Calcutta High Court
India Steel Corporation And Ors. vs Sri Ahindra Lal Datta And Anr. on 12 July, 1993
Equivalent citations: (1993)2CALLT269(HC)
JUDGMENT R. Bhattacharyya, J.
1. In the aforesaid criminal revision, twin question raises its head for decision passed, in connection with order No. 1 dated 24.3.90, by the learned Chief Metropolitan Magistrate for cognizance being taken on the basis of a batch of complaints of the Asstt. Commissioner in Case No. C/770/90.
2. Most of the facts are no longer in dispute. The accused persons, as partners, were hauled up for commission of an offence Under Section 276B(ii)/278B of the Income Tax Act, 1961. The non payment of the tax deducted at source laid the seeds of initiation of the criminal proceedings despite the pecuniary obligations discharged by the partners beyond the statutory period.
3. The question arises in this way. Mr. Bhattacharyya appearing for the revisionists has canvassed that no penal action lies against the firm as it is not a body corporate nor a juristic person. He has tried to impress on me that the code is meticulously silent about the prosecution of a firm in a criminal trial. To buttress his claim, he has argued with much emphasis that Section 276 of the Income Tax Act does not entertain any ambiguity. On the other hand, it could afford a clue that firm was kept out of the provisions of the aforesaid Section. The argument seems to be attractive at the first flush. But, if one walks through the bosom of Section 276B of the Income Tax Act, it will petter all doubt that provision is very much alive for prosecution of a firm as it is well delineated in the provisions of the Income Tax Act. Section 2(31) of the Income Tax Act 1961 defines the firm as 'per son'. Thus, there could not be any difficulty to attribute meaning to the word 'person'. He has taken me through the various provisions of the In come Tax Act, 1961 to found his claim, although Mr. Talukdar, the learned Advocate, appearing for the Union of India, is sought to have resisted the claim on the ground that the I.T. Act countenances the prosecution of a firm. It is true that a firm cannot suffer any imprisonment but where the question of payment of fine or any other punishment is concerned, the firm cannot be relieved of its obligations. A firm could be very well prosecuted for which mode of service has been prescribed by the code. It is also fallacious that a firm is immuned, if it fails to pay any tax as there are prescribed modes for dealing with the registered and unregistered firms under the Income Tax Act. It is true that a summon cannot be served or issued on the firm directly but through its proprietor or partners as the case may be. Our court, in Commissioner of South Dum Dum Municipality v. O.M. Khosla AIR 1965 Calcutta 263 : 1965 Cri LJ 617 held :
"In view of the terms of Section 69(3) Cr PC showing that summons on a company may be served on the Secretary or the local Manager or other Principal Officer, it may be held by analogy that the Secretary or the local manager or the Principal Officer of the company will represent the company in such a prosecution".
4. In the background of the above, in my opinion, process can well be issued through the partners of the firm which would be in consonance with law. The craving for treating the partners as "Principal Officer" of the firm is uncalled for, in view of the dealings between the department and the petitioners being evident.
5. The case of Sudhir Ranjan Roy Chowdhury v. N.K. Mazumdar AIR 1944 Patna 210 also supports such view. Section 63 of the new Code cor responds to Section 69(3) of the old Code except verbal change and an explanation. The explanation comes, in the wake of the recommendation of the law commission in its 41st report, the object being to bring within it the registered societies. Therefore, the firm is immuned from prosecution as urged by Mr. Bhattacharyya does not illumine the claim.
6. More so, the first line of Section 276B speaks of 'a person'. The word 'person' has a reference to Section 2(31) of the Act. Therefore, Section 279 of the Income Tax Act also contains the word 'person'. It dissipates all doubt that a person could be prosecuted Under Section 279 for violation of Sections 275A, 276, 276A, 276B, 276BB, 276C, 276CC, 276D, 277 or 278. It could be very well prosecuted in accordance with the provisions of the Income Tax Act. Section 276B is not the bed of roses for a firm. Firm cannot be prosecuted for violation of law is an argument ill founded.
7. Yet, I have been addressed by Mr. Bhattacharyya on an important question of law. According to him Section 279 stands as an insurmountable bar for the prosecution of a 'person1 when devoid of the previous sanction of the Chief Commissioner of Director General or Commissioner. The case when gets a factual exposure, it reveals that the prosecution was commenced under the authorization of the Asstt. Commissioner of Income Tax. The commencement of proceedings on the strength of such authorization, as canvassed by Mr. Bhattacharyya, shook the foundation of taking cognizance as the section does not arm the Asstt. Commissioner to launch a prosecution.
8. Mr. Talukdar in rebutting the contention of his learned adversory has made a forceful submission that the absence of any saving clause in Section 279 of the Income Tax Act, 1961 in respect of the institution of the criminal proceeding does not constitute any illegality for want of sanction. In developing the point, he has sought for the aid from the principle of law laid down in G.L. Kilikar v. State of Kerala . In the celebrated judgment his Lordships observed :
"As the Gold (Control) Act does not exhibit a different or contrary intention, proceedings initiated under the repealed law must be held to continue. We must also remember that by Gold (Control) Ordinance, the "Rules" were deemed as an act of parliament. Hence on the repeal of the "Rules" and the Gold (Control) Ordinance, 1963, the consequences mentioned in Section 6 of the General Clauses Act, follow. For ascertaining whether there is a contrary intention, one has to look to the provisions of the Gold (Control) Act, 1968. In order to see whether the rights and liabilities under the repealed law have been put an end to by the new enactment, the proper approach is not to enquire if the new enactment has by its new provisions kept alive the rights and liabilities under the repealed law but whether it has taken away those rights and liabilities. The absence of a saving clause in a new enactment preserving the rights and liabilities under the repealed law is neither material nor decisive of the question".
9. On a close analysis, it is seen that the action taken under the Gold Control Ordinances and the Rules which were deemed to be the Act of Parliament, Section 6 of the general clauses Act afforded a protective Umbrella to such action. The amendment was geared to action on and from 1.4.89. The past act according to Mr. Talukdar, has been saved. Mr. Talukdar has asserted to forestall the claim of Mr. Bhattacharjee that the offence spoken of even if committee before the introduction of the amendment of Section 279 of the Income Tax Act, 1961, the prosecution of it for the post amendment of the section will not entail forfeiture of the right of the prosecution to launch an offensive against a person who had violated the provisions of the statute. To fortify his claim, he has relied on the case of State of West Bengal v. Manmal Bhutoria, .
10. The moot point for decision in the above case was as to whether criminal proceedings could continue or initiate when the offender ceased to be a public servant, although the offence committed by such servant while he was in service. Another side fact became the germane for consideration of the court was as to whether a stranger could be prosecuted Under Section 5(3) of the prevention of Corruption Act, 1947 when he habitually committed an offence Under Section 165A of the I.P.C. There, the Lordships, however, considering quite a good number of decisions and returned a verdict in the affirmative. The principle of law as settled in the ruling under reference cannot be applied to the facts and circumstances of the case at hand. Nor even any analogy could be deduced from the afore noted decision. It is noticeable that their Lordships, did not advert to examine, if sanction was an essence of law for prosecution of an offence.
11. The tall claim of Mr. Talukdar is turned into shambles as it is the essence of law in view of the amendment of Section 279 of the I.T. Act, 1961 that the sanction for prosecution is an essence of law. The wisdom of the legislature for prosecution of the offences embodied in Section 279 of the I.T. Act, 1961, since adequately reflected in it, the same cannot be expelled on the count of offence being committed before the commencement of Section 279 of the I.T. Act. In the background of the clear legislative intent, circumvention of provision of law is not permissible.
12. I cannot resist my temptation to cite the case of R.P. Jain and Anr. v. The State of Bihar, 1977 Cr LJ 1758, where his Lordship while examining the absence of a saving clause in a repealed Act or Ordinances concluded that the impugned Act or section when does not save a right or remedy under the repealed Act or ordinance, both right and remedy are lost. Section 279 of the I.T. Act, 1961 or any other provisions of the statute as I have seen or taken note of where the legislature with ample care and caution refrained from containing an appropriate saving section. In the background of the above, it would be legitimate for the revisionist to contend that the procedure laid down in the section could not be read in isolation of it. The argument inspires confidence in the backdrop of legislative intention amply reflected in the section.
13. 1 am, therefore, of the opinion that no action could be taken to prosecute the accused persons in contravention of the provisions as contained in Section 279 in the I.T. Act.
14. None of the rulings cited by Mr. Talukdar in the background of the legislation and the state of affairs could be made applicable.
15. There is another important feature of the case in the background of the legislation which cannot be lost sight of as the statute by amendment altered the procedural law for prosecution of the offences. The mode of prosecution, being procedural in nature must be ensured when provided through amendment even though a specific provision in that regard was not found afailable in the earlier law. This legislative exercise created new liability. I see no difficulty in reading Section 179 in that light.
16. May be the offences are of anterior dates but prosecution, in absence of sanction after amendment is impermissible. Besides, the action was not concluded before amendment rather it is a post amendment action which demands the fulfilment of law.
17. In the context of the facts, the decision of G. L. Kilikar is not applicable to the facts of the present case.
18. Persuaded by the aforesaid reason, I cannot agree with the contention of Mr. Talukdar. The points urged by Mr. Bhattacharjee adds full flavour to the case that the prosecution in bar of Section 279 of the Income Tax Act, 1961 is not maintainable.
19. Therefore, it is a fit and proper case where revisional power should be exercised to do a complete justice between the parties in order to prevent the abuse of the process of court as the prosecution cannot be permitted to continue in supersession of law.
Since similar points are involved in Criminal Revision Nos. 566-638 ; this order will also govern the aforenoted Criminal Revisions.
In the result, the revision succeeds.