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2008] 304 ITR 382 [2009] 184 TAXMAN 136 (MP) HIGH COURT OF MADHYA PRADESH, INDORE BENCH Union of India v. Nalinidevi* S.K. SETH, J. CRIMINAL APPEAL NO. 350 OF 1995 FEBRUARY 12, 2008 Section 276C, read with section 277, of the Income-tax Act, 1961 - Offences and prosecution - Wilful attempt to evade tax, etc. - Assessment year 1981-82 - Assessees who were partners of a firm were prosecuted for having committed offence punishable under section 276C, read with section 277, on allegation that false returns were filed in order to evade income-tax for assessment year 1981-82 - Trial Judge, however, on finding that accused persons had no active role to play in business of firm and, moreover, prosecution had failed to establish that said partners were effectively controlling affairs of firm, acquitted assessees - Whether there was no illegality with order of acquittal of accused members of firm - Held, yes CASE REVIEW Kanhaiyalal Deepchand Jain v. Union of India [2000] 241 ITR 323 (MP) and Smt. Sitaben v. Union of India [1994] 208 ITR 285/[1995] 78 Taxman 385 (MP) [Para 5] followed. CASES REFERRED TO Kanhaiyalal Deepchand Jain v. Union of India [2000] 241 ITR 323 (MP) [Para 3] and Smt. Sitaben v.Union of India [1994] 208 ITR 285/[1995] 78 Taxman 385 (MP) [Para 3]. R.L. Jain and Ku. Veena Mandalik for the Appellant. H.O. Soni for the Respondent. JUDGMENT 1. This appeal is directed against the of acquittal of Smt. Nalinidevi and Smt. Gayatridevi passed by ACJM (Economic Offences), Indore in sessions Trial No. 5/87. They being members of a firm viz., M/s. Micro Chemical, Mandsaur, were prosecuted for having committed offence punishable under section 276(c) read with section 277 of the Income-tax Act (hereinafter referred to as 'the Act') on the allegation that false returns were filed in order to invade income-tax for the assessment year 1981-82. 2. The accused persons adjured their guilt and set-up a defence that they being only housewives were not in charge of the business of the firm. On the basis of the evidence led by the prosecution, learned trial Judge found that there was no defect with the sanction for prosecution and the firm was guilty for offence punishable…

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