Law:

Section:

Section 277, read with sections 278 and 278B, of the Income-tax Act, 1961 - Offences and prosecution - False statement in verification, etc. - Assessment year 1973-74 - Whether a partnership firm could not be prosecuted for offence committed on 18-7-1973 as at that time accused could only be punished under section 278 with rigorous imprisonment for a term which may extend to two years and there was no provision for sentencing accused to pay fine and firm could not be sentenced to undergo rigorous imprisonment - Held, yes FACTS The Assessing Officer filed a complaint for an offence under section 277 against a partnership firm and its three partners, namely, H, R and P (lady partner) alleging, inter alia, that the partnership firm submitted the return for the assessment year 1973-74 on 18-7-1973 and the accused had knowingly made wrong verification on the income-tax return declaring the income at a lower figure and further, delivered knowingly wrong accounts and false statements of account and as such had committed an offence punishable under section 277. He also alleged that H, R and P had been arrayed as accused being responsible for the conduct of the business of the firm. However, the trial court after hearing the parties held that no case was made out against H and P, as they were not incharge and were not having control over the business, whereas R was incharge and was having control over the business. Accordingly, it discharged H and P. On revision petition filed by the revenue, the Additional Sessions Judge held that accused H prima facie appeared to be guilty for the commission of the offence alleged and could not be discharged as ordered by the trial court. He further held that so far as P was concerned, she was only a sleeping partner of the firm and revision petition was not directed against her discharge on that account. He, accordingly, directed the trial court for further enquiry into the matter. On revision petition filed by the partnership firm and H : HELD From a perusal of section 278B, which was added in the Act with effect from 1-10-1975, it would be clear that accused H could not be prosecuted for having committed the offence on 18-7-1973…

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