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TMI Blog2006 (1) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... are acquitted from the charge of the offences punishable under sections 276C and 277 r.w.s. 278B. The amount of fine if deposited by the applicants, be returned to them. - - - - - Dated:- 10-1-2006 - Judge(s) : S. C. VYAS. JUDGMENT S.C. Vyas J.- This revision petition is preferred against the judgment dated January 2, 2002, passed by the XIVth Additional Sessions Judge, Indore, in Criminal Appeal No. 4/96, confirming the conviction and sentence recorded by the ACJM (Economic Offences), Indore, in Criminal Case No. 21/1986 vide judgment dated December 22, 1995, convicting applicant No. 2 for the offences punishable under section 276C read with sections 278 and 277 and sentencing him to undergo six months R.I. and to pay a fine of Rs. 3,000 on each count. Applicant No. 1 was found guilty of the offence punishable under section 276C and section 277 read with section 278B of the Income-tax Act and was sentenced to pay a fine of Rs. 3,000 on each count. The facts of the case which are necessary for the disposal of this revision are that applicant No. 1 was a partnership firm during the relevant period, namely, assessment year 1975-76, and the relevant accounting period from Di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trial court after framing charges against both the applicants conducted trial against them and convicted them and passed sentence as stated hereinabove. The applicants preferred an appeal against the judgment of conviction and sentence in the appeal finally the impugned judgment was passed against which the present revision petition has been filed. Learned senior advocate Shri S.C. Bagadiya, appearing for the applicants assisted by Shri D.K. Chhabra, advocate, contended that the provisions of sections 278B and 276C were not in existence on the statutory book on the date when the return of the assessment year 1975-76 for accounting year Diwali 1973 to Diwali 1974 was filed on behalf of applicant No. 1 by applicant No. 2. The date of the return was July 30, 1975, whereas the provisions of section 278B of the Income-tax Act were inserted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. By this provision a deeming provision has been inserted to the effect that "where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of and was responsible to the company for the conduct of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no mistake in convicting the applicant No. 2 also. Section 278B of the Act came into existence for the first time on October 1, 1975, prior to that there was no provision for making other persons responsible regarding the offence committed by the company by the acts of the firm in contravention with the provisions of the Act. After insertion of section 278B in the Act every person who, at the time of the commission of the offence, was in charge of and was responsible to the company for the conduct of its business has been made liable to be proceeded against for the offences committed by a company. The definition in section 2(31) as reproduced hereinabove makes it very clear that prior to October 1, 1975, as per this definition the firm alone was responsible and was alone to be prosecuted for the criminal acts. As per the provisions of section 278B also, out of the partners of the firm, only those persons can be deemed guilty of the offence committed by the firm who, at the time of the offence was committed, were in charge and were responsible to the company for the conduct of the business of the company meaning thereby that sleeping partners and those persons who were not taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of tax. Learned senior counsel Shri R.L. Jain, appearing for the Income-tax Department, firstly tried to justify the conclusion drawn by the two courts below but ultimately he stated that as the income of Rs. 50,760 was shown as income of the firm in Part III of the income-tax return as a goodwill income, therefore, the present case cannot be said to be the case of concealment of any income. Return exhibit P-1 which was filed on behalf of the firm, applicant No. 1 and was signed and verified by applicant No. 2 shows that goodwill income of Rs. 50,760 has been shown in the column of "Other sums not included in total income and claimed to be not taxable". There is a specific column for showing such sums in the income-tax return when an amount is shown as a sum which has not been included in the total income then at the time of assessment and computing the income of the firm the Income-tax Officer can very well inquire regarding such sums shown in column III and then can take suitable decision for including or excluding such sums from the total income. But once when such sums have been shown by the applicant in the income-tax return and the amount was not detected by the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no deliberate attempt on the part of the applicants to conceal any income. On the contrary, the income which was detected as balance-sheet difference was shown by them, as such, in Part III of the return, showing their bona fide intention that the information was furnished by them to the Income-tax Department for the purpose of assessment. The assessment of income-tax was done accordingly by the Department, and as there was no wilful act to conceal any income so the act of the applicant does not come under the provision of section 276C of the Act. It also appears that there is nothing to infer that there was any false statement in the return filed by the applicants. The two courts below have failed to consider the effect of introduction of 16 the provisions of section 278B with effect from October 1, 1975, and the effect of mentioning the balance-sheet difference as goodwill income in Part III of the return submitted by the applicant. As they have not appreciated the facts of the case and evidence available on record correctly so the findings have become erroneous which are liable to be quashed. Consequently, the revision succeeds and is allowed. The judgments passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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