Law:

Section:

Section 276C of the Income-tax Act, 1961 - Offence and prosecution - Wilful attempt to evade tax, etc. Where accused, who were ladies, were discharged on ground that they were not active partners of firm and were only sleeping partners for purpose of profit only, it had to be determined on basis of material whether they were dormant partners and that could be done at time of trial; therefore discharge of accused was not justified Where the accused, who were ladies, were discharged on the ground that they were not active partners of firm and were only sleeping partners for the purpose of profit only, and the prosecution had not shownprima facie that they were active partners of the firm. Held that in the complaint, there was specific averment that all the accused persons were in charge of as well as responsible for the conduct of the business of the firm. Whether accused were admitted to the partnership firm only for profits and whether they were sleeping or dormant partners and not active partners, could be decided on the basis of material which could be produced at the time of trial. In fact, that could be decided on the basis of the deed of partnership, which could specify the role of the concerned partners. If certain partners are admitted only for profit or certain partners are to be dormant partners, such terms of the agreement are expected to be incorporated in the partnership deed. The Additional Chief Metropolitan Magistrate nowhere referred to the contents of partnership deed to come to the conclusion that these partners were not active partners and were only sleeping or dormant partners. Therefore, it was difficult to accept the finding of the trial court that these partners were entitled to be discharged on that ground also could not be accepted. JUDGMENT (Oral Judgment) J.H. Bhatia, J.-Heard Mr. H. V. Mehta, learned counsel for the applicant-Union of India. None appeared for the respondents. Perused relevant documents and the impugned order passed by the Additional Chief Metropolitan Magistrate, 47th Court, Esplanade, Mumbai. The applicant's case in brief is that, respondent No. 1 is a partnership firm and respondents Nos. 2 to 11 are its partners…

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