Law:

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Section 278B of the Income-tax Act, 1961 - Offences and prosecutions - Offences by companies - Whether where it had not been alleged in complaint that petitioners, who were partners in firm, were in charge of, and responsible to firm for conduct of business of firm at time of alleged commission of offence, no criminal liability could be fixed upon them and thus complaint filed against them under sections 276C and 277 was to be quashed - Held, yes Facts A firm 'O' having four partners, J, S, SK and SM filed its income-tax return for the relevant assessment year. A part of the documents filed with the return were signed by SK and certain documents were signed by SM. However, the verification was done by SK on all the documents. In the assessment proceedings the ITO made certain addition to the income of the firm. On appeal, the AAC, however, reduced the said addition. On further appeal, the Tribunal further reduced the said addition. Thereafter, the Commissioner by his order deleted the addition and held that there was no concealment. However, a complaint was filed under sections 276C and 277 against the petitioners, namely, J and S and other partners. On application under section 482 of the Code of Criminal Procedure, 1898 for quashing the said complaint, the petitioners submitted that it was nowhere alleged in the complaint that these two petitioners, namely, J and S 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 could be fixed upon them. Held Having regard to the materials brought on record, in the instant case, it was clear that there was force in the argument of the petitioners. Therefore, in view of the provisions of section 278B, the prosecution of these petitioners was misconceived and nothing short of abuse of the process of law. Consequently, the petition was allowed and the aforesaid complaint was quashed. Case referred to Murari Lal v. ITO [1985] 154 ITR 227 (Punj. & Har.). Bhagirath Dass and A.C Jain for the Petitioner. Ashok Bhan and A.K. Mittal for the Respondent. JUDGMENT 1. Petitioners Jai Gopal and Smt. Suman…

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