1992 (1) TMI 37

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..... sment year 1979-80, the total income of the firm was declared at Rs. 13,050. The return was duly signed and verified by one of the partners, namely, Bharat Bhushan, on August 10, 1979, at Barnala. On scrutiny of the books of account of the firm, it was found that the firm earned profits in the dealing in cotton at Rs. 1,02,111 and a profit of Rs. 27,910 on the purchase and sale of rice and it failed to show that the profits did not belong to it. The Income-tax Officer, Barnala, thus filed a complaint under sections 276C and 277 read with section 278 of the Income-tax Act, 1961 ( "the Act " for short ), against Messrs. Parmeshwari Dass Sat Pal, Barnala, and the present petitioners, namely, Sat Pal and Dharam Pal. The Chief judicial Magistrat .....

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..... ad no knowledge about the contents of the return and they could not be prosecuted for any criminal act. Learned counsel referred to the provisions of section 278B(1) of the Incometax Act, 1961, which read as under : "Where an offence under this Act has been committed by 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 : . . Explanation. - For the purposes of this section, (a)`company' means a body corporate, and includes (i) a firm ; and (ii) an association of persons or a body of in .....

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..... Puran Devi v. Z. S. Klar, ITO [1988] 169 ITR 608 (P H), a false return of income was filed by a partner of a firm to evade income-tax. There was no allegation that the partner who signed the return was in any way running the affairs of the firm or was responsible to the firm for the conduct of the business and the impugned complaint and the resultant proceedings were quashed against the partner. Similarly, in the authority reported as Murari Lal v. ITO [1985] 154 ITR 227 (P H), prosecution was launched under section 278B of the Incometax Act, 1961, against four partners of the firm and the firm itself. It was found that only one of the partners was in charge of and responsible for the conduct of the business of the firm. It was held th .....

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