Punjab-Haryana High Court
Smt. Pushpa Maini And Ors. vs Income-Tax Officer And Anr. on 16 March, 1992
Equivalent citations: [1993]200ITR198(P&H)
JUDGMENT Harmohinder Kaur Sandhu, J.
1. The Income-tax Officer, Circle-11, Patiala, filed a complaint against M/s G. R. Machine Tools, Sirhind and eight other partners of the firm for offences under Sections 276C and 277 of the Income-tax Act, 1961 ("the Act" for short), in the Court of the Chief Judicial Magistrate, Patiala. The income-tax return for the assessment year 1979-80 was signed and verified by Dev Raj Dhiman, accused No. 3. In the trial court, an application was filed by accused Nos. 2 and 4 to 9 who are the partners of M/s G. R. Machine Tools praying that proceedings against them be dropped. After hearing counsel for the parties, the learned Chief Judicial Magistrate allowed the application and dropped the proceedings against accused Nos. 4 to 9. Accused No. 2 had since expired. Aggrieved by this order dated November 5, 1986, the complainant filed a revision petition which was allowed by Shri M. L. Singhal, Additional Sessions Judge, Patiala, who held that the order of discharge passed by the Chief Judicial Magistrate was premature as it will be a matter of evidence as to whether partners other than Dev Raj Dhiman were or were not responsible for the conduct of the business of the firm. It is against this order dated October 30, 1987, passed by the Additional Sessions Judge, that the present revision petition has been filed by accused Nos. 4 to 9, i.e., partners of M/s G.R. Machine Tools, Sirhind.
2. I have heard Mr. Hemant Kumar, learned counsel for the petitioners, and Mr. R.P. Sawhney, learned counsel for the respondent.
3. Admittedly, in the complaint, it was not alleged that the petitioners were either in charge of or responsible for the conduct of the business of the firm. It was contended that Dev Raj alone was liable as he was the managing partner and in charge of the firm and the rest of the partners were neither in charge of nor responsible for the conduct of the business of the firm and as such were not liable for any offence under the Act.
4. The only question to be decided in this revision petition is whether a partner who is neither in charge of nor responsible for the conduct of the business of the firm could be sued for offences under Sections 276C and 277 of the Act.
5. It was argued on behalf of the respondent that the petitioners who were partners of the firm were prima facie liable for the offences regarding which the complaint was filed against them because they were sharing the profits of the firm and they were presumed to be abetting the act of filing false return by Shri Dev Raj. In support of his contention, learned counsel placed reliance on the case of Tilak Raj v. ITO [1987] 165 1TR 46 (P & H). The facts of this case are distinguishable from the facts of the present case, as the petitioners, in the case of Tilak Raj [1987] 165 ITR 46 (P & H), being the partners of a firm, were lending their names to their co-accused for the purpose of ostensible and fictitious sale to such concerns who had imported woollen tops with a view to enable the latter concerns to conceal substantially a major part of their income. In the instant case, there are no allegations in the complaint regarding any abetment or connivance on the part of the petitioners with the partner who was managing the affairs of the firm. Under Section 278B of the Act, where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. The petitioners were not mentioned to be in charge of the affairs of the firm nor was it alleged that they were conducting the business of the firm in any manner. There were also no allegations that the petitioners had prepared any false record or used the same in any manner. They had not signed or verified the return and as such they were not liable to be prosecuted under Sections 276C and 277 of the Act. Jasbir Singh v. ITO [1987] 168 ITR 770 (P & H), Puran Devi v. Z.S. Klar, ITO [1988] 169 ITR 608 (P & H) and Basal Tool Co. v. ITO [1987] 167 ITR 24 (P & H) are the authorities which are fully applicable to the facts of the present case.
6. In the absence of any allegation made in the complaint about the involvement of the petitioners in submitting a false return by the managing partner and any wilful attempt made by them to evade tax, it cannot be said that the order regarding discharge of the petitioners by the trial court was premature.
7. As a result, I accept this revision petition, set aside the order of the learned Additional Sessions Judge dated October 30, 1987, and restore that of the trial court.