The petitioner served as an independent, non-executive, and nominee director on the Board of a company from 27-6-2007 to 12-11-2011. For the financial year 2008-09, the company failed to deposit the TDS to the credit of the Central Government within the prescribed period; however, this amount was subsequently paid by the company in September 2010.

The petitioner became aware of the criminal case and the orders passed thereunder only on 5-9-2022, when he received a copy of the summons dated 3-8-2022.The petitioner submitted that he was never served with any notice treating him as a principal officer as required under clause (b) of section 2(35) to initiate a prosecution under section 276B read with 278B. Hence, he prayed to Court to quash the Criminal Case filed against him for the offence punishable under sections 276-B read with 278-B.

Section 276-B lays down the punishment for non-payment of tax deducted at source to the credit of the Central Government as required under Chapter XII-D or XVII-B of the I.T. Act. Court held that in order to treat a person as a Principal Officer as defined under section 2(35)(b), Assessing Officer must have served upon him a notice of his intention of treating him as principal officer of company. Where notice as contemplated under section 2(35) had not been served upon petitioner, who was an independent, non-executive, and nominee director on Board of company, before initiating prosecution against him under purview of sections 276B and 278B, prosecution proceedings initiated against him and orders are quashed and set aside.