1984 (7) TMI 39 - HC - Income Tax

Summary

Issues:
Petition to set aside/quash summons under s. 482 Cr. P.C. and art. 227 of the Constitution of India.

Analysis:
The judgment pertains to a petition filed by M/s. Lalji & Co. and its partners challenging the summons issued to them in a pending complaint under s. 277/278 of the I.T. Act, 1961, and s. 193/196, IPC. The High Court admitted the petition after hearing arguments on its merits. The court noted that no case was made out against the petitioners in the complaint itself, as they were based in Bombay and the allegations did not justify their continued appearance in the Delhi Court. The court emphasized that inherent powers under s. 482, Cr. P.C., should not be exercised hastily without giving the complainant an opportunity to substantiate the allegations. However, in this case, the court found that the complaint did not disclose the commission of the alleged offence, warranting the quashing of the process against the petitioners.

The complaint alleged that M/s. Shanti Vijay & Co. and M/s. Lalji & Co. were involved in fictitious cash credit entries to purchase jewellery, with accusations of false accounts and statements under the I.T. Act. Accused No. 1 was accused of using concealed income as cash credits, while Accused No. 6 made a voluntary disclosure and settled with the income-tax authorities. The court focused on the specific allegations against Accused No. 6 and its partners, highlighting that mere introduction of parties did not amount to abetment or inducement in filing false returns. The court emphasized that the settlement with the income-tax department provided immunity to Accused No. 6 regarding the loan transactions, which were separate from those of Accused No. 1. The judgment concluded that the petitioners had not abetted or induced any offence under the I.T. Act or IPC, leading to the quashing of the process against them in the pending complaint before the trial court.

In summary, the High Court's judgment in this case centered on the lack of evidence to support the allegations against the petitioners, emphasizing the importance of not allowing the trial to proceed when no case was made out in the complaint itself. The court scrutinized the specific allegations against the petitioners, highlighting that mere introductions and independent transactions did not establish their involvement in the alleged offences. Ultimately, the court allowed the petition and quashed the process against the petitioners in the pending complaint, emphasizing the need for a prima facie case to warrant further legal proceedings.