INCOME TAX OFFICER Vs. DELHI FRUIT COMPANY

JUDGEMENT

(1.) THIS application for leave to appeal is directed against the judgment of the Chief Judicial Magistrate, Jalandhar, dated March 24, 2000, holding that the complaint filed by the appellant against the respondents for the alleged offences committed under sections 276C and 277 read with section 278B of the Income-tax Act, 1961 (for short "the Act"), as not maintainable and consequently acquitting all the accused.

(2.) THE relevant facts are that respondent No. 1--Delhi Fruit Company, is a partnership firm carrying on its business at Sabzi Mandi, Jalandhar. For the assessment year 1980-81, it consisted of six partners, namely, Ram Sarup, Vas Dev, Darshan Lal, Balbir Singh, Vinod Kumar and Varinder Kumar. It filed its return of income for that year before the Income-tax Officer, District-II(2), Jalandhar, on November 5, 1980, declaring an income of Rs. 46,214. THE verification in the return was signed by a partner, Ram Sarup. During the assessment proceedings, the Income-tax Officer noticed certain interpolations in the cash book which resulted in the introduction of cash amount of Rs. 41,927.02 on account of fictitious credits under the head "Ugrahi Account" and corresponding fictitious reduction in the debtors. Accordingly, he treated the same as concealed income of the firm while framing its assessment under section 143(3) of the Act on March 30, 1981. He also initiated penalty proceedings under section 271(l)(c) of the Act for concealment of true particulars of income/filing of inaccurate particulars of income. A criminal complaint was also filed for commission of alleged offences under sections 276C and 277 read with section 278B of the Act. THE accused-firm preferred an appeal before the Appellate Assistant Commissioner, Jalandhar, who, vide his order dated May 31, 1984, set aside the assessment made by the Income-tax Officer and directed it to be made afresh. Aggrieved by the order of the Appellate Assistant Commissioner, the Revenue filed an appeal before the Income-tax Appellate Tribunal. Meanwhile, during the pendency of the Revenue's appeal, all the accused were discharged by the court in the criminal case filed against them vide order dated January 7, 1985. THEreafter, the Tribunal vide its order dated July 19, 1985, accepted the appeal of the Revenue. THE order of the Appellate Assistant Commissioner dated May 31, 1984, was set aside and that of the Income-tax Officer dated March 30, 1981, restored. THE addition of Rs. 41,927 was upheld.

(3.) IT is at this stage that the Income-tax Officer, Ward 2(1), Jalandhar, filed another complaint against the firm and all the six partners accusing them of offences punishable under sections 276C and 277 read with section 278B of the Act. The said complaint has been dismissed vide impugned order dated March 24, 2000, by the Chief Judicial Magistrate. The Chief Judicial Magistrate noted that two of the accused-partners, namely, Darshan Lal and Vinod Kumar, had died during the pendency of the proceedings before him and, therefore, the proceedings against them could not continue. Regarding the other accused, he referred to the partnership deed and found that only Ram Sarup was the active partner who was responsible for the day-to-day carrying on of the business of the firm and the other partners were merely dormant in business. He, therefore, held that in view of the decision of this court in SatPal v. State of Punjab [1993] 200 ITR 139, besides the firm it was only the person or partner who, at the time of commission of offence was in charge of and was responsible to the firm for the conduct of its business, who was liable to be prosecuted. Thus, according to him only Ram Sarup could be proceeded against. He also found that even the return of income and other documents filed along with it, were signed and verified by Ram Sarup alone. Thus, according to him, no other partner could be held responsible for any act done by Ram Sarup. Coming to the liability of Ram Sarup, the court found that he had already been discharged of the same offences in a similar complaint on January 7, 1985, and the order of discharge had become final. Therefore, he held that no second complaint for the same offences was maintainable. The complaint was held to be not maintainable on the ground of limitation as also for want of sanction of the appropriate authority in accordance with section 279(1) of the Act.