 and 44 of 2001 respectively whereby and whereunder, prima facie 3 case has been found to be made out under Sections 276(b) read with 278(b) of Income Tax Act and Sections 409, 34 of IPC. 3. The common question in all these criminal misc. petitions is whether a criminal prosecution can be permitted to be continued against a person who while serving as an Advisor Finance in Heavy Engineering Corporation, Dhurwa, Ranchi (for short HEC) for not remitting the TDS deduction on time to the Income Tax Department. PROSECUTION CASE 4. Opposite party no. 2-Union of India through Deputy Commissioner of Income Tax, Ranchi filed 17 numbers of complaint cases in the court of Special Judge, Economic Offence, Ranchi which were registered as Complaint Case Nos. 28-44 of 2001 against all 11 accused persons. 5. Accused No. 1 is HEC Limited and the main allegation is that during the financial years 1995-96, the accused persons defaulted in deduction of tax from the employees on 17 occasions and of depositing the same within a week. 6. The petitioner has been impleaded as Accused No. 10 as Advisor Finance, HEC and for default in deduction and remittance of the amount to the Income Tax Department. The prosecution has been initiated under Sections 276B read with 278B of Income Tax Act. 7. It is submitted by learned counsel for the petitioners that the default and remittance was not deliberate on the part of HEC but it had become sick industry and, therefore, deduction could not be made on time. 8. It is submitted that the petitioner cannot be made liable for prosecution because he is not a public servant and vicarious liability for default cannot be imposed unless specific role of the petitioner is attributed. This petitioner was not having any control over the affairs of deduction and/or deposited of tax from the employees or contractors or to deposit the same. The petitioner was an outsider and Financial Advisor retained to advice to improve the financial condition of HEC Ltd in which he does not come within the meaning of “employee” of HEC or he was not a public servant or an assessee under the meaning of Section 2(q) of the I.T. Act. 9. Learned counsel for the State have opposed the quashing petition and submitted that the petitioner was not the employee rather he was working as a Retainer in HEC in the capacity of Financial Advisor. It 4 was his duty to apprise the management of the necessity of deduction of TDS and remittance to the Income Tax Department. Indisputably the petitioner does not come within the definition of assessee, principal officer and employee. The complaint does not disclose specific role of the petitioner in not deducting TDS or remitting it to the Income Tax Department. 10. After having considered the rival submissions advanced on behalf of both the sides, it is apparent that petitioner is not an employee of HEC and no specific role has been attributed to him in the said act of not deducting the Income Tax of the 17 employees and remitting it on time within the stipulated period. It is the cardinal principle of criminal jurisprudence that where there are allegations of vicarious liability, then there has to be sufficient evidence of the active role of each director. There need to be a specific act attributed to a director or the person allegedly in control of management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company. There is nothing to show that the delay was willful. In absence of any such material, the prosecution is not sustainable. Accordingly, the entire criminal proceedings including the orders taking cognizance are quashed. All the criminal misc. petitions are allowed. Pending I.As., if any, stand disposed of. AKT (Gautam Kumar Choudhary, J.)