Law:

Section:

Section 277 of the Income-tax Act, 1961 - Offences and prosecutions - False statement in verification, etc. - Assessment year 1971-72 - Whether once complaint has been authorised by Commissioner, it can be admitted even though it has been filed by ITO different from one by whom return was admitted - Held, yes - Whether a partner who did not file return of firm and about whom there was no evidence that he was conducting business of firm could be prosecuted prior to insertion of section 278B - Held, no - Whether prior to 1-10-1975 prosecution against a firm was not maintainable as only punishment was imprisonment and a firm being juristic entity could not be imprisoned - Held, yes FACTS The first accused was a partnership firm and the accused Nos. 2 and 3 were its partners. For the assessment year 1971 -72, accused No. 2 filed a return disclosing an income of Rs. 1,54,194. The return was submitted to the ITO, A-Ward, Ernakulam. Later, this file was transferred to the Special Circle, Ernakulam. The ITO attached to the Special Circle, Cochin, conducted a search in the business premises of the accused. The houses of the partners of the first accused and the business premises were also searched and books of account and other records were seized. The search and other investigations conducted by the complainant disclosed that there were irregularities in certain business transactions and steps were initiated to prosecute the accused. All the three accused had been convicted for the offence punishable under section 277 of the Income-tax Act and sections 193 and 196 of the Indian Penal Code, 1860. For the offence under section 277 accused Nos. 2 and 3 were sentenced to undergo rigorous imprisonment for six months. On revision petition it was contended that (i) the return was admitted by the ITO, A-Ward, Ernakulam, whereas the complaint was filed by the ITO, Special Circle, Cochin, and, therefore the same was not maintainable, (ii) accused Nos. 1 and 3 could not be found guilty on the basis of the returns submitted by the second accused. On reference: HELD In the instant case, the Commissioner had granted sanction to prosecute the accused. Therefore, it could not be said…

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