- (1.) THIS judgment will dispose of Criminal Appeals Nos. 1207 and 1208 of 1977 as the complaints involved therein disclose common questions of law. The ITO, Central Circle II, Ludhiana, filed a complaint under Section 276 (b) and (d) read with Section 276b of the I. T. Act, 1961 (hereinafter called the Act), and Section 409, IPC, against the respondents alleging therein that since the deductions made at source had not been deposited in the Government treasury, the respondents be tried and punished in accordance with law. The learned Chief Judicial Magistrate, Ludhiana, who tried the case held that respondents Nos. 1 to 3 being directors of the limited company in Criminal Appeal No. 1207 of 1977 were not liable to be prosecuted under the law as there was no evidence to show as to who was responsible for making payment of salaries concerned and since there was no evidence of actual disbursement of the salaries, the offence in question was not established against any of the respondents.
(2.) MR. Awasthy, the learned counsel for the Revenue has drawn our attention to the following admission made by the respondent-company in its communication Ex. PC/1 : " As humbly submitted hereinabove due to extreme finance shortage experienced by the concern since assessment year 1965-66 no regular payments of salary could be made every month to the employees. There was considerable and varying delay in payment of salaries of various employees, Thus, this information cannot be furnished datewise in respect of each employee. Whenever the salaries were paid, the concern did not have enough finance to pay the full salary. Thus only net salary after reducing the tax payable therefrom was paid to the employees. However, tax payable on the salaries of the employees has been paid into the treasury as per details given above. "
(3.) ON this basis, it has been argued that the company on its own showing had failed to make the deposits of the tax deducted at source. About the liability of the directors, it was submitted that the directors of a limited company were officers of such a company and any default committed by the latter could also visit the directors with evil consequences.;