Punjab-Haryana High Court
Jai Gopal Mehra And Smt. Suman Mehra vs Income-Tax Officer on 4 March, 1986
Equivalent citations: [1986]161ITR453(P&H)
JUDGMENT K.P.S. Sandhu, J.
1. Petitioners, Jai Gopal and Smt. Suman Mehra, have filed this petition under Section 482, Cr. P. C., praying therein that the complaint dated January 8, 1985, filed by the respondent against them be quashed.
2. The petitioners are partners of M/s. O. T. C. Agencies, Post Office Four Fields, G. T. Road, Amritsar. On July 31, 1979, the firm, M/s. O. T. C. Agencies, filed its income-tax return for the year 1979-80. A part of the documents filed with the return were signed by Satish Kumar Kapur and certain documents were signed by Sudhir Mehra, another partner of the firm, and Sudhir Mehra is accused No. 5 in the complaint. However, the verification was done by Satish Kumar Kapur on all the documents, Satish Kumar Kapur is accused No. 7 in the complaint filed by the Department regarding the aforesaid return.
3. On March 31, 1982, an addition of Rs. 9,90,000 was made in the trading account of the firm by the Income-tax Department. However, the firm went in appeal. The amount was reduced to Rs. 6,85,236 from Rs. 9,90,000 addition. On further appeal to the Income-tax Appellate Tribunal by the firm, it was further reduced to Rs. 90,800 under Section 40A(3) of the Income-tax Act. The Commissioner of Income-tax, vide his order dated July 26, 1985, deleted the addition made by the Department and held that there was no concealment. Consequently, the penalty imposed was deleted. However, on January 8, 1985, a complaint under Sections 276C and 277 of the Income-tax Act was filed against the petitioners and other partners by the Income-tax Officer, Central Circle-1, Amritsar.
4. Mr. Bhagirath Dass, senior advocate, learned counsel for the petitioners, has contended at the outset that it is nowhere alleged in the complaint that these two petitioners, namely, Jai Gopal and Smt. Suman Mehra, were in charge of, and responsible to, the firm for the conduct of the business of the firm at the time of the alleged commission of the offence. Therefore, no criminal liability can be fixed upon them. He has taken me through the provisions of Section 278B of the Income-tax Act which read as under :
"(1) 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 :
Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.... "
5. Mr. Ashok Bhan, senior advocate, has not been able to say much against this proposition in view of my earlier judgment in Murari Lal v. ITO [1985] 154 ITR 227 (P&H). I find considerable force in the contention of the learned counsel for the petitioners. In view of the provisions of Section 278B of the Income-tax Act, the prosecution of these petitioners is misconceived and is nothing short of the abuse of the process of law. Consequently, this petition is allowed and the complaint dated January 8, 1985, and the proceedings taken in consequence of that are quashed.