P.V. PAI, B.R. SHETTY, BIYAR RUBBERS PVT. LTD. AND SMT. LASHA B. SHETTY Vs. R.L. RINAWMA, DEPUTY COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE petitioners herein have challenged the legality of the complaint filed by the respondent, Deputy Commissioner of Income Tax (Assessments), against them for various offences under the Income Tax Act, 1961, before the Special Court for Economic Offences at Bangalore. A -1 is a private limited company, A -2 and A -3 are its directors and A -4, a chartered accountant, auditing their accounts. They are alleged to have committed offences under s 276C and 277 read with s 278B and 278 of the Income Tax Act, 1961. During verification of the accounts submitted by them for the assessment year 1985 -86 for the period ending on March 31, 1985, it was revealed that a false claim regarding depreciation on buildings in a sum of Rs. 1,35,480 was made by the company and investment allowance amounting to Rs. 5,30,506 was also claimed which A -1 could not have done. Similarly, there was fabrication of false evidence regarding commissioning of the intermix before March 31, 1985, to entitle the company to claim depreciation and investment allowance. The machinery was not commissioned till September 24, 1985. The complainant -respondent further alleged that the accused persons had wilfully attempted to evade payment of taxes to the Revenue. A -3 is in charge of and responsible for conduct of the business of the company, whereas A -4 has given audited reports to the shareholders as required under 227(2) of the Companies Act, 1956. In fact, A -4 has abetted the commission of these offences by A -1 to A -3. These are the allegations in brief in the complaint filed by the respondent.

(2.) IN challenging the legality of the trial court taking cognizance of the offences against them in these petitions, the petitioners -accused have raised and urged the following contentions :

(3.) 276C refers to evasion of tax by any person, and 277 makes penal delivering an account or statement which is false. Under 278B, where an offence under the Act has been committed by a 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. 277 which is penal and which is very material for our purpose reads as follows :