Crlp/12664/2016 Of Sudhir Sanghi, Hyderabad v. Dy.commissioner Of Income Tax, Hyd And 2 Otrs, Rep Spl.pp

IN THE HIGH COURT FOR THE OF AT HYDERABAD FRIDAY, THE TWENTY SECOND DAY OF SEPTEMBERTWO THOUSAND AND TWENTY PRESENT THE HONOURABLE SRI JUSTICE K.SURENDER CRIMINAL PETITION Nos.: 8634 AND [12664 ] CRIM INAL PETITION No.: 8634 OF [2016] Between: 1. Sanghi lndustries Ltd, Having [registered ][office ][at ][Sanghi Nagar, ][Koheda]Village, Hayath Nagar tr,4andal, Ranga Reddy District, [rep ][by ][its ][lvlanaging]Director, Sri.Ravi Sanghi.Village, Hayath Nagar tr,4andal, Ranga Reddy District, [rep ][by ][its ][lvlanaging]Director, Sri.Ravi Sanghi. 2. Ravi Sanghi, S/o Sri Ramsharan Sanghi, [Koheda Village, Hayath ][Nagar]lr/andal, Ranga Reddy District, [Telangana.]lr/andal, Ranga Reddy District, [Telangana.] ...PETITIONERSlAl and 2 in CC.No.108/2016 ANDll The Deputy Commissioner of [lT., ][Circle ][- ][3(1), ][7th ][Ftbor, ]['B' ][Block,]l.T.Towers, A.C.Guards, [lvlasab ]Tank, [Hyderabad, Telangana. ][Rep ][by]Standing Counsel for l. t. Dept ...RESPONDENT/ DEFACTO COMPLAINANT in CC 108/2016 Petition under Section 482 of Cr.P.C [praying ][that ][in ][the ][circumstances]stated in the lvlemorandum of [Grounds ][of ][Criminal Petition, ][the ][High ][Court ][may]be pleased to [quash ]the criminal [proceedings ][initiated ][in ][C.C.No. ][108 ][of ][2016 on]the file of Special Judge [for ][Economic Offences, Nampally, ][at ][Hyderabad,]holding it as abuse of [process ][of ][court ][by ][invoking ][the ][inherent ][jurisdiction ][under]section 482 of the Criminal [procedure code.] CRLPMP. NO:9451 OF 2016 Petition under Section 482 of Cr.P.C [praying that ][in ][the ][circumstances]stated in the Memorandum of Grounds [of ][Criminal Petition,the ][High ][Court ][may]be pleased to stay all further [proceedin]osin C.C.No. 108 of 2016 on the file ofSpecial Judge for Economic Offences,1.{ampally, at Hyderabad, including [the]presence of the petitioners. I ''* + 'L. ii, IiI: iI: This Petition coming on for hearing, upon perusing the lVemorandum of, [Gro]undslbf Criminal Petition and upon hearing the arguments oi Sri N. BharatBabu, Advocate for the Petitioners and Sri Gadi Praveen Kumar, Advocate fortheRespbndent. :* j CRIMINAL PETITION NO: 12664 OF 20.16: I Between:., . r Sddhir Sanghi,S/o. Late Sri Ram Sharan Sanghi, Sanghi \agar, KohedaVillage, HayathNagar Mandal, Ranga Reddy Dist. Presen y residing at 534,Road No. 12, Banjara Hills, Hyderabad - 500 034. ...PETITIONERYACCUSED No.3 I AND ti: r.it .; Commissioner Of lncome Tax, Circle -3(1), 7th Floor, B Block, l.T, [A.C. Guards, ]Masab Tank, Hyderabad, Telangana. Represented by, [A.C. Guards, ]Masab Tank, Hyderabad, Telangana. Represented byth8 Soecial Public Prosector, Income Tax Department..RESPONDENTiCOMPLAINANT**l [[i, ]]#rrF.ft I I ...RESPONDENTiCOMPLAINANT**l [[i, ]]#rrF.ft I I . :pi i[[i, ]]rrF.ft I I . ..RESPONDENTiCOMPLAINANT .2Satghi lndustries Ltd.,Having its registered office at Sanghi Nagar, KohedaVillage, Hayath Nagar[4andal, Ranga Reddy District, represented by itsIvldnaging Director SriRavi Sanghi 3. Ravi Sanghi, S/o. Sri Ram Sharan Sanghi, Koheda Village, Hayath NagarN4dndal, Ranga Reddy Districl. Telangana. ! ,E 't...ACCUSED NOS.1 AND 2/NOT NECESSI\RY PARTIES i I IPetition under Section 482 of Cr.P.C praying that in the ,:ircumstancesstated in the N/emorandum of Grounds of Crimi nal Petition, the High Court may ben order quashing C.C. No. 108 of 201 6 on the lile of Special, .:;c Offences, Nampally at HyderabadI94 0F 2016 under Section 482 of Cr.P.C praying that in the oircumstancesstated ['in]e'ltrlemorandum of Grounds of Criminal Petition the High Court may beeasedpLssan order staying all further proceedings in C.C. No. 108 of 201 6ainli'of Special Judge for Economic Offences, Nampally at Hyderabad,3. Nilemorandum ofSri Ch. PushyamAdvocate for theent i,,los.2 and 3.Sri Ch. PushyamAdvocate for theent i,,los.2 and 3. '.1i{:.,:-.i. )I ! ,E 't...ACCUSED NOS.1 AND 2/NOT NECESSI\RY PARTIES i I IPetition under Section 482 of Cr.P.C praying that in the ,:ircumstancesstated in the N/emorandum of Grounds of Crimi nal Petition, the High Court may ben order quashing C.C. No. 108 of 201 6 on the lile of Special, .:;c Offences, Nampally at HyderabadI94 0F 2016 under Section 482 of Cr.P.C praying that in the oircumstancesstated ['in]e'ltrlemorandum of Grounds of Criminal Petition the High Court may beeasedpLssan order staying all further proceedings in C.C. No. 108 of 201 6ainli'of Special Judge for Economic Offences, Nampally at Hyderabad,3. Nilemorandum ofSri Ch. PushyamAdvocate for theent i,,los.2 and 3.Sri Ch. PushyamAdvocate for theent i,,los.2 and 3. '.1i{:.,:-.i. )I J:iiIfl'fl i THE HONOURABLE SRI JUSTICE K.SURENDERCRIMINAL PETITION Nos.8634 & L2664 0F 2016COMMON ORDER: 1.. Criminal Petition No.8364 of 2016 rheis filed by petitioners/A1 and A2 ar-rcl Criminai Perrtion No.12664 of 20'16 ishled by the petitioncr/A3 to quash the proceedings in C.C.No. 108of 2076 on the fi1e of Special .Iudge for Economic Offences,Nampally, Hyderabad. Both petitions are heard together anddisposed by u,av ol this Common Order. 2. The petitioners petitioners are arral,cd as ,{1 to A3 in the complaint filedarral,cd as ,{1 to A3 in the complaint filedin the complaint filedthe complaint filedcomplaint filedfiledby the Deput-t Commissioncr of lnr:ome fix, Cir.te-:(1). Theoffence alleged is under Se ction 276-C(2.\ &, 278-8 of the IncomeTax Act, 196 i The petitioners petitioners are arral,cd as ,{1 to A3 in the complaint filedarral,cd as ,{1 to A3 in the complaint filedin the complaint filedthe complaint filedcomplaint filedfiled 3. In the complaint filed, it is alleged that A I is Limitedcompany, A2 and A3 arc ils Directors. A1/company filed return ofincome terx for the assessmcnt year 20lO-11 on 20.O9.2010determining its net aggrcgatc liabiiity at Rs.2,56,O3,81O/-. Thereturns were llicd q,it}-rout payment of tax. The AssistantCommissioner of lncome Tax issued no[ice s on 21.O 1.201 1 under Section 221{1J and 140,4 of Income [Tax ]Aci, [196 ]1 to tl-rc accusedior non payment cf self assessment [tax ][as ][liled ][bv ]ihe [accl.sed] 4. in response to the notice, [repl]'' ][$ ]as [givcn ][stating ][that ][the]cornpany was in financial crisis and [timc ][u'as ][sought ][lor ][pa5rmsnl]of tax. The Assistant Commissioner, illcome [Ta-x ][pa-ssetl ][penaltl']imposing an amount of Rs.64,00,953/ [. ][Aggrievecl ][bv the ][order,]appeal was filed before the CIT [(A) ]and [the ][penaltv ][rvas ][restricted ][to]Rs.10.00 lakhs. The decision of CIT-A [u'as ][challengcd ][r'vhrch ][is]pending adjudication before the ITAT. 5. Learned Senior Counsel appearing for [the ][petitione ][rs ][u'ould]submit that the entire amount of tax [s'as ][in ][lact ][u'as ][paid ][even]prior to 14.O3.2O11. The complaint [in ][question u'as ][filed ][on]29.O3.2O16. Further, petitioner/A3 [was ][non-executive ]l)romoter.He resigned as Director frorn [17 ].12.20 [11. ][The ][petitioner/43 ][being ][a]non-executive Director, was not [responsible ][for ][the ][dal'. ][1o ][6.,]management of the company. 6. On the other hand, [learned ]counsel [appearing ][for ][tl-e ][Income]Ta;< Department would submit thit thcse [are ][question ][s ][of ][fact]which can only be decided during trial. Accordingly, [prayed ][to]dismiss the petitions. 7. The offence allegcd is undcr Section 275 [C(.21 ]of the IncomeTax Act, 1961. It an\, [per-sor'I ]rt,illfulll' attempts in any mannerwhatsoever to affect the [payment ]of [ta-:<, ][penalt;', ]cr [interest ][under]the Act, he shall be punrshable rvith rigorous [imprisonment for ][a]term which shall not be iess tt.ran three months but [which ][may]extend to two year-s and shail also iiable to [fine. ][.] Section 278-B of the Income Tax Act, i96 i 278-B of the Income Tax Act, i96 i of the Income Tax Act, i96 i the Income Tax Act, i96 i Income Tax Act, i96 i Tax Act, i96 i Act, i96 i i96 i i deals with with [[the]] 7. The offence allegcd is undcr Section 275 [C(.21 ]of the IncomeTax Act, 1961. It an\, [per-sor'I ]rt,illfulll' attempts in any mannerwhatsoever to affect the [payment ]of [ta-:<, ][penalt;', ]cr [interest ][under]the Act, he shall be punrshable rvith rigorous [imprisonment for ][a]term which shall not be iess tt.ran three months but [which ][may]extend to two year-s and shail also iiable to [fine. ][.] Section 278-B of the Income Tax Act, i96 i 278-B of the Income Tax Act, i96 i of the Income Tax Act, i96 i the Income Tax Act, i96 i Income Tax Act, i96 i Tax Act, i96 i Act, i96 i i96 i i deals with with [[the]] 8" Section 278-B of the Income Tax Act, i96 i 278-B of the Income Tax Act, i96 i of the Income Tax Act, i96 i the Income Tax Act, i96 i Income Tax Act, i96 i Tax Act, i96 i Act, i96 i i96 i i deals with with [[the]]offences by Companies. When Lhe offence is cornrnitted by [the]1\'ho at ihe time of commission of [offence]company, every [person ]was in-charge and was rcsponsible lor conciucting [business of ][the]!company as well as the companr shall [be ][dcemed ][to ][be ][guilty ][of ][the]offence and shall be liable for [punishment.] 9. The petitioner/A3 is roped in by u'a1' of vicarious liability. [In]the complaint, it is not stated as to how this [petitioner ][was]responsible for the day today alfairs of the compaly. [The ][twin]requirement for making a person responsible [by ][way ][of vicarious]liability is that i) a person should have been [responsible ][for]conduct of the business of the fompany; ii) and [company ][as ][a]whole. Unless both [the ][ingredients ]are satished, [a ][person ][cannot ][be]roped in to face criminal [prosecution.] t -,. --..J 10. The Hon'ble Supreme Court [in the ][casc ][of Sunil ][Bharti]Mittal v. Central Bureau of [Investigation ] [helC ][that ][a ][t)irector ][or]Malaging Director or Chairman of the [compani ][coi-tici ][be ][meide]accused along rvith the company only [if there is ][sr-lfltcienl material]to prove his active role coupled rvith criminal [intent.] 11. As seen from the [record, ][which are annual ][repolt ][lor ][the]years 20O9-2O1.O, 2OlO 2O11 and 2Ol1-2O12 of A1 company.pctitioner/A3 rvas shown as the promoter and [non ][cxecutive]Director. Further, the day today management of the [company ilas]conducted by the Vice-Chairman and Managing [Director] 12. In the absence of any specific allegation in [the complaint ][that]petitioner/A3 was responsible for the filing of the returns [r.r'ithout]payment and was responsible for day to day basis for tltr: conductof the business and supervision of the affairs of the company, [the]petitioner/A3 cannot be criminally proceeded rvith lor the [violation]of the said provisions under the Act. 13. Learned Senior Counsel relied on the [judgments; ]i) [judgment]in Criminal Miscellaneous No.3669f of 2OO7, dated O3.12.2OO9 of High Court of Patna; iii .Judgmenr, tn Crir.ninai [O.P ][(MD) ][|Jc. ][13383]of 2019 and Cr1.M.P.(MD) Nos.8303 and 83C'+ of 2019 [dated]\2.O3.202O; iii) judgment of Gujarat High Court in the case ofVinaychandra Chandulal Shah r'. State cL Gujaiat [( ]1995 [2 ][1 ]3 307 Guj) and iv) order of the Income ['la-x ]Appeilate Tribunai in [iTA]Nos.122 &,834lHYD/20 16, dated 01.10.2C19 14. In ali the [judgments, ]it [r.r'a ]s ftrund that uniess [the ][prcsecution]establishes that the returns wcre filed it'ith an intention to evadetax, [proceedings ]cannot be continued 13. Learned Senior Counsel relied on the [judgments; ]i) [judgment]in Criminal Miscellaneous No.3669f of 2OO7, dated O3.12.2OO9 of High Court of Patna; iii .Judgmenr, tn Crir.ninai [O.P ][(MD) ][|Jc. ][13383]of 2019 and Cr1.M.P.(MD) Nos.8303 and 83C'+ of 2019 [dated]\2.O3.202O; iii) judgment of Gujarat High Court in the case ofVinaychandra Chandulal Shah r'. State cL Gujaiat [( ]1995 [2 ][1 ]3 307 Guj) and iv) order of the Income ['la-x ]Appeilate Tribunai in [iTA]Nos.122 &,834lHYD/20 16, dated 01.10.2C19 14. In ali the [judgments, ]it [r.r'a ]s ftrund that uniess [the ][prcsecution]establishes that the returns wcre filed it'ith an intention to evadetax, [proceedings ]cannot be continued 15. In the present case, the entirc ra-ri liable paid before"vas 14"O3.2011, even prior to lodging of the complarnt on 28.03.20 [11.]The said payment is not disputed by the prosecution. Sub-section2 of Section 276C would be attr:rcted onll' '"r'hen [a ][person ]willfullyattempts in any manner r.l,hatsoever to el'ade the [payment ]of [any]tax, penalty or interest under the Act anci [not otherwise. In ][view ][of]the payment being made by the petitioners even [before ][the ][lodging]the complaint after receiving the notice, it cannot [be ][said ][that ][there]was any willful evasion. Furthe6o the ta-.< was [accepted ]by [the]department without any reserva [t ]ion. *t 16. iir [i,he ]resuit, thc proceeriings against petitronersirrl to A.3 ir.rC.C.No. 108 oi 2A16 on the irle of Special Judge [or EconomicOffer-rces, Narnl:aliy, Hvderabaci, are hereby quashed.17. Accordingl,v, both the Criminal petitrons arc :rllorve<iConsequently, miscellaneous applications pending, if anr,, sltarllstand ciosed Sd/-,\.V.S.PRASADASSISTANT REGISTRARREGISTRAR(ihsECtloN oFFlcER ,:.::.ASSISTANT REGISTRARREGISTRAR//rRUE GoPY// (ihI.1.$i a1ttIII j sECtloN oFFlcERIr&To;tlIi: [,.i.,]1. ThbSipecial Judge [for ][Economic Offences Nampally at Hyderabad']z. 'orfbCC to Sri N. Bharat [Babu, Advocate ] ';e. lorYeCC to Sd Gadi [Praveen Kumar (Dy. Solicitor General Of ][lrdia) ][ ]4.rorfeCC to Sri J.V. [Prasad, Advocate ]CC to Sri Ch. Pushyam [Kiran, ][Advocate ]'. .t.o.'CD Copie6 ';t.plp,at:JI1.tI:I;n1:IlrlaIir'{1i ':l'-'::l: it... ,j .,..,'r,.' {fr}'HGURT;:ia1;.:*':I"t FttD210912023,tilt1:il'i'.1 [...l.,,t]' '.1$tr;b:({.iti/,'coMNER\\i,![tfsi]f: iii:{,i',.IJCR-.8634 and 12664 of 2016'I'ti-a.II:I,.,. [' ][.J-:]ItI,i,iOTH...:l,jl ,il, [,*,:l]l:,',.di:,:i: [r:i']I.:,: [.4,.']t, n:i::....1 . [.1.]Ii i',i'4.'ltr';,',.SS