NIRMALA KAPUR Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THE petitioner, Mrs. Nirmala Kapur, partner of firm, M/s. Arun Spinning Mills, Amritsar, has invoked the inherent jurisdiction oi this court under section 482 of the Criminal Procedure Code, 1973, for quashing the criminal prosecution launched against the partners of the said firm which, besides herself, includes her husband, Shri Hem Raj Kapur and her son, Arun Kumar Kapur, by the ITO under an authorisation of the Commissioner, Amritsar, on three grounds, (1) that since the CIT as a result of the settlement between the partners of the firm and the revenue imposed a lesser penalty than the minimum imposable under section 271 (1) (c) (iii) of the I. T. Act, the prosecution stands statutorily barred by Section 279 of the Act; (2) that according to the terms of the settlement arrived at between the partners of the said firm and the Commissioner, Amritsar, the question of launching of criminal prosecution had to be considered on merits, that is, after hearing the partners of the firm, including the petitioner; and (3) that the petitioner was merely a sleeping partner and had not signed any document including the return and, therefore, there was no mens reaon her part and that, in any case, she should not be dragged into litigation after a lapse of 10 years. These submissions have to be judged in the background of facts which can be stated thus.

(2.) THE firm in question, to begin with, was constituted on April 24, 1960, with only three partners, namely, Hira Lal Mehra, Hem Raj Kapur (husband of the petitioner) and Krishan Kumar Khanna, for the manufacture and sale of spun woollen yarn under the name and style of M/s. Arun Spinning Mills, Amritsar. Two partners were added to the firm with effect from April 1, 1969, and thus the constitution of the firm underwent a change, vide partnership deed dated April 1, 1969, and the new partnership firm was comprised of 5 members, that is, the existing three members, the petitioner and her son, Arun Kumar Kapur.

(3.) THE premises of the petitioner and her husband, who was the managing partner of the said firm, were raided by the Central Excise Department and certain documents were seized, one of them being a mundi behi, which disclosed certain transactions which did not find a mention in the account books of the firm. The ITO confronted the partners of the said firm with the undisclosed income, as found a mention in the mundi behi, which led the parties to a negotiating table and a firm proposal was given by the partners of the firm which was to the following effect: