AMRIT LAL AND COMPANY Vs. INCOME-TAX OFFICER

JUDGEMENT

(1.) Messrs. Amrit Lal and Company, Guru Harsahai, which is a registered firm constituted by four partners, i.e., petitioners Nos. 2 to 5, carried on its business at Guru Harsahai. The Income-tax Officer, Ward No. 1, Ferozpur, filed a complaint against Messrs. Amrit Lal and Company through its partners for an offence under Section 276DD read with Section 278B of the Income-tax Act, 1961. The complaint was filed on the allegations that the petitioners submitted their income-tax return on March 15, 1990, at Rs. 52,050 and the assessment was completed at a net taxable income of Rs. 54,050, vide order dated October 30, 1990. During the course of assessment proceedings, the then Income-tax Officer found that the assessees had accepted Rs. 17,000 on June 24, 1988, Rs. 40,000 on September 6, 1988, Rs. 12,000 on October 1, 1988, in cash from Shri Milkhi Ram, son of Kalu Ram, and they accepted Rs. 10,000 in cash from Shri Milkhi Ram, son of Bihari Lal, on May 13, 1988, otherwise than by account payee cheque or account payee draft in contravention of the provisions of Section 269SS of the Income-tax Act, 1961. Petitioners Nos. 2 to 5 were partners of the firm and were directly connected and were in charge of and responsible to the firm in the conduct of its day-to-day business. So they were liable for the alleged offence.

(2.) The present petition has been filed by the firm through its partners under Section 482, Criminal Procedure Code, for quashing the complaint referred to above, annexure P-1, and other proceedings initiated on the basis of the same pending in the Court of the Chief Judicial Magistrate, Ferozepur. It was alleged that after April 1, 1989, the violation of the provisions of Section 269-T was no more penal but the Income-tax Officer by misusing his power as a public servant filed the complaint and the learned trial court without applying its mind to this aspect of the case summoned them which was clearly a misuse of the process of the court. It was further alleged that the partnership deed, annexure P-2, made it abundantly clear that petitioners Nos. 3 to 5 were sleeping partners being ladies and they had no concern with the conduct of the business of the firm. The income-tax return was neither signed nor submitted by them. Verification of the return was signed by Amrit Lal, petitioner, yet they were wrongly arraigned as accused.

(3.) In the written statement filed by the respondent, the averments made in the petition were denied and it was alleged that although verification of the return was signed by Amrit Lal, yet petitioners Nos. 3 to 5 were responsible for carrying on the business of the firm. It was further maintained that although Sections 276DD and 276E were omitted by the Direct Tax Laws (Amendment) Act, 1987, yet the violation of the provisions prior to the date of omission remained penal and the petitioners were prima facie liable for the offence for which they were summoned.