EQUIPMENT SERVICE CENTRE Vs. UNION OF INDIA

JUDGEMENT

(1.) IN the present writ application, the petitioners have prayed for quashing the complaint in Complaint Case No. 287 of 1992 now pending before the Special Judicial Magistrate (Economic Offences), Jamshedpur, respondent No. 2. A prayer has also been made for quashing the order taking cognizance under Sections 276C and 277 of the INcome-tax Act, 1961, including the entire criminal proceedings against the petitioners.

(2.) BEFORE dealing with the grievances made by the petitioners, it would be appropriate to refer to the factual background. Petitioner No. 1 is a partnership firm, whereas petitioner No. 5 is a private limited company incorporated under the Companies Act, 1956. Petitioners Nos. 2, 3 and 4 are partners of petitioner No. 1 and petitioner No. 6 is the director of petitioner No. 5. A complaint was filed by respondent No. 2 in the Court of the Special Judicial Magistrate, Muzaffarpur, alleging, inter alia, that petitioner No. 1 was engaged in the business of leasing equipment like air-conditioners, etc., and pays a commission of Rs. 66,500 to petitioner No. 5. On scrutiny, this was disallowed and added to the total income of petitioner No. 1. Penalty proceeding under Section 271(1)(c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was initiated. The complaint alleges that this accused firm have deliberately and wilfully furnished inaccurate particulars of income and attempted to evade tax within the meaning of Section 276C of the Act and as a false verification in the return of income under Section 277 of the Act was made. The firm, as well as the partners and the director, were liable for prosecution under Sections 276C and 277 of the Act. A certified copy of the complaint has been annexed as annexure 1 to the writ application.

(3.) IT appears that when again a fresh penalty proceeding was initiated in respect of the same amount, the petitioners again moved the appellate authority in Income-tax Appeal No. 369 of 1994-95. By an order dated November 14, 1994, the said appeal was partly allowed. The aforesaid orders dated February 6, 1992, and November 14, 1994, passed by the appellate authority have been annexed as annexures 9 and 10, respectively, in the supplementary affidavit.