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Issues Involved:
1. Whether all the petitioners were not in charge of the firm so that they could not be prosecuted. 2. Whether the order of the Income-tax Appellate Tribunal setting aside the penalty proceedings will exonerate the accused persons from the criminal proceedings initiated against them. Issue-wise Detailed Analysis: 1. Whether all the petitioners were not in charge of the firm so that they could not be prosecuted: The petitioners argued that it was not specifically alleged in the complaint that the accused persons 2 to 7 were in actual administration of the first accused firm, and therefore, all of them could not be prosecuted. They relied on the decisions in *Puran Devi v. Z. S. Klar, ITO* and *K. Subramanyam v. ITO*, which held that only the person or partner responsible for the conduct of the firm's business at the time of the alleged offence is liable. However, the respondent contended that specific allegations were made against all accused, stating that they were in charge of and responsible for the conduct of the business. Specific paragraphs in the complaint mentioned the involvement of each accused in signing balance sheets, filing revised returns, and conspiring to prepare false statements. Therefore, the court rejected the first contention, stating that the allegations were sufficient to hold all partners accountable. 2. Whether the order of the Income-tax Appellate Tribunal setting aside the penalty proceedings will exonerate the accused persons from the criminal proceedings initiated against them: The petitioners contended that the Income-tax Appellate Tribunal found no concealment of income and that the discrepancy was a bona fide mistake. They argued that the criminal court should respect this finding, as the Tribunal is a fact-finding authority. The respondent countered that criminal proceedings under the Income-tax Act operate independently from penalty proceedings, and the findings of the Tribunal should not bind the criminal court. The court reviewed various decisions, including *Patnaik and Co. Ltd. v. CIT*, which held that the Tribunal's findings on facts should be respected unless there was an error in law. The court noted that the Tribunal concluded that the mistake in the returns was unknown to the partners and was a bona fide mistake. The court found that the Tribunal's findings on questions of fact should be accepted by the criminal court. It also considered decisions from other High Courts and the Supreme Court, which supported the view that when the Tribunal sets aside penalty proceedings, the criminal proceedings should also be quashed. In conclusion, the court held that the prosecutions against the petitioners could not continue based on the Tribunal's findings. The proceedings in C.C. Nos. 143 to 145 of 1991 were quashed, and the petitions were allowed.
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