Punjab-Haryana High Court
Amrit Lal And Company And Ors. vs Income-Tax Officer on 1 February, 1994
Equivalent citations: [1994]210ITR427(P&H)
JUDGMENT Harmohinder Kaur Sandhu, J.
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 269T 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 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.
4. I have heard learned counsel for the parties and have perused the record.
5. A perusal of the complaint as filed by the respondent in the Court of the Chief Judicial Magistrate, Ferozepur, shows that the complaint was filed under Section 276DD read with Section 278B of the Income-tax Act, 1961 (assessment year 1989-90) and the petitioners were alleged to have contravened the provisions of Section 269SS of the Income-tax Act by accepting various amounts otherwise than by account payee cheques or account payee drafts. The copy of the complaint as attached with the present petition, annexure P-1, was not a correct copy as the complaint here was shown to have been filed under Section 276E. Under Section 269SS no person could take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft after June 30, 1984, if,--
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or
(c) the amount or the aggregate amount referred to in Clause (a) together with the amount or the aggregate amount referred to in Clause (b), is Rs. 10,000 or more.
6. Later on, this section was amended with effect from April 1, 1989, and the word "10" was substituted by "20". It is thus evident that in the , year 1988, the petitioners could not accept or receive any amount beyond a sum of Rs. 10,000 otherwise than by account payee cheque or account payee bank draft. As per the averments made in the complaint, they had received an amount of Rs. 17,000 on June 24, 1988, Rs. 40,000 on September 6, 1988, and Rs. 12,000 on October 1, 1988, in cash and prima facie they were liable for contravention of the provisions of the abovereferred section.
7. It was argued on behalf of the petitioners that the contravention of the provisions of Section 269SS was punishable under Section 276DD, but that section was omitted with effect from April 1, 1989, and at the time when the assessment return was submitted by the petitioners, the violation of the provisions was no longer penal and the complaint was filed by the Income-tax Officer by misusing his powers. This contention of learned counsel, however, does not hold good. It is correct that Section 276DD was omitted with effect from April 1, 1989, but the contravention was alleged to have been made by the petitioners in the year 1988. Unless a different intention appears, the repeal does not affect, inter alia, any investigation, legal proceedings or remedy in respect of any such right, privilege, obligation, liability, penalty, etc. Prima facie it was open to the Income-tax Officer to launch prosecution in respect of acts or omissions committed during the period the provisions of the repealed or unamended sections were operative. Section 276DD was in operation at the time the payments were alleged to have been accepted by the petitioners and the subsequent repeal of the section will not exonerate the petitioners of the violation, if any, committed by them.
8. It was next urged on behalf of the petitioners that as per the terms of the partnership deed, petitioners Nos. 3 to 5 who were ladies were sleeping partners and they were not in charge of the conduct of the business of the firm. They had not submitted any return and they were only involved in the case. The complaint against them was liable to be quashed on this ground alone. In support of his contention, learned counsel relied on the case of Murari Lal v. ITO [1985] 154 ITR 227 (P & H). In this case, the return of the petitioner-firm was signed and verified by one partner who had also signed the statement of account. Subsequently, it was found that there had been false entries in the accounts. Proceedings were, therefore, initiated under Section 276C of the Income-tax Act. It was nowhere alleged by the complainant that the three other partners apart from the one who had signed the statements of account were in charge of and responsible to the firm for the conduct of the business of the firm at the time of the alleged offence and so it was held that no criminal liability could be fixed on them and the complaint as well as all the proceedings taken in con-- sequence thereof against those persons were quashed. This authority is not applicable to the facts of the present case as in paragraph No. 6 of the complaint it is specifically mentioned that all the partners of the firm were directly connected and were in charge of and were responsible to the firm for the conduct of its business. So, it cannot be said that there are no averments to that effect. The question whether they were sleeping partners and they had nothing to do with the conduct of business of the firm is to be determined only after evidence is led to that effect. The allegations made in the complaint prima facie make out a case against the petitioners. No ground for quashing the complaint is made out and I find that the petition is without any merit. The same is hereby dismissed.