INCOME TAX OFFICER Vs. MANOHARLAL KOTHARI D

JUDGEMENT

(1.) THESE revisions arise against the orders of the Principal Sessions Judge, City Civil Court, Madras, and also the Additional Chief Metropolitan Magistrate, Egmore, Madras.

(2.) THE Income-tax Officer, who is the revision petitioner in Crl. R. C. No. 314 of 1989 prosecuted Electricals Fittings and Equipments (Madras) Pvt. Ltd., Madras, and its directors, accused Nos. 2 to 5, before the Additional Chief Metropolitan Magistrate (Economic Offences I), Egmore, Madras, in E. O. C. C. Nos. 38 to 85 and 176 to 195 of 1986, for the offences under sec tion 276B read with Sections 192, 194A, 200 and 204 of the Income-tax Act, 1961, hereinafter to be referred to as the Act, read with Rule 30 of the Income-tax Rules, 1962, and Section 278B of the Act, alleging that the first accused company had not deducted the income-tax on the remuneration to the directors and also the interest credited to the creditors. Sixty-eight complaints were filed for the above violations under the abovesaid provisions and all the cases were clubbed and the learned Additional Chief Metropolitan Magistrate after trial, has found that all the charges relating to the offences mentioned above have been proved against the first accused company and sentenced it to pay a fine of Rs. 200 for each count for the offence under Section 276B of the Act for non-deduction of the income-tax on salary of the directors and also to pay a fine of Rs. 100 for each of the sixty counts for non-deduction of the tax on the interest credited to the account of the creditors. THE same sentence was imposed upon the second accused, who is the director of the first accused company. THE total fine amount for each of the accused Nos. 1 and 2 is Rs, 10,800. Accused Nos. 3 to 5 have been acquitted holding that there is no proof on their part for their participation in the affairs of the company. Aggrieved of this conviction and sentence of fine only imposed on accused No. 2, the Income-tax Department has filed Crl. R. C. No. 314 of 1989 for the imposition of the minimum sentence prescribed under the Act as it was not awarded to the second accused, who has been found guilty.

(3.) LEARNED counsel for the revision petitioners raised another contention that the Income-tax Appellate Tribunal, by its order in I. T. A. Nos. 19 to 24 of 92/93 dated August 9, 1994, has found that the tax was not deductible by the first accused company for the reason that the partnership firms, Ashok Electrical Company and Kumar Brothers, had invested their money in the first accused company and as the company contended that the remuneration was payable only to the partnership firms, the directors are not entitled to the remuneration and therefore, the failure to deduct income-tax on the remuneration credited to the accounts of the directors will not attract Section 192 of the Act. LEARNED counsel further contended that as the Tribunal has given this finding, the courts have to accept the finding when especially, it relates to matters of fact and, therefore, the prosecution of the revision petitioners is not proper.