GEETHANJALI MILLS LIMITED Vs. THIRUVENGADATHAN V

JUDGEMENT

(1.) THE petition has been filed to quash the proceedings in C. C. No. 29 of 1985 on the file of the Additional Chief Judicial Magistrate (Economic Offences), Madurai.

(2.) THE Inspecting Assistant Commissioner of Income tax (Assessment Range No. 1), Madurai, launched prosecution against petitioners Nos. 1 to 7 (accused Nos. 1 to 4, 6, 7 and 10) and three others (accused Nos. 5, 8 and 9) for the offenses under sections 120B read with sections 193, 196, 420 read with section 511 of the Indian Penal Code ("IPC") and sections 276C(1), 277 and 278B of the Income tax Act, 1961. THE first petitioner is a limited company, a spinning mill manufacturing cotton yarn. THE second petitioner is its managing director. Petitioners Nos. 3 to 6 are its directors and the seventh petitioner is its secretary. THE first petitioner-company furnished its income tax return and connected statements declaring an income 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 an opportunity to the company, enabling it to produce the persons who have supplied the stores and also adduce evidence to prove the genuieness of the vouchers produced.

(3.) COMING to the other fang of the argument claiming immunity from prosecution, learned consul for the petitioners would rely upon section 41A of the State Financial Corporations Act of 1951 as well as section 30A of the Industrial Development Bank of India Act of 1964. Section 41A of the State Financial Corporations Act of 1951 reads as follows :