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Issues: Quashing of Criminal Case under section 482 of CrPC based on discrepancy in tax return, vicarious liability under Income Tax Act, lack of allegations against applicants 2 and 3, requirement of prosecution sanction under Income Tax Act.
Analysis: The judgment delivered by Justice Mohammad Wahajuddin of the High Court of Allahabad pertains to an application under section 482 of the Criminal Procedure Code (CrPC) seeking the quashing of a criminal case pending in the court of the Chief Judicial Magistrate, Varanasi. The case involved three applicants, namely Rajendra Prasad Agarwal, Ayodhya Prasad, and Ram Autar. The primary issue addressed in the judgment was the discrepancy of Rs. 18,003 in the tax return for the assessment year 1973-74, which led to the revision of the return. The judge emphasized that the complaint must prima facie disclose the offense, and it was argued that the complaint did not establish any offense by applicants 2 and 3, Ayodhya Prasad and Ram Autar. The judge highlighted the provisions of section 277 of the Income Tax Act, which imposes liability on the person making a false statement or delivering a false account. It was noted that vicarious liability is not created under this section, and only the person directly involved in making the false statement is liable for punishment. Additionally, the judge mentioned section 278B, which was enacted to hold other partners guilty but clarified that it does not have retrospective effect. The judge scrutinized the complaint and found no allegations against applicants 2 and 3 regarding abetting or inducing the primary accused to make false statements. Furthermore, the judge pointed out that prosecution under section 278 of the Income Tax Act requires the sanction of the Commissioner under section 279. In this case, the sanction provided only related to an offense under section 277, not section 278. Consequently, the judge partially allowed the application under section 482 of CrPC and quashed the proceedings against applicants 2 and 3, Ayodhya Prasad and Ram Autar, while dismissing the application of applicant 1, Rajendra Prasad Agarwal. In conclusion, the judgment delves into the legal intricacies surrounding vicarious liability under the Income Tax Act, the necessity of allegations in a complaint to establish an offense, and the requirement of prosecution sanction for specific sections of the Act. The judge's analysis focused on the lack of evidence implicating applicants 2 and 3 in the alleged offense, leading to the quashing of the proceedings against them.
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