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TMI Blog1994 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing, purchase and sale of drums and kegs used in the paint industry, utensils, etc., and it is assessed to income-tax. Accused Nos. 2 to 5 are the partners of the first accused firm. The return of income relating to the first accused firm for the assessment year 1976-77 was delivered to the Income-tax Officer on October 28, 1976. The assessment was completed on March 25, 1977, on a total income of Rs. 1,61,330. On December 14, 1979, there was a search under section 132 of the Income-tax Act, 1961. In the premises of the first accused firm, several incriminating accounts and documents were seized. A scrutiny of these accounts and documents showed that the first accused firm had deliberately inflated the purchases during the accounting year relevant for 1976-77 assessment year. This has been done by inflation of figures in the purchase accounts and introduction of bogus purchases. In the first method, the first accused has increased the amounts by round sums of Rs. 2,000 or Rs. 2,200 by interpolating the figures "20" or "22" before the actual figure in the purchase account. For example, if the purchase as per the bill originally entered in the accounts was Rs. 31.50 this has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the said Act. The amount of tax sought to be evaded works out to roughly Rs. 1,31,743. Hence the complaint. In E. O. C. C. No. 232 of 1984, the respondent has filed a complaint against the very same five accused for an offence under section 120B read with sections 193 and 196 of the Indian Penal Code and sections 276C(1) and 277 of the Income-tax Act, 1961, for the assessment year 1977-78 on similar allegations. In E. O. C. C. No. 233 of 1984, the respondent has filed a complaint against the six accused for offences under section 120B read with section 193 of the Indian Penal Code and sections 276C(1), 277 and 278 of the Income-tax Act, 1961, for the assessment year 1978-79. The allegations in it are similar to the allegations made in the previous two complaints. Regarding the sixth accused, it is alleged that he had abetted and also conspired with the other accused in the commission of the offences. Apart from the above allegations, it is also stated that there was no entry with regard to the payment of Rs. 1,00,000 to the Indian Oil Corporation and that only a lesser sum of Rs. 5,000 was entered as paid to S. I. D. Co. During the pendency of these complaints, accused No. 3 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the merits after the completion of the relevant assessments and while so, the minutes of the settlement cannot be a bar to the launching of these prosecutions, He would further submit that regarding the partners other than the second accused, necessary allegations are made in the complaints to make them also liable for the offences alleged. He would further submit that though the first accused is a partnership firm, the sentence of fine can be imposed and there cannot be a quashing of the proceedings in their entirety as against the first accused for offences under sections 276C and 277 of the Income-tax Act. Regarding authorisation, he would submit that the authorisation is only for filing of the complaint and the purpose is very narrow and that there is no defect or infirmity in the authorisations. I have carefully considered the submissions made by learned counsel. I shall consider the submissions seriatim. Regarding the first submission, Mr. A. K. Lakshminarayanan would rely upon the following portions in the minutes of the settlement. " In other words, we have to give the finding that all the purchases quantity-wise are genuine though they might not have been shown in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the allegations in the complaint make out the offence, because of the finding in the minutes of settlement, the prosecution cannot be quashed in the face of the last paragraph in the minutes of settlement, which I have extracted above and in the face of the positive allegations made in the complaint, with regard to the inflation of the expenses and with regard to the settlement. Mr. A. K. Lakshminarayanan would rely upon Gopal Lal Dhamani v. ITO [1988] 172 ITR 456 (Raj). In it, it was held that in any criminal case, before the prosecution can succeed, it must establish all the ingredients of the offence. The learned judge has observed that "in case any assessment or reassessment order is passed in favour of the assessee during the criminal proceeding, the criminal court has to take notice of it and may drop the proceedings". In P. Jayappan v. S. K. Perumal, First ITO [1984] 149 ITR 696 (SC), the court had observed that : ".... in appeal or reference under the Act cannot come in the way of the institution of the criminal proceedings under section 276C and section 177 of the Act. In the criminal case, all the ingredients of the offence in question have to be established in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6C(1) of the Income-tax Act. In the face of these allegations made in the complaint, I am unable to accept the submission that necessary allegations to make out the offences against the petitioners were not made in the complaint. Similar allegations as in the complaint in C. C. Nos 231 of 1984 are made in the complaint in C. C. Nos. 232 and 233 of 1984 also. In P. N. Subramaniam v. P. C. Chadaga, Asst. CIT [1992] 195 ITR 910, this court had held that : "The complaint showed that the two petitioners, who were partners of the first accused firm, had conspired along with the other accused, with a view to wilfully evade tax, defraud the exchequer of its legitimate revenue and deceive the concerned Income-tax Officer, in which process they had fabricated false evidence in the form of books of account containing false entries." It was held that "these allegations were sufficient prima facie to permit the trial to be proceeded with against these two petitioners and the complaint could not be quashed at its threshold". This ruling applies squarely to the facts of this case. I am in entire agreement with the view of Justice Arunachalam in the above case, that when the necessary allegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s authorisation. The words "at the instance of the Commissioner" occurring in section 279 of the Act do not mean that each and every aspect of the case should be dealt with and considered and referred to in the authorisation. That apart, it is not a relevant fact which requires mention in the authorisation. A general reference to the same as in the extracted portion above should suffice to meet the requirement of section 279(1) of the Income-tax Act, 1961. Mr. A. K. Lakshminarayanan relied upon Parmeet Singh Sawney v. Dinesh Verma [1988] 169 ITR 5 (Delhi). In that case, the prosecution was against Parmeet Singh Sawney, who was a little less than six years old at the time of the accounting year. He was a minor and could only share the profits of the firm. It cannot be said that this Parmeet Singh Sawney was in charge of and responsible for the conduct of the business of the firm. But the complainant alleged that Parmeet Singh Sawney was in charge of and responsible for the conduct of the business of the firm at the time of the commission of the offence. The Delhi High Court had held that this would clearly go to show that the respondents have mechanically reproduced in the complain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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