Grey area, says Madras HC on case against Maran; questions I-T dept on rationale

CHENNAI: The Madras High Court wondered about the rationale behind the Income Tax (I-T) department’s conclusion that Sun Group chief Kalanithi Maran is the ‘principal officer’ of SpiceJet.

A division bench of Justice R Suresh Kumar and Justice C Saravanan raised this question when the department’s Delhi unit moved an appeal seeking to prosecute him for allegedly not crediting the tax deducted at source (TDS) to the government account. Earlier, a single judge had set aside the notice.

Citing the Bhopal gas tragedy case where United Carbide Corporation CEO Warren Anderson was prosecuted after deeming that he held vicarious liability, the department counsel submitted that Maran similarly held vicarious liability and sought to reject his defense stating that he does not hold any managerial position in the company.

The bench then noted that declaring a person principal officer by invoking section 2(35) of the I-T Act to launch prosecution would put him in a disadvantageous position while defending his case, as he was already declared as the principal officer.

“There is a grey area in the case that in order to prosecute Kalanithi Maran under sections 276b and 278b, he was declared as the principal officer under 2 (35). Hence, we need explanation in this regard,” observed the bench.

The bench also raised the question of jurisdiction, asking how the Madras High Court could pass orders when the cause of action occurred in Delhi. To this, the I-T counsel said the case was probed by the Delhi unit because all documents, witnesses, and cause of actions were there, and added that Maran cannot get leverage to escape from prosecution merely because he was residing in Chennai.

The matter was then posted to October 28 for the department’s explanation on the aspects raised by the bench.