9911796707
TMI Blog1998 (11) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... essing the petitioners at a higher income than shown in the earlier income-tax return. The assessment order was upheld up to the appellate stage. The complaint had been filed against the petitioners for committing offences punishable under sections 276C and 277 of the Income-tax Act and section 420 of the 'Indian Penal Code. An application was filed on behalf of the petitioners before the learned trial court for discharging them on the ground that petitioner No. 1 is a firm and it cannot be punished with sentence of imprisonment as provided under the Income-tax Act under those sections. It was further asserted that as the firm cannot be prosecuted and sentenced, petitioners Nos. 2 and 3 who are partners of petitioner No. 1-firm would also be not liable to be prosecuted and punished. The learned trial court rejected the said application with the observation that there is sufficient ground for framing of charge, as the complainant's evidence before the charge has already been recorded. Feeling aggrieved the petitioners have filed the present applications under section 482 of the Code of Criminal Procedure for quashing the entire criminal proceedings including the cognizance order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine ; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. (2) If a person wilfully attempts in any manner whatsoever to evade the payment of any tax, penalty or interest under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. Explanation.---For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case, where any person--- (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement ; or (ii) makes or causes to be made any false entry or s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firms as well. Under section 278B it has been provided that where an offence under the 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 business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. By the proviso to such provision it has been provided that nothing contained therein shall render any such person liable to such punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. In the complaint there is a bald statement that petitioners Nos. 2 and 3 are partners of petitioner No. 1 and each of them is in charge of the conduct of the business of the firm and responsible for the day-to-day business. It has been contended by learned counsel for the petitioners that merely such bald statement would not be sufficient, as the law requires that it should be specifically averred in what manner the particular person was responsible and was conducting the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be specific averments in the complaint to the effect that the partner of the firm at the time the offence was committed was in charge of, and was responsible for, the conduct of the business of the firm and particulars regarding conduct of business and responsibility should be stated in the complaint, in order to make him liable for the offence and in its absence no partner could be convicted. It was observed that the complaint is bound to provide indication, though not evidence, as to in what manner a particular partner of the firm was in charge of and responsible for the conduct of business and mere reproduction of the words of the section is not enough. In that case the court quashed the proceedings in respect of one of the accused in the absence of specific averments regarding specific overt acts alleged against him. Learned counsel for the petitioners has placed reliance on a decision of the Punjab and Haryana High Court in the case of Mehar Chand Om Parkash v. ITO [1994] 209 ITR 494. In the said case it has been held that where a firm is prosecuted for filing an erroneous return, a partner against whom there is no specific allegation, cannot be held liable. Relying on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h some person and such person might sign the verification. Petitioner No. 1 is the firm and it could not be punished with sentence of imprisonment. It has been held in the case of Dunlop India Ltd. v. Arun Chandra Sinha [1995] 211 ITR 79 (Cal), that proceedings under section 277 of the Income-tax Act cannot be initiated against a company because imprisonment is a compulsory punishment for an offence under that section and a company cannot be sent to prison nor is it open to a court to impose a sentence of fine and not award any imprisonment if the court finds the company guilty under that section. I agree with the said principles laid down in the said case. I hold that the prosecution against petitioner No. 1 for the offences under sections 276C and 277 could only be a futile exercise when no punishment of imprisonment as provided under the said sections could be imposed on petitioner No. 1, which is not even a legal entity. Considering the entire facts and circumstances of the case and in view of the discussions made above, in my opinion, taking cognizance against the petitioners and passing the impugned order rejecting the application for discharge of the petitioners and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
