9911796707
TMI Blog1994 (1) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... G. I. steel tubes and allied products. The firm submitted a return of income for the year 1984-85, on July 28, 1984, declaring an income of Rs. 98,240 and further furnished particulars of interest and credit. Rupees 12,617 were credited to Messrs. Precision Tubes and Rs. 7,845 were credited to Messrs. Jotindra Steel and Tubes Ltd., but the petitioners failed to deduct tax out of these amounts. This was brought to their notice. The contention of the petitioners was that deduction was not by way of interest, but was a penal Batav. The same was not accepted by the Income-tax Department. The petitioners, thereafter, deducted the tax Rs. 4,094 at source, and deposited it after 36 months, though it was also short by Rs. 202. On these facts, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany includes firm and its partners as well. As such they have rightly been prosecuted. The second contention of learned counsel for the Union of India is that it is for the person who is accused to prove that the offence was committed without his knowledge or that he has exercised all due diligence to prevent the commission of such offence. It has also been submitted that the accused-petitioners have put no question to the prosecution witness suggesting that they or any of them were not in charge of or responsible to the company for the conduct of business. Now, therefore, it will have to be seen as to whether all the partners including the so-called sleeping partners can be prosecuted without showing who was in charge of, or was respons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any' means a body corporate, and includes- (i) a firm ; and (ii) an association of persons or a body of individuals whether incorporated or not ; and (b) 'director', in relation to- (i) a firm, means a partner in the firm; (ii) any association of persons or a body of individuals, means any member controlling the affairs thereof." Though it is true that every partner is liable for the acts of the firm, "the acts of the firm" include any act or omission by all the partners or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm. The same is true of all civil liabilities, but the standard of proof for a criminal liability and under a penal provision shall not be the same as preponderanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledge. It is significant to note that the obligation of the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in sub-section (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was, during the relevant time, in charge of the business. In the absence of any such proof, no partner could be convicted. We, therefore, reject the contention urged by counsel for the State." The complaint filed by the Income-tax Department ipso facto does not show who was in charge of or responsible for the conduct of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. In the second case the complaints against three other partners who were not in charge of the business and had not signed the statement of grounds were quashed. In view of the discussion above, the prosecution of and framing of charges against the petitioners, Smt. Sitaben, wife of Bhogilal Shah, Shantiben, wife of Premchand Shah, Rasiklal, son of Premchand Shah, Kirtibhai, son of Bhogilal Shah, Rajnikant, son of Kantilal Shah and Bharatkumar, son of Bhogilal Shah, is bad and the same deserves to be quashed and is hereby quashed. It is further observed that if during the hearing of the case the parties including the Income-tax Department cannot show that any other person or persons were in charge of and responsible to the company for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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