RADHESHYAM SUNDARMAL Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) These six Rules heard together seek to quash six proceedings pending against the petitioners in the court of a competent Magistrate under Section 276 B of the Income Tax Act, 1961, for failure to pay within the prescribed period, the tax deducted at source from the interest paid to certain depositors. The petitioner no. 1 happens to be the firm with whom the amounts were deposited and the other petitioners are the partners. Six proceedings were started by the concerned Income Tax Officer in respect of six different accounting years at the end of which tax was deducted at source but not paid to the credit of Central Government within the prescribed period.

(2.) All the proceedings are sought to be quashed on the same grounds; The learned advocate for the petitioners has contended and with a good deal of force that in any case the proceeding cannot be allowed to proceed against the rum because an offence punishable under Section 276B of the said Act is punishable with imprisonment and fine. In such circumstances there is no doubt that in the event of a conviction, the court has no option but to sentence the offender to imprisonment and since a firm like the petitioner no. 1 cannot be committed to prison, there can be no question of its prosecution for an offence under Section 276B of the Act The learned advocate for the opposite party has also fairly conceded that the prosecution of petitioner no. 1 is not competent.

(3.) The second contention raised on be half of the petitioners was that the averments made in the complaint are not enough to show commission of any offence by any of the partners of the firm. A reference to the petition of complaint may show that all that has been alleged so far as the partners are concerned, are that they were so at the relevant time and as such they were personally responsible to the firm for conduct of its day to day business. Further averments made against the partners were that they being partners were conjointly responsible for managing, the, affairs of the firm and as such they are responsible under the statute for commission of the offence. The offence in the instant case was alleged to have been committed by a firm and its partners are sought to be made vicariously liable for such offence. In other words, the partners are alleged to be liable by reason of the provision of Section 278B of the said Act which lays down that where an offence has been committed by a firm then every person: who was responsible to the firm for the conduct of its business shall be deemed to be guilty of the offence. It further provides that where an offence was committed by a firm and it is proved that it was committed with the consent or connivance of or is attributable to any neglect on the part of a partner then he shall also be deemed to be guilty of that offence. Therefore, it was absolutely essential to make an averment in the complaint that the present petitioners 2 and 3 were In-Charge of and were responsible to the firm, petitioner no. 1, for the conduct of its business or that the offence was committed with their consent or connivance or was attributable to any neglect on their part It has been pointed out that the averments made in the complaint were merely that petitioners 2 and 3 were partners and as such they were personally responsible to the firm for the conduct of its day to day business and further that they being partners of the firm were conjointly responsible for managing the affairs of the firm. The use of the words as such or the words being partners indicate that the complainant had merely presumed that the partners of the firm must be guilty by reason of the office held by them arid as far as they are concerned there is not even a whisper to show apart from, the presumption drawn by the complainant that there is any act committed by them from which a reasonable inference can be drawn that they could also be vicariously liable. In this connection it is interesting to refer to the decision of the Supreme Court in Municipal Corporation of Delhi v. Ram Kishan Rohtagi and others, whit in was a casein which certain persons as the directors of a company were sought to be made vicariously liable for an offence punishable under the Prevention of Food Adulteration Act. Thee provisions of this Act and those of the Income Tax Act, regarding the vicarious liability of directors, or for that matter of the partners of a firm, are substantially the same and an averment made in the complaint to the effect that the certain accused persons were the directors of a company, who was also another accused, and as such they were In-Charge of and responsible for the conduct of business of the company at the relevant time was found by their Lordships to be inadequate and an order made by the High Court quashing the proceeding was upheld. On the basis of this authority it can be safely held that in the cases before us also the averments do not disclose commission of any offence by petitioners 2 and 3.