9911796707
TMI Blog1988 (9) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of Rs. 1,11,370 for the fifteen months' period ending with March 31, 1980, claiming exemption by way of stores consumption in the form of bobbins, spinning wheels, etc., without even mentioning the names And addresses of the suppliers, to the tune of Rs. 7,53,963. On the direction of the Assessing Officer, the first petitioner-company, in fact, furnished the names, and addresses of four suppliers and the particulars of purchase vouchers. On scrutiny of all such materials produced, the Assessing Officer computed the income at Rs. 20,87,680 by his order dated March 24, 1983, for the assessment year 1980-81. During scrutiny, it was found that the names and addresses of the suppliers as given by the petitioner company were non-existing persons, besides the vouchers numbering about 263 being found to be bogus. The aggrieved company took the matter on appeal, before the Commissioner of Income-tax, who, by his order dated October 10, 1984, upheld the order of the Assessing Authority. The matter was again agitated before the Income-tax Appellate Tribunal which, in fact, by its order dated May 27, 1985, remanded the matter to the Assessing Authority for fresh consideration by giving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner subsequent to the remand on March 28, 1988. This argument was repelled by the Revenue stating that there is no bar to the launching of a criminal prosecution, pending decision by the Assessing Authorities and whatever adverse finding has been observed in the orders of assessment or penalty proceedings, that was not binding on the criminal court while determining the guilt of the accused. He would further submit that mere expectancies should not stand in the way of the criminal court proceeding in the matter. In support of the contention, reliance was sought to be placed in the case of Telu Ram Raunqi Ram v. ITO [1984] 145 ITR 111 (P H). In that case, the Income-tax Officer, during the assessment proceedings, made additions to the income of the assessee. The Appellate Assistant Commissioner reduced the addition. On further appeal, the Tribunal made certain additions and in the quantum proceedings, the matter came finally to rest. Simultaneously, the Inspecting Assistant Commissioner passed an order imposing penalty on the assessee. The assessee's appeal to the Tribunal was dismissed. The assessee filed an application for reference against the order of the Inspecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to nothing. It is of no consequence to the prosecution launched during the pendency of the proceedings before the Income-tax Appellate Tribunal getting terminated by an order of remand for fresh disposal. The assessment proceeding, whether pending before the Income-tax Appellate Tribunal or before any other forum before completion of assessment, cannot be stated to be anything other than the pendency of proceedings. In this view of the matter, the argument of learned counsel for the petitioners that the criminal complaint had no legal basis to stand on the moment the order of the Assessing Authority had been set aside by the Tribunal cannot at all be countenanced. The position here is rather worse when the assessment had been completed and reached finality by the order of the Inspecting Assistant Commissioner of Income-tax after giving due opportunities to the petitioners as per the directions of the Tribunal. As adverted to earlier, the position of the brokers from whom consumable stores were purchased remained to be non-existing entities, besides the vouchers produced were bogus vouchers resulting in claiming false exemption from tax. It is these acts of the petitioners which m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managing agent or manager." It is unnecessary to quote the provisions of section 30A of the Industrial Development Bank of India Act of 1964, as the provisions of that section are also couched in the same language as that of section 41A of the State Financial Corporations Act of 1951. To counter this argument, the Revenue would place reliance on section 278B of the Income-tax Act, 1961. The section reads as follows: "(1) 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: Provided that nothing contained in this sub-section shall render any such person liable to any 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. (2) Notwithstanding anything contained in subsection (1), where an offence under this Act has been committed by a company and it is proved that the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the company, then it is for them to prove that the offence had been committed without their knowledge and despite due diligence to prevent the commission of such offence. The onus in such an eventuality is shifted to them to prove the absence of knowledge or exercise of due diligence to prevent the commission of such an offence by adducing evidence. As such, at this stage, it cannot be stated that the arraying of these persons as accused in the complaint is not born out of lack of application of mind on the part of the Department. There is one more single circumstance of some importance as stated by learned counsel for the Revenue, viz., that the Income-tax Act, being a special enactment, will have the effect of overriding the provisions of the State Financial Corporations Act of 1951 and the other allied enactment, namely, the Industrial Development Bank of India Act of 1964, and, therefore, learned counsel for the petitioner cannot at all seek the benevolent provisions of the respective enactments. This argument put forth by the Revenue rather appears to be sound and tenable and even without this, as stated earlier, for the petitioners to avail of the benevolen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est on Securities'. - (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income chargeable under the head 'Interest on securities', shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force : Provided that no such deduction shall be made in a case where the person (not being a company or a registered firm) entitled to receive such income furnishes to the person responsible for making the payment (a) an affidavit, or (b) a statement in writing, declaring that his estimated total income assessable for the assessment year next following the financial year in which the income is credited or paid will be less than the minimum liable to income-tax." Section 200 of the Act contains the salient provisions as respects the duty of the person deducting the tax at source. This section reads as follows : "200. Duty of person deducting tax. -Any person deducting any sum in accordance with the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by learned counsel for the petitioners reported in Pratap (M. R.) v. Muthuramalingam, ITO [1984] 149 ITR 798 (Mad), is not at all applicable to the facts of the present case. Consequently, non-issuance of individual notice to any of these petitioners is of no consequence. One point of some signal importance touching upon the non-feasibility of fastening criminal liability in the shape of sentence of imprisonment on a juristic personality like the company as well as the impossibility of the commission of offence by its requiring a particular mens rea had neither been adverted to as a ground in the petition, nor was it argued before me. feel that it is rather unfortunate that such a tenable contention was not at all taken by learned counsel for the petitioners. The first petitioner, no doubt, is a private limited company, a juristic person. It is very well settled that a corporation or a juristic personality cannot be subjected to bodily punishment or imprisonment. This apart, under section 11 of the Indian Penal Code, the word "person" is defined as including a company or association or body of persons, whether incorporated or not. All the offences under the Indian Penal Code in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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