2002 (10) TMI 32 - HC - Income Tax

Offence punishable under section 269SS - This is a petition under section 482 of the Code of Criminal Procedure, for quashing the complaint annexure Pl dated January 25, 1991, filed under section 276DD read with section 278B of the Income-tax Act, 1961, and order dated March 25, 1991, annexure P 2, passed by the Chief Judicial Magistrate, Ferozepur, vide which the petitioners were summoned in this case. - After perusing the allegations made in the complaint as well as the averments made in the petition, I find that there are no allegations against petitioners - A perusal of this petition shows that the other partners were responsible for the work and conduct of the partnership concern, Dua Rice Mills. - In this view of the matter, I quash the complaint

Summary

Issues:
Quashing of complaint under section 482 of the Code of Criminal Procedure regarding alleged offence under Income-tax Act, 1961 based on loan transactions not through account payee cheques/bank drafts.

Analysis:
The complaint alleged that the petitioners, operating a firm named Dua Rice Mills, took a loan in cash from individuals, violating section 269SS of the Income-tax Act, 1961. The petitioners were summoned based on this complaint. The petitioners argued that the allegations were primarily against one partner, Mohan Singh, who handled income tax matters for the firm, and that other partners were not involved in the firm's operations. Citing a Delhi High Court decision, the petitioners contended that the complaint should specify the involvement of each partner in the business. The Income-tax Department's counsel countered that the petitioners had not denied the responsibility of other partners in the firm's operations, suggesting that the complaint should only be quashed against specific petitioners.

The judge examined the complaint and the petition's contentions, finding no allegations against petitioners Gurdial Singh and Smt. Ajit Kaur, who were residents of U.P. and Rajasthan, respectively. It was noted that the other partners were responsible for the firm's operations. Consequently, the judge decided to quash the complaint and summoning order only against petitioners Gurdial Singh and Smt. Ajit Kaur, allowing the remaining petitioners to face trial before the Chief Judicial Magistrate, Ferozepur. The judge granted the petitioners the opportunity to present their arguments in the trial court, which was instructed to expedite the case.

In conclusion, the petition was partly allowed, with the complaint and summoning order being quashed for specific petitioners while others were directed to proceed to trial. The judgment emphasized the importance of specifying individual responsibilities in business-related complaints and provided the petitioners with the chance to defend themselves in the trial court promptly.