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TMI Blog1994 (8) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 278B of the Income-tax Act, 1961, for fabrication of the accounts suppressing the real income to the tune of Rs. 2,79,965. The learned Magistrate recorded the evidence under section 244, Criminal Procedure Code, to find out the prima facie case and after the evidence, these petitioners filed a petition to discharge them under section 245, Criminal Procedure Code, as no prima facie case has been made out by the complainant. The learned Magistrate disagreeing with the petitioners' version had dismissed the petition. In this revision, challenging that order, learned counsel appearing for the revision petitioners would contend that the evidence adduced before the court below for framing charges is not adequate to hold that there is prima fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence, the initial burden itself was not discharged by the complainant. In the next case [1990] 67 Comp Cas 1, the documents produced in that case did not show the participation of the partners in the business of the firm and it was observed in that case as follows : "It was, therefore, necessary to add an emphatic note of caution in this regard. More often it is common that some of the partners of a firm may not even be knowing what is going on day-to-day in the firm. There may be partners, better known as sleeping partners, who are not required to take part in the business of the firm. There may be ladies and minors who were admitted to the benefits of partnership. They may not know anything about the business of the firm. It would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners that they were in charge of the business of the firm. In support of this allegation in the complaint, evidence also has been let in to the effect through P. W.-1 who has stated that the returns of the first petitioner were submitted by petitioners Nos. 2 to 4. In the cross-examination it is elicited that the return was signed by the second accused. Learned counsel would contend that there is no evidence to show that all the three partners had signed the return and further in the cross- examination P. W.-1 would admit that he did not know personally who are all in the management of the first accused firm and in the light of this evidence, it cannot be taken that accused Nos. 2 to 4 are in management and control of the first accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cused which is a firm. It is the contention of learned counsel relying upon P. V. Pai v. R. L.Rinawma, Dy. CIT [1993] 200 ITR 717 (Kar) and Geethanjali Mills Ltd. v. V. Thiruvengadathan [1989] 179 ITR 558 (Mad) that the prosecution against the firm is not sustainable in view of the fact that the company cannot be convicted to undergo imprisonment. In the first case, the view of the Karnataka High Court is that the company being a juristic person cannot have mens rea, that it cannot be imprisoned and the prosecution cannot be launched against company under sections 276C and 277 of the Income-tax Act. In the next decision referred to by learned counsel, Janarthanam J. has observed that in the case of companies as the requisite mens rea for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the firm". Learned counsel for the respondent, Mr. Ramaswamy, refers to an observation of the Supreme Court in U. P. Pollution Control Board v. Modi Distillery [1988] 63 Comp Cas 77 ; AIR 1988 SC 1128, wherein it is observed that unless the company is prosecuted, the members of the board of directors cannot be prosecuted. In other words, it is expressed therein that, when the members of the board of directors were prosecuted, the company also should be an accused. Otherwise, the prosecution against the members of the board of directors alone is not sustainable. In view of this observation, the prosecution against the company or firm also is maintainable. In Rayala Corporation Pvt. Ltd. v. V. M. Muthuramalingam, ITO [1981] 129 ITR 675, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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