The complaint under s.276B names me as a director and says nothing more than that I was in charge of the company. The trial court discharged me. Can the Department get that set aside?
Yes, if the complaint carries the specific averment that the director was in charge of and responsible to the company for the conduct of its business, and the s.2(35) notices treating him as principal officer are on the record as exhibits. Whether he really was at the helm is a matter of evidence for the trial, not a ground for discharge, and non-production of the record behind the notices does not make the complaint bad at that stage.
Decided by the High Court (H.P. Sandesh J) on 2025-02-03, reported as NC: 2025:KHC:4782; Criminal Revision Petition No. 396 of 2020 (High Court of Karnataka at Bengaluru). It bears on section 276B, section 278B, section 2(35), section 278AA of the Income Tax Act 1961, in Prosecution and TDS Defaults matters.
This is the Revenue side of the s.278B averment line, and it marks its limit. The averment requirement is real — a complaint that merely names every director without saying he was in charge of and responsible for the conduct of the business does not survive. But where the averment is made and the s.2(35) notices are exhibited, the director cannot get out at the discharge stage by pointing to gaps in service or in the underlying records; he must lead his defence, including the proviso to s.278B (offence without his knowledge, or all due diligence exercised) and s.278AA reasonable cause, at trial. Practitioners should read this alongside the cases holding a bare recital insufficient: the dividing line is what the complaint says, not how strong the proof of service looks before charge.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The Assistant Commissioner of Income Tax (TDS), Bangalore filed a private complaint under s.200 CrPC alleging that M/s Sicon Design Technologies Private Limited (accused No.1) had deducted but not remitted TDS of Rs.4,84,69,841 for the financial year 2013-14, an offence under s.276B, and that accused Nos.2 to 6, the directors, were vicariously liable under s.278B. Accused No.2 was the Managing Director. Cognizance was taken, the accused appeared and were enlarged on bail, and evidence before charge was recorded under s.244 CrPC: two witnesses were examined as PW-1 and PW-2 and documents were marked Exs.P1 to P13, including Exs.P5 to P9, attested copies of notices under s.2(35) treating the directors as principal officers, and Ex.P12, the company's reply of 07.08.2014 acknowledging receipt by the company and its principal officers of the notice dated 30.07.2014 proposing prosecution and giving reasons for the delay in remittance. The accused Nos.2 to 6 applied under s.245(1) CrPC for discharge, saying no list of directors had been obtained, the documents showing service of the s.2(35) notices had not been produced, the evidence was given without personal knowledge, and there was no material on their role in filing quarterly or annual returns or any board resolution. The Special Court for Economic Offences, Bengaluru, by order dated 01.10.2019 in C.C. No.77/2018, answered the first point in the affirmative against the company but discharged accused Nos.2 to 6, holding that service of the s.2(35) notices could not be presumed and there was no evidence that they were in charge of the company's financial affairs. The Department filed a criminal revision confined to accused No.2.
The revision was allowed and the order of discharge of accused No.2 was set aside, with a direction to the trial court to proceed in accordance with law. Where the complaint specifically avers that the directors were in charge of the day-to-day affairs of the company and the attested copies of the s.2(35) notices treating them as principal officers are marked in evidence, the trial court's conclusion that no notice was served and that they were not in charge is perverse and calls for revisional interference. Whether a person is a principal officer or is in charge of and responsible for the business is a matter of evidence to be considered at trial, and the accused cannot raise his defence at the discharge stage.
The Court set out s.2(35), s.276B and s.278B, and applied Madhumilan Syntex Ltd. v. Union of India. From para 26 of Madhumilan Syntex it took the proposition that to hold a person responsible it must be shown that he is a principal officer under s.2(35) or is in charge of and responsible for the business, and that where the necessary averments have been made in the complaint, the initiation of criminal proceedings, issuance of summons or framing of charge cannot be held illegal and the Court would not inquire into the correctness of the allegations, that being a matter of evidence for trial (paras 12 and 14). From para 28 of the same judgment it took the proposition that no independent and separate notice is necessary where the show-cause notice itself stated that the directors were to be treated as principal officers (paras 8 and 15). On the facts, the specific averment was in the complaint and had been extracted by the trial court itself in para 11 of the impugned order; Exs.P5 to P9 were on record; and the company's own reply acknowledged that the company and its principal officers had received the prosecution notice. In those circumstances the finding that no notice was served as contemplated by s.2(35) and that the directors were not in charge was 'nothing but perversity' (para 15). The Court also noted the Department's reliance on s.278AA, which places the burden on the accused to prove reasonable cause, and on the proviso to s.278B, which places the burden on the person in charge to prove that the offence was committed without his knowledge or that he exercised all due diligence (para 6).
The defence of the accused cannot be considered while considering an application filed for discharge of the accused persons.
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Handle my notice → Ask a CA on WhatsAppYes, if the complaint carries the specific averment that the director was in charge of and responsible to the company for the conduct of its business, and the s.2(35) notices treating him as principal officer are on the record as exhibits. Whether he really was at the helm is a matter of evidence for the trial, not a ground for discharge, and non-production of the record behind the notices does not make the complaint bad at that stage. This was decided by the High Court (H.P. Sandesh J) and bears on section 276B, section 278B, section 2(35), section 278AA of the Income Tax Act 1961. It is reported as NC: 2025:KHC:4782; Criminal Revision Petition No. 396 of 2020 (High Court of Karnataka at Bengaluru). This is the Revenue side of the s.278B averment line, and it marks its limit. The averment requirement is real — a complaint that merely names every director without saying he was in charge of and responsible for the conduct of the business does not survive. But where the averment is made and the s.2(35) notices are exhibited, the director cannot get out at the discharge stage by pointing to gaps in service or in the underlying records; he must lead his defence, including the proviso to s.278B (offence without his knowledge, or all due diligence exercised) and s.278AA reasonable cause, at trial. Practitioners should read this alongside the cases holding a bare recital insufficient: the dividing line is what the complaint says, not how strong the proof of service looks before charge. If it applies to you, the first step is this: Read the complaint itself and mark every sentence that pleads the director was in charge of and responsible to the company for the conduct of its business; if that sentence is absent, take the point at discharge, because that is the point this judgment leaves open.
The Assistant Commissioner of Income Tax (TDS), Bangalore filed a private complaint under s.200 CrPC alleging that M/s Sicon Design Technologies Private Limited (accused No.1) had deducted but not remitted TDS of Rs.4,84,69,841 for the financial year 2013-14, an offence under s.276B, and that accused Nos.2 to 6, the directors, were vicariously liable under s.278B. Accused No.2 was the Managing Director. Cognizance was taken, the accused appeared and were enlarged on bail, and evidence before charge was recorded under s.244 CrPC: two witnesses were examined as PW-1 and PW-2 and documents were marked Exs.P1 to P13, including Exs.P5 to P9, attested copies of notices under s.2(35) treating the directors as principal officers, and Ex.P12, the company's reply of 07.08.2014 acknowledging receipt by the company and its principal officers of the notice dated 30.07.2014 proposing prosecution and giving reasons for the delay in remittance. The accused Nos.2 to 6 applied under s.245(1) CrPC for discharge, saying no list of directors had been obtained, the documents showing service of the s.2(35) notices had not been produced, the evidence was given without personal knowledge, and there was no material on their role in filing quarterly or annual returns or any board resolution. The Special Court for Economic Offences, Bengaluru, by order dated 01.10.2019 in C.C. No.77/2018, answered the first point in the affirmative against the company but discharged accused Nos.2 to 6, holding that service of the s.2(35) notices could not be presumed and there was no evidence that they were in charge of the company's financial affairs. The Department filed a criminal revision confined to accused No.2. The matter was decided on 2025-02-03 by the High Court (H.P. Sandesh J). On those facts the High Court held as follows. The revision was allowed and the order of discharge of accused No.2 was set aside, with a direction to the trial court to proceed in accordance with law. Where the complaint specifically avers that the directors were in charge of the day-to-day affairs of the company and the attested copies of the s.2(35) notices treating them as principal officers are marked in evidence, the trial court's conclusion that no notice was served and that they were not in charge is perverse and calls for revisional interference. Whether a person is a principal officer or is in charge of and responsible for the business is a matter of evidence to be considered at trial, and the accused cannot raise his defence at the discharge stage.
The Court set out s.2(35), s.276B and s.278B, and applied Madhumilan Syntex Ltd. v. Union of India. From para 26 of Madhumilan Syntex it took the proposition that to hold a person responsible it must be shown that he is a principal officer under s.2(35) or is in charge of and responsible for the business, and that where the necessary averments have been made in the complaint, the initiation of criminal proceedings, issuance of summons or framing of charge cannot be held illegal and the Court would not inquire into the correctness of the allegations, that being a matter of evidence for trial (paras 12 and 14). From para 28 of the same judgment it took the proposition that no independent and separate notice is necessary where the show-cause notice itself stated that the directors were to be treated as principal officers (paras 8 and 15). On the facts, the specific averment was in the complaint and had been extracted by the trial court itself in para 11 of the impugned order; Exs.P5 to P9 were on record; and the company's own reply acknowledged that the company and its principal officers had received the prosecution notice. In those circumstances the finding that no notice was served as contemplated by s.2(35) and that the directors were not in charge was 'nothing but perversity' (para 15). The Court also noted the Department's reliance on s.278AA, which places the burden on the accused to prove reasonable cause, and on the proviso to s.278B, which places the burden on the person in charge to prove that the offence was committed without his knowledge or that he exercised all due diligence (para 6). In the words reproduced by the source cited on this page: "The defence of the accused cannot be considered while considering an application filed for discharge of the accused persons." The decision followed or applied Madhumilan Syntex Ltd. & Ors. v. Union of India & Anr. [(2007) 290 ITR 0199] — followed; paras 13, 14, 15, 26 and 28 relied on.
It was decided by the High Court on 2025-02-03 and is reported as NC: 2025:KHC:4782; Criminal Revision Petition No. 396 of 2020 (High Court of Karnataka at Bengaluru). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 276B, section 278B, section 2(35), section 278AA, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The revision was allowed and the order of discharge of accused No.2 was set aside, with a direction to the trial court to proceed in accordance with law. Where the complaint specifically avers that the directors were in charge of the day-to-day affairs of the company and the attested copies of the s.2(35) notices treating them as principal officers are marked in evidence, the trial court's conclusion that no notice was served and that they were not in charge is perverse and calls for revisional interference. Whether a person is a principal officer or is in charge of and responsible for the business is a matter of evidence to be considered at trial, and the accused cannot raise his defence at the discharge stage. It arises in Prosecution and TDS Defaults matters, on section 276B, section 278B, section 2(35), section 278AA of the Income Tax Act 1961, and was decided by H.P. Sandesh J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask for the s.2(35) notices and the company's reply to the show-cause notice on prosecution — an acknowledgement in the reply that the principal officers received the notice is what defeated the service argument here. Do not build the discharge application on the Department's failure to produce the records behind the s.2(35) notice; on this authority that is a trial issue. Reserve the proviso to s.278B and s.278AA reasonable cause for evidence at trial, and start assembling the material (board minutes, delegation of financial functions, the cause of the delay) now. For a non-executive or nominee director, plead the absence of the averment and the absence of any role in financial affairs specifically, and keep that argument separate from the service argument.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator search on citedby:150216802 returns nothing. A second search for "Vishweshwara Rao Chava" returns 4 documents, all earlier stages of the same prosecution against the managing director of Sicon Design Technologies. No later decision cites the 3 February 2025 judgment on who may be treated as principal officer under s.2(35), and no Supreme Court matter was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Two things in the report need flagging. First, a date conflict: para 6 records the notice to the company as dated 30.07.2014 and the reply as 07.08.2014, while para 15 says 'a notice was issued on 30.07.2024'. The 2014 date is the one the reasoning depends on. Second, the judgment introduces its extract at the end of para 12 as 'the proviso to Section 276 B', but what it then sets out is the main body of s.276B with clauses (a) and (b) and no proviso at all. That extract must not be treated as a current reproduction of s.276B: it was printed in a February 2025 judgment but shows no proviso, and the case concerned FY 2013-14. The extract of s.278B in the same paragraph, by contrast, is a full reproduction of sub-sections (1) to (3) with the Explanation. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The revision was allowed and the order of discharge of accused No.2 was set aside, with a direction to the trial court to proceed in accordance with law. Where the complaint specifically avers that the directors were in charge of the day-to-day affairs of the company and the attested copies of the s.2(35) notices treating them as principal officers are marked in evidence, the trial court's conclusion that no notice was served and that they were not in charge is perverse and calls for revisional interference. Whether a person is a principal officer or is in charge of and responsible for the business is a matter of evidence to be considered at trial, and the accused cannot raise his defence at the discharge stage.
TaxSphere, “Income-Tax Department v Vishweshwara Rao Chava”, https://taxnotice.vittsphere.com/caselaw/case/ito-dept-v-vishweshwara-rao-chava-278b-principal-officer-discharge/ (validity last checked 2026-09-08)
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I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
You have now paid the TDS. Does that end the prosecution under s.276B?
I am a non-executive director. The complaint under s.276B read with s.278B says only that I was in charge of and responsible to the company for the conduct of its business. Is that enough to put me on trial?
The Commissioner has sanctioned my prosecution under s.276B without dealing with my explanation that a cash crunch and the department's own withheld refunds caused the delay. Can I have the sanction quashed in a writ petition?
