Judgment :- AR.Lakshmanan, J. The Income Tax Officer, Headquarters, TDS, and the Income-tax Officer, Salaries Circle, Madras, have preferred three complaints before the Additional Chief Metropolitan Magistrate, (Economic Offences I), Madras-8, against the respondents herein under Sec.276-B and 276-B read with Sec.278-B of the Income Tax Act, 1961 (hereinafter referred to as the Act) for their failure to deduct income-tax at source from the interest amounts paid to various persons as per Sec.194-A of the Act. The 1st respondent is the firm and the 2nd respondent is the partner of the 1st respondent firm. .2. The 1st respondent- company in E.O.C.C. Nos.292 to 360 of 1987 (Crl.R.C. No.417of 1987) furnished its return of income, which was signed by the 2nd respondent, in the form of trading profit and loss accounts and balance she’et for the accounting year 30.9.1982 (Assessment Year 1983-84) on 30.12.1985. In the statement accompanying the return, the firm claim to have paid interest to the extent of Rs,6,64,565.98 to various parties. Of these, there were payments over Rs.1,000 in aggregate during the financial year in respect of 68 parties. The respondents have failed to deduct tax of Rs.2,400 on the interest credited to Sri Finance Corporation on various dates. Since the 1st respondent had failed to deduct the tax at source as per the provisions of Sec.194-A of the Act, show cause notice under Sec.276-B of the Act was issued on 310. 1986 calling for the assessee’s explanation for non-deduction of tax at source under Sec.l94-A of the Act. There was no response from the firm. For the failure on the part of the 1st respondent- firm to deduct tax at source from the amount of interest paid to the creditors and thereafter to remit the same within seven days from the last day of the month in which deduction was made or within two months of the expiration of the month in which the date of crediting to the parties amount falls, to the credit of the Government of India’s account as stipulated in Rule 30(1)(b) of the Income Tax Rules, 1962, which is without reasonable cause or excuse, the Department seeks to prosecute the 1st respondent- firm under Sec.276-B of the Act. The 2nd respondent being the Managing Partner of the 1st respondent-firm at the material time, is responsible for the conduct of the business of the firm, and has committed the offence under Sec.276-B read with Sec.276-B of the Act. Therefore, the above complaint was filed requesting the trial Magistrate to take the complaint on file, issue process to the accused/ respondents and deal with them in accordance with law. 3. The 1st accused/1st respondent in C.C.Nos.361 and 362 of 1987 on the file of the Additional Chief Metropolitan Magistrate (Economic Offences I), Madras-8 (Crl.R.C.No.415 of 1987) is a partnership firm carrying on the business of marketing quality eye wares and the 2nd accused, who is its partner, has signed the firm’s annual return in Form 24, under Sec.206 of the Act. For the assessment year 1986-87, relevant for the financial year ended 33. 1986, the firm filed an annual return in Form No.24 under Sec.206 of the Act on 24. 1986. It also furnished the particulars in Form No.24. According to the particulars furnished, even though the employees had a taxable income-tax was not deducted at source in accordance with the provisions of Sec.192 of the Act. Therefore, a letter was issued on 12. 1987 by the complaint to the assessee firm requiring them to furnish monthly remittance particulars. The assessee in its reply dated 20.2.1987 has stated that since the annual income under this head does not exceed the minimum amount liable to tax, the monthly remittance particulars in Form No.24 are shown as ‘Nil’. It is stated that the failure on the part of the firm to deduct tax at source under Sec.192 of the Act and to remit the same within the time stipulated is an offence punishable under Sec.276-B of the Act. The 2nd accused/ respondent being the partner, of the 1st accused firm who had signed its annual return in Form No.24 and answerable to the 1st accused firm for the conduct of the business of the firm is equally liable under Sec.276-B read with Sec.278-B of the Act. .4. The 1st accused in C.C. Nos. 268 to 291 of 1987 on the file of the Additional Chief Metropolitan Magistrate (Economic Offence I), Madras-8 is the firm functioning at Madras and accused 2 and 3 respondents 1 and 2 are the partners, who are responsible for the conduct of the business of the firm. .4. The 1st accused in C.C. Nos. 268 to 291 of 1987 on the file of the Additional Chief Metropolitan Magistrate (Economic Offence I), Madras-8 is the firm functioning at Madras and accused 2 and 3 respondents 1 and 2 are the partners, who are responsible for the conduct of the business of the firm. They filed the return for the year ended on 33. 1980 and trial final accounts in the form of trading profit and loss account and balance sheet. In the statement of interest paid account, the firm had claimed to have paid interest to the extent of Rs.99,000 to eight persons. It is stated that the accused have delayed the remittance of tax deducted at source to Government of India’s account from the interest. The firm remitted the TDS amount after a delay of nearly two months. Therefore, summons under Sec.131 of the Act were issued to the assessee on 111. 1986 asking them to appear on 211. 1986 with books of accounts for the year ended 33. 1980 to 33. 1983. On 112. 1986, the assessee filed a letter dated 112. 1986 relating to the assessment year 1980-81 along with the particulars of interest paid, TDS paid, etc. The assessee in their explanation had stated that all the depositors were already on the list of assessee and due to misapprehension, the depositors themselves paid advance tax on these interest payments. It is therefore, stated that the failure on the part of the firm to deduct at source from the amount of interest paid to the creditors and thereafter remit the same within the time stipulated is without reasonable cause or excuse, and as such, the 1st accused/ firm has committed the offence punishable under Sec.276-B of the Act and accused 2 and 3 respondents have committed the offence punishable under Sec.276-B read with Sec.278-B of the Act. .5. The learned trial Magistrate heard the learned Special Public Prosecutor for Income Tax Department on the question of maintainability of the complaints against the 2nd accused (Managing Partner) without statutory notice under Sec.2(35)(b) of the Act treating the 2nd accused as Principal Officer of the firm. .5. The learned trial Magistrate heard the learned Special Public Prosecutor for Income Tax Department on the question of maintainability of the complaints against the 2nd accused (Managing Partner) without statutory notice under Sec.2(35)(b) of the Act treating the 2nd accused as Principal Officer of the firm. The following point was formulated by the learned Magistrate for determination: ."whether without statutory notice under Sec.2(35)(b) of the Income Tax Act, cognizance can be taken of the offence under sec.276-B read with Sec.278-B of the Income Tax Act against the 2nd accused, the Managing Partner of the firm?". 6. It was argued before the learned Magistrate on behalf of the Department that under Sec.2(35)(b) of the Act, since the Principal Officer includes agent and since a partner under the Indian Partnership Act is an agent for the business of the firm, no notice under Sec. 2(35)(b) of the Act to treat such partner as Principal Officer of the firm is necessary. Rejecting the said contention, the learned Magistrate held that there is a legal lacuna in not issuing notice under Sec.2(35)(b) of the Act to the 2nd accused, who is a partner of the 1st accused firm, and who is sought to be made liable by virtue of Sec.278-B of the Act and because of that lacuna, complaint cannot be taken cognizance of against the 2nd accused. Therefore, rejecting the contention of the Department, the Magistrate held that the Managing Partner of a firm will not come under the meaning ‘agent’ in Sec.2(35)(b) of the Act and that the complaints are not legally sustainable against the 2nd accused for non-issue of statutory notice under Sec.2(35)(b) of the Act to make him liable under Sec.278-B of the Act. Thus, the complaints were taken on file only against the 1st accused-firm. 7. Aggrieved against the order of the Additional Chief Metropolitan Magistrate (Economic Offences I) Madras-8, the Income Tax Officers, Headquarters, TDS, and salary circle have filed the three revisions under secs.397 and 401 of the Code of Criminal Procedure. 8. The matter came up before E.J.Bellie, J. on 3. 1994. 7. Aggrieved against the order of the Additional Chief Metropolitan Magistrate (Economic Offences I) Madras-8, the Income Tax Officers, Headquarters, TDS, and salary circle have filed the three revisions under secs.397 and 401 of the Code of Criminal Procedure. 8. The matter came up before E.J.Bellie, J. on 3. 1994. Before the learned Judge, the learned counsel for the 1st accused/firm cited two decisions of this Court reported in Shital N. Shah v. Income Tax Officer, Madras-34, 1990 L.W. (Crl.) 478, by T.S. Arunachalam, J. as he then was) and G. Anantharamiah v. The Income Tax Officer, 1992 L.W. (Crl.) 173, by K.A. Swamidurai, J. wherein it has been held that for prosecution of a partner of a firm for the offence of non-deduction of tax at source from the interest payable by the firm, a notice under Sec.2(35)(b) of the Act is a precondition. E.J. Bellie, J., felt that the said decisions are not correct and that no question of notice under Sec.2(35)(b) of the Act to a partner arises at all. The learned Judge has also felt that it is discernible that there is an error committed in having taken the view that a partner of a firm comes within the purview of Sec.2(35) of the Act. Therefore, the learned Judge thought it necessary to refer the matter to a Division Bench to have an authoritative binding judgment. That is how the matter is posted before this Bench. 9. The following is the order of reference by E.J. Bellie, J.: "This criminal revision petition case is by the Income Tax Officer, Headquarters, TDS, office of the Commissioner Madras-34, hereinafter referred to as the Income-tax Officer, against an order passed by the Additional Chief Metropolitan Magistrate, Economic Offences I, Egmore, Madras, in Crl.M.P. No.242 of 1987 refusing to take cognizance of an offence complaint against the 2nd accused in the case. Para 2. The complaint was filed by the Income-tax Officer against the 1st accused firm and against the 2nd accused its Managing Partner under Sec.276-B read with Sec.278-B of the Income-tax Act for an offence of failure of deduct income-tax at source from the interest payable by the partnership firm. Para 3. Para 2. The complaint was filed by the Income-tax Officer against the 1st accused firm and against the 2nd accused its Managing Partner under Sec.276-B read with Sec.278-B of the Income-tax Act for an offence of failure of deduct income-tax at source from the interest payable by the partnership firm. Para 3. Before the case was taken cognizance, the learned Magistrate suo motu observing that as regards the 2nd accused, the Income-tax Officer should have issued statutory notice to him under Sec.2(35)(b) of the Income-tax Act and such a notice having not been issued, the prosecution is incompetent against him, he took cognizance of the offence only against the 1st accused. Aggrieved by this order the Income-tax Officer has come up with this criminal revision case. Para 4. Mr.K.Ramasamy, learned counsel appearing for the revision petitioner/ Income-tax Officer contends that the order of the Court below is erroneous since no notice under Sec.2(35)(b) to 2nd accused is warranted. Para 5. Mr.V. Gopinath, learned counsel appearing for the 2nd respondent/ Managing Partner of the 1st respondent firm cites two decisions of this Court i.e., (i) Shital N.Shah and others v. Income-tax Officer, Madras, 1990 L.W. (Crl.) 478 and (ii) G.Anantharamiah v. Income-tax Officer (Headquarters), TDS, Madras-34, 1992 L.W. (Crl.) 173, wherein as ordered by the Magistrate, is has been held that for prosecution of a partner of a firm for the offence of non-deduction of tax at source from the interest payable by the firm, a notice under Sec.2(35)(b) is a pre-condition. Para.6 On a careful analysis of the relevant sections in the Income-tax Act, I am clearly able to see that the said decisions of this Court are not correct and no question of notice under Sec. 2(35)(b) to a partner arises at all. Para 7. Now Sec.l94-A of the Income Tax Act provides for deduction of income-tax from interest payable. Sec.200 provides for payment of the deducted amount to the Government. These two sections cast a duty for deduction and payment of tax upon a person responsible for paying interest. Here it would be relevant to note that as per Sec. 2(31) a person includes a firm. Under Sec. 204, the meaning of ‘person responsible for paying’ has been given. In this section, there are three clauses in respect of interest in clause (iii). Here it would be relevant to note that as per Sec. 2(31) a person includes a firm. Under Sec. 204, the meaning of ‘person responsible for paying’ has been given. In this section, there are three clauses in respect of interest in clause (iii). As per this clause, the person responsible for paying is the payer himself, or, if the payer is a company, the company, the company itself including the Principal Officer thereof. Para 8. Now in our case the payer is undoubtedly a partnership firm, ‘company’ has been defined in Sec. 2(17) of the Act. ‘Firm’ has been defined in Sec. 2(23). Therefore, a firm cannot be said to be a company. They are in nature different from each other. Hence when the sub-clause (iii), reads, ‘If the payer is a company itself including the Principal Officer thereof, it refers only to a company defined under Sec.2(17) and not to a firm defined under Sec. 2(23). Para 9. Sec. 276-B is a penal section for failure to deduct or pay tax. As per this section, if a person fails to deduct, or after deducting fails to pay the tax, as required by or under the provisions of sub-sec.(9) of Sec.80-E or Chapter XVIII(B), he shall be punishable. It is seen above that the person responsible for paying in our case is the firm itself. Therefore, for non-deduction of tax from interest payable, the firm is punishable. Para 10. Under Sec.278-B where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. In this section itself, there is an explanation according to which for the purpose of this section, a company included a firm. As regards the firm, the partners thereof are the persons who are in charge of the firm and they are responsible for the conduct of the business of the firm. Therefore, under Sec. 278-B for the offence committed by the firm, the partners are deemed to be liable. As regards the firm, the partners thereof are the persons who are in charge of the firm and they are responsible for the conduct of the business of the firm. Therefore, under Sec. 278-B for the offence committed by the firm, the partners are deemed to be liable. Hence, if the allegation that tax has not been deducted from the interest payable by the firm is true, then under sec.278-B along with the firm, the partners also would have committed an offence. This being the case no notice under Sec. 2(35)(b) arises at all. Para 11. Firm does not come within the purview of Sec.2 (35). This Section relates to the Local Authority or a company or any other public Body or any Association of persons or any body of individuals. Here it must be noticed that under Sec. 2(31) person includes. .(i) An Individual .(ii) A Hindu undivided family (iii) A company .(iv) A Firm .(v) An association of persons or body of individuals whether incorporated or not. .(vi) A Local Authority, and (vii) Artificial juridical person not falling within any of the proceeding sub-clauses, company, public Body or an Association of person or Body of Individuals mentioned in Sec.2(35) all come within the meaning of ‘person’ under Sec.2(31) and they are besides a firm. From this, it is clear that a firm is not within the ambit of Sec.2(35). Therefore, as said above, no question of giving any notice under Sec.2(35) arises in the case of a firm. Para 12. In the abovesaid two judgments of this Court, it is discernible that there is an error committed in having taken the view that a partner of a firm comes within the purview of Sec.2(35). In this position, I think it is necessary to refer the matter to a Division Bench to have an authoritative binding judgment. Para 13. Therefore, the office is directed to place the matter before My Lord the Hon’ble Chief Justice to post the matter before a Division Bench or Full Bench." 10. It is also to be noticed that the 2nd accused in E.O.C.C. Nos.292 to 360 of 1987/ 2nd respondent in Crl.R,C. No.415 of 1987 filed Crl.M.P.No.7697 of 1987 under Sec.482 of the Code of Criminal Procedure to direct the Registry to issue notice to him for an opportunity being given to be heard on the question at issue. On 8. It is also to be noticed that the 2nd accused in E.O.C.C. Nos.292 to 360 of 1987/ 2nd respondent in Crl.R,C. No.415 of 1987 filed Crl.M.P.No.7697 of 1987 under Sec.482 of the Code of Criminal Procedure to direct the Registry to issue notice to him for an opportunity being given to be heard on the question at issue. On 8. 1987 notice was ordered and Mr.V.Gopinath, Advocate, entered appearance on his behalf. 11. We have hard Mr.K.Ramaswami, learned Special Public Prosecutor for the Income-tax Department petitioner and Ms.Nappinnai, learned counsel for the respondents. She also argued the case on behalf of the Managing Partners of the 1st accused firm. 12. It is contended by the learned Special Public Prosecutor Mr.K.Ramaswami as follows: .(a) The learned Magistrate has misdirected himself on the question of law relating to Sec.2(35) of the Act and has failed to note that the ‘Principal Officer’ defined under Sec.2(35)(b) of the Act relates to only the obligations under Secs.194 and 204 of the Act and they relate to a company and not to a firm. .(b) The court below ought to have held that the 1st accused, a partnership firm, is not a company and therefore there is no question of any Principal Officer being appointed or notices being served under Sec.2(35) of the Act. As such, the Court below has completely erred in applying Sec.2(35)(b) of the Act to Sec.278-B of the Act just because Sec.278-B includes a firm. .(c) The court below had failed to note that the decision reported in M.R. Pratap v. M. Muthuramalingam, I.T. Officer, 140 I.T.R. 798, applies only to a company and its employees and does not apply to a firm. .(d) The court below had failed to note that the words ‘company’ and ‘Director’ have been given wider connotation only for the purpose of the other Sections of the Act. 13. Countering the arguments of the learned Special Public Prosecutor, Ms.Nappinnai, learned counsel appearing for the respondents in all these cases contended that the complaints suffered from fundamental legal defects of non-issuance of the statutory notice under Sec.2(35)(b) of the Act to the 2nd respondent/ partner, treating him as the Principal Officer, so as to bring him within the meaning of Sec.278-B of the Act. It is further submitted that Sec.276-B of the Act, with which the 2nd respondent is sought to be charged, prescribes stringent punishment of rigorous imprisonment which may extend to three years and fine, and in any event, it shall be for a minimum period of three months. The penal provisions of the Act have to be strictly observed and nonobservance of the statutory procedure is illegal and any proceedings that are sought to be taken are vitiated and hence unsustainable. 14. The following decisions were cited before us: Shital N.Shah v. Income Tax Officer, Madras, 1990 L. W. (Crl.) 478, by T.S. Arunachalam, J. as he then); G.Anantharamiah v. Income Tax Officer, 1992 L.W. (Crl.) 173, by K.Swamidurai, J.) M.R. Pratap v. M. Muthuramalingam, Income Tax Officer, 148 I.T.R. (by S. Natarajan, J. as he then was), M.R. Pratap v. M. Muthukrishnan Income Tax Officer, 1961 T.R. 798, by the Supreme Court). 15. The points that arise for consideration in these revisions are: .(1) whether the 2nd accused in his capacity as the partner is liable for prosecution under Sec.176-B read with Sec.278-B of the Act, and .(2) Whether notice under Sec.2(35)(b) of the Act to a partner is a precondition? 16. Sec.2 (17) of the Act defines ‘company’, which runs thus: "2(17).‘Company’ means- .(i) any Indian company, or .(ii) any body corporate incorporated by or under the laws as of a country outside India, or (iii) any institution, association or body which is or was assessable or was assessed as a company for any assessment year under the Indian Inc6me-tax Act, 1922 (II of 1922), or which is or was assessable or was assessed under.... this Act as a company for any assessment year commencing on or before the 1st day or April, 1970, or (iv) any institution, association or body, whether incorporated or not and whether Indian or non-Indian, which is declared by general or special order or the Board to be a company; Provided that such institution, association or body shall be deemed to be a company only for such assessment year or assessment years (whether commencing before the 1st day of April, 1971, or on or after that date) as may be specified in the declaration." 17. Sec. 2(23) or the Act defines ‘firm’. It runs thus: "2 (23). Sec. 2(23) or the Act defines ‘firm’. It runs thus: "2 (23). ‘Firm’, ‘partner’ and ‘partnership’ have the meanings respectively assigned to them in the Indian Partnership Act.1932 (9 of 1932); but the expression ‘partner’ shall also include any person who, being a minor has been admitted to the benefits of partnership." Two essential conditions necessary to form the relation of partnership are: (i) these should be an agreement between persons to share the profits as well as the losses of the business, and (ii) the business must be carried on by all or any of them acting for all within the meaning of the definition of partnership under Sec.4 of the Indian Partnership Act. 18. Sec.2(31) of the Act defines ‘person’ as follows: "2 (31) "person’ includes- .(i) an individual, .(ii) a Hindu undivided family, (iii) a company, (iv)a firm .(v) an association of persons or a body of individuals, whether incorporated or not; .(vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses; 19. Sec.2(35) of the Act defines Principal Officer’ as follows: "2 (35) "Principal Officer, used with reference to a local authority or a company or any other public body or any association of persons or any body of individuals, means- .(a) the secretary, treasurer, manager or agent of the authority, company, association or body or .(b) any person connected with the management or administration of the local authority, company, association or body upon whom the Assessing Officer has served a notice of his intention of treating him as the principal officer thereof." 20. Sec.192 of the Act deals with deduction at source in the case of salaried people. Sec.194-A of the Act deals with interest other than interest on securities. Sec.200 of the Act deals with duty of person deducting tax. When the tax has been deducted at source, it does not lie at the risk of the revenue and unless the tax so deducted is deposited or paid, the person who has deducted, continues to be responsible. A default in payment of tax deducted at source to the credit or the Central Government attracts penalty under Sec.201(1) read with Sec.221, interest under Sec.201(1-A) and prosecution under Sec.276-B of the Act. The relevant rule for this section is Rule 30 of. A default in payment of tax deducted at source to the credit or the Central Government attracts penalty under Sec.201(1) read with Sec.221, interest under Sec.201(1-A) and prosecution under Sec.276-B of the Act. The relevant rule for this section is Rule 30 of. the Income-tax Rules, 1962, which provides for time and mode of payment to Government account of tax deducted at source. 21. Sec.201 (1-A) of the Act provides for payment of simple interest at 15% per annum if any such person, principal officer or company, does not deduct or after deducting fails to pay the tax as required by or under the Act. Sec.221(1) of the Act provides for penalty in case of default in payment of tax. 22. Sec.276-B of the Act reads as follows: "276-B. Failure to pay the tax deducted at source: If a person fails to pay to the credit of the Central Government, the tax deducted to source by him as required by or under the provisions or Chapter XVIIB. he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine." 23. The above section was substituted by the District Tax Laws (Amendment) Act.1987 with effect from 4. 1989. Prior to its substitution, Sec.276-B as inserted by the Finance Act, 1968, with effect from 4. 1968 and later on substituted by the Taxation Laws (Amendment) Act, 1975, with effect from 10. 1975 and amended by the Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986, with effect from 9. 1986, stood as under. “276B. Failure to deduct or pay tax: -If a person fails to deduct or after deducting, fails to pay the tax as required by or under the provisions of Sub- sec.(9) of Sec.80E, or Chapter XVII-B, he shall be punishable, .(i) in a case where the amount of tax which he has failed to deduct or pay exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; .(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.” 24. Under the amended Act, Sec.276-B of the Act now provides for prosecution only in respect of a failure to pay to the Government the tax deducted at source. The offence of failure to deduct tax at source under the provisions of Chapter XVII-B now attracts penalty under Sec.271(c) of the Act, Reference to Sec.80-E has been omitted consequent on the omission of Sec.80-E. A uniform punishment has been provided for the offences, which is rigorous imprisonment for at least three months extending upto seven years and fine. Even under the old section, the burden of proving the existence of reasonable cause or excuse was shifted to the assesseee with effect from 9. 1986. Under the new section also, the position continues to be the same. Prior to 4. 1989, the breach of contravention which attracted prosecution under this section related to the failure of a person without reasonable cause or excuse, to deduct, or, after deducting to fail to pay, the tax as required by or under the provisions of Sub-sec.(9) of Sec.89-E or Chapter XVIII-B of the Act. It provided that a person failing without reasonable cause or excuse to deduct or after deducting the tax as required by the provisions hereinbefore mentioned, shall be punishable with rigorous imprisonment for a term which may extent to six months and shall also be liable to fine, which shall not be less than a sum calculated at 15% per annum on the amount of such tax from the date on which such tax was deducted, to the date on which such tax was actually paid. An imposition of rigorous imprisonment at least for a fraction of six months was imperative under the provision. In fixing the amount of fine, the court may take into account circumstances such as the recurrent nature of the defaults and the interest lost by the Government due to the failure. 25. Under Sec.278-B, a limited company as well as every person who, at the time the offence, was committed, was in charge of and was responsible to the company for the the conduct of the business of the company. 26. 25. Under Sec.278-B, a limited company as well as every person who, at the time the offence, was committed, was in charge of and was responsible to the company for the the conduct of the business of the company. 26. Sec.278-B of the Act runs thus: “278-B.(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in Sub-sec.(1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation: For the purposes of this section,- .(a) ‘company’ means a body corporate, and includes (i) a firm and (ii) an association of persons or a body of individuals whether incorporated or not; and .(b) ‘director’, in relation to- .(i) a firm, means a partner in the firm; .(ii) any association of persons or a body of individuals, means any member controlling the affairs thereof.” This section, which was inserted by the Taxation Laws (Amendment) Act, 1975, with effect from 10. 1975, does not apply to an offence committed prior to that date. A person ‘in charge of the business is the person who is in over all control of the day today business. 27. The effect of this section is to make every person who was in charge of and was responsible to the company for the conduct of the business of the company at the time the offence was committed apart from the Managing Director who signed the return liable to be proceeded against and punished. 27. The effect of this section is to make every person who was in charge of and was responsible to the company for the conduct of the business of the company at the time the offence was committed apart from the Managing Director who signed the return liable to be proceeded against and punished. The position earlier was that only the Principal Officer (which term included the Managing Director in case of a company) could be prosecuted and punished. Under Sec. 278-B of the Act, the basic requirement is that the prosecution must prove that the persons concerned were in charge of and were responsible to, the company or the firm as the case may be, for the conduct of the business of the company or the firm at the time, when the offence was committed. It is only then that they can be vicariously prosecuted along with the company or the firm as the case may be. The proviso to Sub-sec.(l) will come into operation only after the initial onus cast on the prosecution under the main section gets discharged. In view of the provisions of this section, non-issuance of individual notices to any of the partners is of no consequence, rather not necessary to issue any such notice. Sec.2(35) of the Act as pointed defined the expression ‘Principal Officer’ only with reference to a local authority or a company or any other public body or any association of persons or any body of individuals. The Act adopts the definition of the terms ‘firm’, ‘partner’ and ‘partnership’ as contained in the Indian Partnership Act, 1932. Bach partner is an agent of another. Consequently, all the partners are jointly and severally liable to the acts of one or other of the partners of the firm and are also entitled to share the profits and losses, (vide the decision reported in Geethanjali Mills Limited v. Thiruvengadathan, 179 I.T.R. 558. 28. A consistent view has been expressed by courts that a company being a juridical person cannot be made liable for corporeal punishment like imprisonment. 28. A consistent view has been expressed by courts that a company being a juridical person cannot be made liable for corporeal punishment like imprisonment. It is also held that if the contravention is by a company, the persons who may be held guilty and punished are (i) the company itself; (ii) every person who, at the time the contravention was committed was in charge of, and was responsible, to the company for the conduct of the business of the company (in short, the person in charge); and (iii) any director, manager, secretary or other officer of the company with whose consent or connivance or acts of neglect attributable to whom the offence had been committed i.e., an officer of the company. Any one or more or all of them may be prosecuted and punished. The person in charge may also be prosecuted. 29. It is seen from the Explanation to Sec.278-B of the Income-tax Act that the partner of a firm or, as the case may be, a member of other association is also liable to be convicted for an offence committed by the firm or other association, if he is in charge of and is responsible for the conduct of the business of the firm or association or if it is found that the offence is committed with the consent or connivance or is attributable to any neglect on the part of the partner or member concerned. The expression ‘a person in charge of and responsible for the affairs of a company’ appearing in Sub-sec.(i) of Sec.278-B would also refer to a firm or other association in view of the Explanation to Sec.278-B. The test, therefore, to be applied to a director in charge of a company must also necessarily apply to the partner of a firm or, as the case may be, member of other association in charge of a business. In that context, a person ‘in charge’ must mean a person in overall control of the day to day business of the company or firm or other association. 30. Secs. 4 and 18 of the Indian Partnership Act, 1932 should also be beneficially noticed in this context. Sec.4 reads as follows: "4. In that context, a person ‘in charge’ must mean a person in overall control of the day to day business of the company or firm or other association. 30. Secs. 4 and 18 of the Indian Partnership Act, 1932 should also be beneficially noticed in this context. Sec.4 reads as follows: "4. Definition of ‘partnership’, ‘partner’, ‘firm’ and ‘firm name’: ‘Partnership’ is the relation between person who have agreed to share the profit of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually ‘partners’ and collectively ‘a firm’ and the name under which their business is carried on is called the ‘firm name’. 31. The components of the definition of ‘partnership’ consists of (a) persons, (b) a business carried on by all of them or any of them acting for all, and (c) an agreement between those persons to carry on such business and to share its profits. It is the relationship between those persons which constitutes the partnership. In other words, the following important elements must be there in order to establish partnership, (a) there must be an agreement entered into by all parties concerned; (b) the agreement must be to share profits of business; and (c) the business must be carried on by all or any of the person concerned acting for all. .32. Sec.18 of the Indian Partnership Act runs as follows: ."18. Partner to be agent of the firm: Subject to the provisions of this Act, a partner is the agent of the firm for the purposes of the business of the firm." 33. Sec.18 of the Indian Partnership Act makes a partner the agent of the firm for the purposes of the business of the firm. It is thus clear that a partner is liable for the acts of the other partners vice versa as principal is liable for the acts of his agent done in the ordinary course of business. The effect of Sec.18 is to make every partner as agent of the firm and make him jointly and severally liable for all acts of the firm. 34. The effect of Sec.18 is to make every partner as agent of the firm and make him jointly and severally liable for all acts of the firm. 34. In the light of the above discussion and analysis of the relevant sections of the Income-tax Act and the Indian Partnership Act, we have to see whether the decisions of this Court in Shital N.Shah v. I.T.Officer, Madras, 1990 L.W. (Crl.) 478 and G.Anantharamiah v. I.T.Officer, 1992 L.W. (Crl.) 173, are correct and whether the notice under Sec. 2(35)(b) of the Act to a partner is a pre-condition. .35. All the three complaints given by the Department relate to the partnership firms. All of them have been rejected by the Magistrate on the ground that the complaints against the partners are not legally sustainable for the non-issue of statutory notice under Sec.2 (35)(b) of the Act to make them liable under Sec.278-B of the Act. We have already seen the scope of Secs.194-A, 200,204,276-B and 278-B of the Act. Secs.194-A and 200 of the Act cast a duty for deduction and payment of tax upon a person responsible for paying interest. 36. In Shital N.Shah v. Income-tax Officer, 1990 L.W. (Crl.) 478, T.S. Arunachalam, J., as he then was, who decided the case on 28. 1990, had taken the view that the words "any person who is responsible for paying" found in Sec.194-A of the Act had to be read in conjunction with Sec.204 of the Act, which furnishes the meaning of "persons responsible for paying". We are unable to endorse and subscribe to the views of the learned Judge in the above case. It is not necessary that prosecution under Sec.278-B of the Act can be launched only against the company and "its principal officer." There is no warrant to give a restricted meaning to the following expression found in Sec.278-B of the Act: "Every person who was in charge and was responsible to the company for the conduct of the business of the company at the time when the offence was committed would be liable. Such person, who was in charge of and was responsible to the company and for the conduct of the business may be the "Principal Officer" as defined in Sec. 2(35) of the Act or "person responsible for paying." 37. Such person, who was in charge of and was responsible to the company and for the conduct of the business may be the "Principal Officer" as defined in Sec. 2(35) of the Act or "person responsible for paying." 37. The interpretation placed by the learned Judge (T.S. Arunachalam, J., as he then was) is contrary to the express language of Sec.278-B of the Act. Therefore, any person who at the time the offence was committed was in charge of and was responsible to the company which includes a firm, for the conduct of the business can be proceeded against under Sec.278-B of the Act notwithstanding the fact that the person proceeded against may not be either ‘principal officer’ or ‘person responsible for paying’. The intention of the Parliament is, therefore, not to confine the prosecution under Sec.278-B of the Act only against the "principal officer" and "person responsible for paying’. .38. We also came across another decision of T.S. Arunachalam, J. (as he then was) reported in G.Ramaswami Moopanar v. E.S.I. Corporation, 1990 L.W. (Crl.) 414 decided on 8. 1990. The learned Judge had considered the question of law as to whether a Director of a company or a partner of a firm be prosecuted as a "Principal employer" falling within the fold of Sec.2 (17) of the E.S.I. Act as it stood prior to its amendment by Central Act 29 of 1989, in and by which Sec.86-A of that Act was introduced in the said Act. (Amended with effect from 20.10.1989). 39. Sec.86-A of the E.S.I. Act reads as follows: "86-A. Offences by companies: (1) if the person committing an offence under this Act is company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. .(2) Notwithstanding anything contained in Sub-sec.(1), where an offence under this Act has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation: For the purposes of this section- .(i) ‘company’ means any body corporate and includes a firm or other association of individuals; and .(ii) ‘director’ in relation to- .(a) a company, other than a firm, means the managing director or a whole time director; .(b) a firm means partner in the firm.“ 40. On a comparison of Sec.86-A of the E.S.I. Act with Sec.278-B of the Act, it is seen that they are verbatim the same. Sec.86-A of the E.S.I. Act has been inserted by the E.S.I. (Amendment) Act 29 of 1989. This provision is analogous to similar provisions contained in various statutes such as Essential Commodities Act, Electricity Act, Prevention of Food Adulteration Act, etc., in which for the offences under such Acts, prosecution can be launched against both natural and artificial persons. It is provided that if a person committing the offence is a company, then, every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be prosecuted against and punished accordingly. The provision to Sub-sec.(l) safeguards the interest of the persons who can prove that the offence was committed without his knowledge or that he exercised due diligence to prevent such offence. The onus is upon such person to prove any one of the above circumstances and if he so proves, he shall not be liable for punishment. 41. Sub-sec.(2) of Sec.86-A of the E.S.I. Act contains a deeming provision. The onus is upon such person to prove any one of the above circumstances and if he so proves, he shall not be liable for punishment. 41. Sub-sec.(2) of Sec.86-A of the E.S.I. Act contains a deeming provision. It states, where an offence has been committed with the consent or connivance of or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. For the purpose of this section, company has been given extended meaning. It means any body corporate and includes a partnership firm or other association of individuals. This means that ”company“ will include not only public or private limited companies registered under the Indian Companies Act, but also statutory corporations, partnership firm or any society registered under the Societies Registration Act or any State Societies Registration Act. 42. In interpreting similar provisions in Drugs and Cosmetics Act, 1940, the Supreme Court in the decision reported in Rajasthan Pharmaceutical Laboratory, Bangalore v. State of Karnataka, A.I.R. 1981 S.C.809: (1981)2 S.C.R. 604 , has held that the Directors who are not directly in charge of the management of the company cannot be held liable. 43. In this context, we may also beneficially refer to Sec.10 of the Essential Commodities Act, 1955. Sec.10 of the said Act contains similar provisions to Sec.86-A (1) of the E.S.I. Act. 44. Two things have to be proved viz., (i) the company must be charged for the same offence; and (ii) the persons, besides the company sought to be made liable, must be in charge of and responsible to the company for the conduct of the business. 45. While dealing with a similar situation with reference to the provisions of the Prevention of Food Adulteration Act, 1954, the Allahabad High Court in the decision reported in D.K. Jain v. The State, A.I.R. 1965 All. 45. While dealing with a similar situation with reference to the provisions of the Prevention of Food Adulteration Act, 1954, the Allahabad High Court in the decision reported in D.K. Jain v. The State, A.I.R. 1965 All. 525, held that a reading of Sec.17(2) of the Prevention of Food Adulteration Act, makes it obvious that the Legislatures has taken care to provide that natural persons made vicariously liable for an offence under the Act, committed by a company or anyone of its employees are to be punished only when it is established that they had some nexus with the crime either because of their connivance with it or due to their criminal negligence which had resulted in its commission. The Allahabad High Court has further held that to make a person liable for the offence committed by the company or its salesman, who was physically present on the scene, it must be proved that the offence was committed with his connivance. 46. In the decision reported in G.Ramaswami Moopanar v. E.S.I. Corporation, 1990 L.W. (Crl.) 414, T.S. Arunachalam, J., as he then was, had observed as follows: “By this provision, if a person committing an offence under the Act was a company, it makes every person, who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, liable to be proceeded against and punished. A similar provision regarding vicarious liability, is found in several Acts, for example, the Prevention of Food Adulteration Act, Essential Commodities Act, Indian Explosives Act, Indian Electricity Act, etc. The liability is sought to be fastened only when such person was in charge of and responsible for the conduct of the business of the company at the time when the offence was committed. If such a person were to be prosecuted after satisfying the basic requirement of the section, even then it would be open to such a person to prove that the offence was committed without his knowledge or he was unable to prevent the commission of the offence in spite of his having exercised all due diligence. It is, therefore, fairly clear that the Legislature had taken note of the defence, which may be feasible. It is, therefore, fairly clear that the Legislature had taken note of the defence, which may be feasible. On the contrary, if the principal employer fails to pay the contribution he is liable to pay under the Act, the offence is complete and prima facie there appears to be no defence open for him. Therefore, it is possible to hold, that the Legislature, when it introduced this welfare legislation, did not intend to punish every partner or every director for nonpayment of the contribution, for apart from being directors or partners, they may not have the ultimate control over the affairs of the factor. In that context, it is quiet possible, that under Sec.2(17) of the Act, the meaning to the word principal employer’ refers to the owner or the occupier of the manager of the factory if he had been so named. The liability, therefore, in such event, will rest on such person, who has complete control over the affairs of the factory. If the partners and directors were liable to be proceeded against under Sec.2(17) of the Act, it appears to my mind, that there was no need for the Legislature to introduce Sec.86-A, by Act 29 of 1989, making the company and persons in charge of and responsible for the conduct of the business or the company liable for offence under the Act. A similar provision in Sec.278-B was introduced in the Income-tax Act on 10. 1975.” 47. The Delhi High Court while considering the insertion of Sec.278-B in the Income-tax Act, in the decision reported in Parmeet Singh Sawney v. Dinesh Verma, (1988)1 Crimes 153 , held as follows: “Before the introduction of this section (Sec.278-B) a firm alone could have been proceeded against. Mr.Jolly states that ‘firm’ includes its partners and they as well could be prosecuted. I must at once point out that Mr.Jolly is labouring under misconception. Under Partnership Act, partners of course will be liable for all the liabilities but we are in a different field. Sec.278-B, which was brought into existence on 1st October, 1975 for the first time, made very person connected with the affairs of the company liable for prosecution. The fact of the matter is that earlier to the introduction of Sec.278-B the partners could not be prosecuted. Sec.278-B, which was brought into existence on 1st October, 1975 for the first time, made very person connected with the affairs of the company liable for prosecution. The fact of the matter is that earlier to the introduction of Sec.278-B the partners could not be prosecuted. The person referred to in Sec.276-B is in the context of the definition of ‘person’ as contained in Sec.2 (31) of the Income-tax Act. Otherwise also, Mr.Sethi’s contention seems to be strong that in case the partners were to be proceeded against in the absence of Sec.278-B, there was no need for the legislature to introduce Sec.278-B as has been done in the year 1975.” 48. It may be relevant at this stage to refer to the observations of the Supreme Court in the decision reported in Sham Sundar v. State of Haryana, A.I.R. 1989 S.C. 1982. While considering the provisions similar to Sec.86-A of the E.S.I. Act (introduced by Act 29 of 1989), it was stated as follows: "But we are concerned with a criminal liability under penal provisions and not a civil liability. The penal provision must be strictly construed in the first place. Secondly, there is no vicarious liability in criminal law unless the statute takes that also within its fold. Sec. 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not. It is, therefore, necessary to add an emphatic note or caution in this regard. More often it is common that some of the partners of a firm may not even be knowing of that is going on day to day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know everything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to Sub-sec.(2) that the offence was committed without their knowledge. There may be ladies and minors who were admitted for the benefit of partnership. They may not know everything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to Sub-sec.(2) that the offence was committed without their knowledge. It is significant to note that the obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in Sub-sec(1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted.“ 49. The Supreme Court in M.R. Pratap v. V.M. Muthu Krishnan, Income-tax Officer, (1992)196 I.T.R. 1, while affirming the decision of the Madras High Court in M.R. Pratap v. V.M. Muthukrishnan, I.T.O., (1977)110 l.T.R. 665, stated as follows: “The word ‘person’ used in Sec.277 of the Income-tax Act, 1961 (as the Act stood prior to its amendment with effect from October 1, 1975), refers not only to the assessee but also to the person who has made the false verification in the return behalf of the assessee. The managing director who verifies the return filed on behalf of the company, which is the assessee, would be the principal officer within the meaning of the definition in Sec.2(35). In view of Sec.139 read with Sec.140(c), the return has to be signed by the principal officer of the company. A statutory obligation is case on the Principal Officer to sign the tax returns filed on behalf of the company. The subsequent amendments made by the Taxation Laws (Amendment) Act, 1975, will not in any way alter the position with regard to the operation of the provisions of the Income-tax Act as against the managing director of a company when he has signed the return in such capacity. The effect of the new Sec.278-B, inserted by the Amendment Act of 1975, is to make every person connected with the affairs of the company, apart from the managing director who had signed the return, liable to be proceeded against the punished in relation to an offence by the company.” .50. The effect of the new Sec.278-B, inserted by the Amendment Act of 1975, is to make every person connected with the affairs of the company, apart from the managing director who had signed the return, liable to be proceeded against the punished in relation to an offence by the company.” .50. S.Natarajan, J., as he then was, in the decision reported in M.R. Pratap v. V.M. Muthuramalingam, Income-tax Officer, (1984)149 I.T.R. 798, held as follows: .“Sec.276-B of the Income Tax Act, 1961, does not refer to a managing director but only to a person. The definition of person, as contained in Sec.2(31), refers to the various categories of assessees who can be treated as persons within the meaning of the Income-tax Act. The principal officer as defined in Sec.2(35) will automatically take in the secretary, treasurer, manager or agent of, inter alia, a company but as far as the managing director is concerned, he can be treated as the principal officer of the company only if the Income-tax Officer gives notice to him of his intention to treat him as such. Consequently, if any one connected with the company is not the secretary, treasurer, manager or agent, then he cannot be treated as the principal officer, of the company unless the Income-tax Officer has served a notice on him as envisaged under Sec.2(35)(b) of the Act. Sec.192(1) does not refer to a director or managing director but only to a person responsible for paying income chargeable under the head ‘salaries’. Consequently, the managing director of a company cannot be held liable under Sec.276-B unless the Income-tax Officer has served a notice on him under Sec.2(35)(b) and informed him of his intention to treat him as the principal officer of the company.” .51. The decision reported in G.Anantharamiah v The Income-tax Officer. 1992 L.W. (Crl.) 173, was decided by K.Swamidurai, J. In that case the 1st accused was a partnership firm carrying on business as film exhibitors. The 2nd accused is the Managing Partner and the 3rd accused was the Joint Managing Partner of the 1st accused firm and the 4th accused was an employee of the 1st accused firm, in charge of financial borrowings, bank transactions, interest payments, etc. The 2nd accused is the Managing Partner and the 3rd accused was the Joint Managing Partner of the 1st accused firm and the 4th accused was an employee of the 1st accused firm, in charge of financial borrowings, bank transactions, interest payments, etc. The Income-tax Officer, Madras - 34, filed a complaint under Sec.276-B read with Sec.278-B of the Act for failure to remit tax deducted at source to the credit of the Government of India within the time prescribed under Sec.200 of the Act read with Rule 30(1)(b)(2) of the Income-tax Rules, 1962. The main contention raised by the 4th accused, was, that he was not the person responsible to and is in charge of the company for the conduct of the business” of the company as well as the company and so, he should not be charged for the alleged offences. The learned Judge, after referring to Secs.200, 276-B and 278-B of the Act, and following the decision in Shital M. Shah v. I.T.Officer, Madras, 1990 L.W. (Crl.), 478 held that the prosecution has failed to prove that the 4th accused is a person responsible for payment of tax deducted to the Government and is also a person in charge of and responsible for paying the said amount. Therefore, the learned Judge held that the charge as against the 4th accused under Secs.276-B and 278-B of the Act is not maintainable. 52. As already seen, T.S. Arunachalam, J., as he then was, has decided two cases reported in Ramaswami Moopanar v. E.S.I.Corporation, 1990 L.W. (Crl.)414 on 8. 1990 and Shital M.Shah v. l.T.Officer, Madras, 1990 L.W. (Crl.) 478 on 28. 1990. Undoubtedly, the decision in 1990 L.W. (Crl.) 414 dated 8. 1990, and in particular the passage extracted by us, has not been brought to the notice of the learned Judge at the time of hearing of the case reported in 1990 L.W. (Crl.) 478. It is seen that Sec. 278-B of the Act was introduced only on 10. 1975. 1990. Undoubtedly, the decision in 1990 L.W. (Crl.) 414 dated 8. 1990, and in particular the passage extracted by us, has not been brought to the notice of the learned Judge at the time of hearing of the case reported in 1990 L.W. (Crl.) 478. It is seen that Sec. 278-B of the Act was introduced only on 10. 1975. The decision of T.S. Arunachalam, J., as he then was, in 1990 L.W. (Crl.) 414, has been rendered after the introduction of Sec.86-A of the E.S.I. Act, under which persons in charge of and responsible for the conduct of the business are liable for the offences under the Act, and the offence in question in that case had taken place after the introduction of Sec. 86-A of the E.S.I. Act. Though prior to the introduction of Sec.86-A of the E.S.I. Act, the director of a company and partner of a firm by virtue of being a director or partner is not a “principal employer” as contemplated by Sec. 2(17) of the E.S.I. Act and therefore, not personally liable to pay the contribution under E.S.I. Act. The position came to be altered as pointed out above on the introduction of Sec.86-A of the E.S.I. Act. Therefore, we find it difficult to subscribe to the view expressed in 1990 L.W.(Crl.) 478. 53. As already seen, Sec.276-B of the act provides that if a person fails to pay to the credit of the Central Government the tax deducted at source by him as required by the provisions of Chapter 17-B, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine. Sec.278-B of the Act deals with offences committed by the companies. The definition ‘company’ for the purpose of the said section includes ‘a firm’. Therefore, the expression ‘company’ used in Sec. 278-B of the Act has to be understood so as to include a firm. If an offence is committed by a firm, only the person who was in charge of and was responsible to the firm for the conduct of the business of the firm at the time when the offence was committed, as well as the firm shall be proceeded against and punished accordingly. If an offence is committed by a firm, only the person who was in charge of and was responsible to the firm for the conduct of the business of the firm at the time when the offence was committed, as well as the firm shall be proceeded against and punished accordingly. Sub-sec.(2) of Sec.278-B of the Act, which opens with non obstante clause, provides that where an offence under the Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any director, manager, Secretary and other Officers of the company such director, manager, secretary or other officers shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Sub-sec.(2) of Sec.278-B of the Act takes away the burden cast on the prosecution by Sub-sec.(1) thereof, to prove that at the time the offence was committed by a company or a firm, persons against whom the prosecution is launched were in charge of and were responsible to the company or the firm as the case may be for the conduct of the business of the company or the firm. At the same time, Sub-sec.(2) of Sec.278-B casts a burden on the prosecution to prove that the offence has been committed with the consent or connivance of, is attributable to any neglect on the part of any Director, Manager, Secretary or other Officer of the company. In such an event, such Director, Manager, Secretary or other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. In a case falling under Sub-sec.(2) of Sec.278-B of the Act, whether the persons prosecuted were in charge of and were responsible for the company for the conduct of the business of the company need not be proved. Such proof is necessary only when the case falls under Sec.278-B(1) of the Act. In the event the prosecution proves the essential ingredients of Sec.278-B(1) of the Act, the accused would have right to prove that the offence was committed in spite of all due diligence to prevent the commission of such offence. That is the distinction between the two sections. 54. In the event the prosecution proves the essential ingredients of Sec.278-B(1) of the Act, the accused would have right to prove that the offence was committed in spite of all due diligence to prevent the commission of such offence. That is the distinction between the two sections. 54. Sec.204 of the Act enumerates as to who are the persons responsible for paying of the Act Enumerates as to who are the persons responsible for paying for the purpose of Secs.192, 193,194,194-Aand 194-B of the Act. For the purposes of prosecution under Sec.278-B of the Act, the only requirement is that the person proceeded against should have been in charge of and responsible to the firm and for the conduct of the business of the firm at the time when the offence was committed. It may be that such person may also be ‘person responsible for paying’ as contemplated in Sec.204 of the Act or a ‘principal officer’ as defined in Sec.2(35) of the Act. It is not as if the prosecution under the Section can be launched only against the ‘Principal Officer’ as defined in Sec.2(35) of the Act or against the ‘person responsible for paying’. The person proceeded against for prosecution under Sec.278-B of the Act should have been incharge of and was responsible to the firm for the conduct of the business of the firm even though such a person may not satisfy the definition of ‘Principal Officer’. In other words, it is not as if prosecution is contemplated only against a ‘Principal Officer’. If that were the intention of the Parliament, then, the language of the section would be different and the section would have stated that the prosecution can be launched only against the “principal officer.” 55. In the light of the above discussion, we are of the view, that the order of the Court below is contrary to law. The Court below has mis-directed itself on the question of law relating to Secs.2(35) and 2(38)(b) of the Act, On a careful analysis of the relevant sections of the Act and the provisions of the allied Acts and of the decisions referred to supra. We are of the view, that the finding of the court below is not correct. Accordingly, we hold that no question of issuing notice under Sec.2(35)(b) of the Act to a partner arises at all. We are of the view, that the finding of the court below is not correct. Accordingly, we hold that no question of issuing notice under Sec.2(35)(b) of the Act to a partner arises at all. We are unable to subscribe to the views expressed by T.S. Arunachalam, J., as he then was, in Shital N. Shah v. Income Tax Officer, 1990 L.W. (Crl.) 478 and K. Swamindurai, J. in G. Ananatharamiah v. The Income-tax Officer, 1992 L.W.(Crl.) 173, since the said decisions do not lay down the correct proposition of law. Therefore, in the light of the aforesaid discussion we overrule both the above decisions. The reference is answered accordingly. 56. For the foregoing reasons, all the revisions are allowed. The orders of the court below are set aside. The court below is directed to proceed with the cases in accordance with law and in the light of the observations made in this order.