Law:

Section:

Section 278b of the income-tax act, 1961-Offences-By firm-Firm having four partners, filed a return of income-tax for assessment year 1981-82 (Accounting year 1980-81)-Return and the annexed statement of accounts were signed by one of the partners ml-In course of survey conducted on 10-7-1981, excess stock worth rs. 35,000 was discovered and books of account for 1981-82 impounded-After survey in the books of account for 1980-81 relevant to the assessment year 1981-82, which were in the possession of firm, firm added rs. 35,000 as 'profit in timber account' and likewise to the value of closing stock-All partners were prosecuted for an offence under section 276 for wilful attempt to evade tax by making false entries in account books-Whether in view of the fact that it was not alleged in complaint that three partners other than ml were also incharge and responsible to firm for conduct of business of firm at the time of offence, prosecution against them could be sustained-Held, no Facts Petitioners ML, MR, MP and BR were partners of the firm MPAK. For the assessment year 1981-82, the firm filed a return of income, dated 31-8-1981, along with the copies of statement of accounts. The return was signed and verified by ML, who also signed the accompanying statement of accounts. In the books of account for the accounting year 1980-81 relevant to the assessment year 1981-82, the petitioner-firm had shown closing balance of stock of Rs. 61,450 and a profit of Rs. 68,526.55 in the timber trading account. The business premises of the firm were surveyed on 10-7-1981 and excess stock of about Rs. 35,000 was detected on the date of survey. The books of account for the accounting year 1981-82 were, accordingly, impounded by the ITO. In the books of account for 1980-81, which were in its possession, the firm added Rs. 35,000 to the profit in the 'Timber Trading Account' by mentioning 'to profit to supplement profit and loss account' and likewise added Rs. 35,000 to the closing stock by mentioning the words 'Addl. closing stock valuation'. The partners of the firm were, accordingly, prosecuted under section 276C of the Income-tax Act, for wilfully attempting to evade tax, penalty…

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