Rajesh Balia, J. - (1.) HEARD learned counsel for the parties. By this petition, the assessee challenges the authorisation issued by the Commissioner of Income-tax on January 20, 1992, to include the name of the petitioner who was then an accountant engaged in Jodhpur Woolen Mills in the order under Section 279(1) for the assessment year 1982-83 passed by his predecessor in the office on March 13, 1991, for prosecuting the petitioner under Section 276B of the Income-tax Act, 1961. The petitioner is an officer of a company known as Jodhpur Woolen Mills Ltd. The facts of the case as emerge from the record of this case are that by communication dated August 3, 1989, the then Commissioner of Income-tax, Jodhpur, issued a notice to the company to show cause against a proposal to launch prosecution under Section 276B of the Income-tax Act for the assessment years 1982-83 to 1985-86. After receiving the reply of the company, the Commissioner of Income-tax vide his order dated March 13, 1991, sanctioned the prosecution of the company and its two joint managing directors and two directors named in the order to be prosecuted under Section 276B and directed the Deputy Commissioner of Income-tax (Assessment) to file a complaint in the court of the special judge for economic offences. In furtherance of this order issued under Section 279(1) of the Income-tax Act, 1961, the successor-in-office of the then Commissioner of Income-tax, authorised inclusion of the name of the petitioner also in the order dated March 13, 1991, for being prosecuted under Section 276B of the Income-tax Act, 1961, for the alleged default for the assessment year 1982-83. As they would be relevant for the purpose of the present case, the two orders are produced hereinbelow : ANNEXURE 3 Order under Section 279(1), dated March 13, 1991 : JUDGEMENT_148_ITR256_2002Html1.htm Order under Section 279(1) of the Income-tax Act, 1961 : "The above named assessee is a limited company being assessed to tax with the Deputy Commissioner of Income-tax (Assessment), Special Range, Jodhpur, and controlled by the managing directors, Svs. S.M. Kankaria and S.C. Kankaria, and directors, Svs. P.M. Kankaria and L.K. Kankaria who were in charge of and responsible to the company for the conduct of the business. It was carrying on business of woolen mill and gwar gum during the material period relevant to the assessment year.
(2.) ON going through the details available on record it was noticed that the assessee had deducted at source (TDS) of Rs. 1,38,197 for the assessment year 1982-83 from the payment of interest to various parties, but failed to deposit the amount of tax so deducted to the credit of the Central Government within the prescribed time limit under Section 80 (sic) of the Income-tax Act, 1961, read with Rule 30 of the Income-tax Rules, 1962. Thus, the company as well as its directors are liable for prosecution under Section 276B read with Section 278B(1) of the Income-tax Act, 1961. A show-cause notice was issued from this office dated August 3/4, 1989, to the assessee-company in response to which the company filed its written reply dated September 15, 1989, through its authorised representative. The explanation put forth by the company is not tenable. In view of the above facts it is evident that the assessee-company and its abovenamed joint managing directors and directors have committed an offence under Section 276B of the Income-tax Act read with Section 278B(1) of the Act. I have gone through the entire facts and seen the relevant records of the assessee-company placed before me and am satisfied that the assessee-company committed offence punishable under Section 276B of the Income-tax Act for the assessment year 1982-83. Therefore, I, S.S. Ruhela, Commissioner of Income-tax, Jodhpur, hereby accord sanction to prosecute the abovenamed assessee-company and its joint managing directors and directors for the aforesaid offence. I, S.S. Ruhela, Commissioner of Income-tax, Jodhpur, hereby direct the Deputy Commissioner of Income-tax (Assessment), Special Range, Jodhpur, to file complaint under Section 276B read with Section 278B(1) of the Income-tax Act against the joint managing directors, Svs, S.M. Kankaria, and S.C. Kankaria and directors, Svs. P.M. Kankaria and L.K. Kankaria, for the assessment year 1982-83 in the competent court of law at Jaipur. JUDGEMENT_148_ITR256_2002Html2.htm With reference to the order under Section 279(1) passed in the case of Jodhpur Woolen Mills Ltd., Jodhpur, for the assessment year 1982-83 on March 13, 1991, by my predecessor, Shri S.S. Ruhela, the then Commissioner of Income-tax, Jodhpur, I, Panna Lal, authorise the name of Shri S.G. Kale, principal officer of the company, to be included in the order under Section 279(1) for the assessment year 1982-83. JUDGEMENT_148_ITR256_2002Html3.htm
(3.) IN pursuance of these two orders, a complaint was lodged against the company, two of its joint managing directors and two directors and the petitioner (who was then accounts officer of the company) before the Special Court for Economic Offences, Jaipur, which, it is now informed, stands transferred to Jodhpur on establishing a court at Jodhpur also. The other facts relevant for the present purpose in order to appreciate the contentions raised by the parties are that these proceedings relate to the failure on the part of the company--Jodhpur Woolen Mills Ltd., Jodhpur, to deduct and pay tax to be deducted at source from the interest payments made to its creditors within one month in the treasury of the Central Government as required under Section 200 of the Income-tax Act. Consequent thereto, proceedings for levy of penalty on failure to deposit the tax deducted at source within the time prescribed, were initiated against the company of which the petitioner was an accountant. In the said proceedings, the Inspecting Assistant Commissioner of Income-tax (Assessment), Jodhpur, made the following order : "So far as penalty is concerned, in view of the explanation of the asses-see the same is not imposed as there was no deliberate attempt on the part of the assessee to avoid payment of tax deducted at source but it failed to deposit the same because of financial difficulties." Thus penalty for breach of Section 200 was not found imposable and no penalty for such breach was imposed. This order was made on May 21, 1985, and related to the assessment year 1982-83 for which the impugned sanctioned/authorisation has been made by the Commissioner of Income-tax in exercise of its powers under Section 279(1) of the Income-tax Act, 1961. ;