1987 (9) TMI 37 - HC - Income Tax

Summary

Issues involved:
The petitioners summoned to face trial u/s 276C of the Income-tax Act, 1961 for allegedly evading tax by filing false returns for the assessment year 1975-76. The petitioners seek quashing of the complaint and summoning order due to lack of criminal allegations as per section 278B of the Act.

Judgment Details:

Issue 1: Allegations of Criminality
The judgment clarifies that under section 278B of the Act, individuals can be held liable for offenses committed by a firm only if they were in charge of and responsible for the firm's conduct. The complaint in question failed to allege that any petitioner, except petitioner No. 2, and a non-petitioner were in control of the firm's affairs. It was noted that the initial return was signed by the non-petitioner and the revised return was filed by petitioner No. 2. The complaint did not establish that any other petitioner was managing the firm or responsible for its business. Consequently, the court quashed the complaint and proceedings against all accused except petitioner No. 2 and the non-petitioner.

Conclusion:
The High Court of Punjab and Haryana, in the judgment delivered by I. S. Tiwana, quashed the complaint and proceedings against the petitioners, except petitioner No. 2, and a non-petitioner, as the complaint failed to establish criminal allegations as required by section 278B of the Income-tax Act, 1961.