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TMI Blog1996 (3) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... mplaint has been filed in a mechanical manner without any application of mind. Before I proceed to discuss the merits of this case, in view of the submissions made by learned senior counsel for the petitioners, it will be necessary to state the facts giving rise to the present petition. In March, 1992, the Deputy Commissioner of Income-tax, Jalandhar, filed a complaint under sections 276C, 277 read with section 278B of the Income-tax Act involving the assessment years 1983-84 and 1984-85. It has been stated in the complaint that accused No. 1, i.e., P. S. Jain Motors, is a partnership concern of which accused Nos. 2 to 5 were the partners during the relevant period. Accused Nos. 2 to 5 were in charge and were stated to be responsible to the firm for conduct of its day-to-day business. It is alleged that during the course of assessment proceedings for the year 1984-85 books of account were examined and it was found that interest on various advances was not charged when it was being charged in the previous years, the details of which were given in the complaint. The assessment proceedings were completed on a total income of Rs. 11,11,429 vide order dated March 23, 1990, against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be less than three months but which may extend to three years and shall, in the discretion of the court, also be liable to fine. Explanation.--For the purposes of this section, a wilful attempt to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof shall include a case where any person-- (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Act) containing a false entry or statement ; or (ii) makes or causes to be made any false entry or statement in such books of account or other documents ; or (iii) wilfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents ; or (iv) causes any other circumstance to exist which will have the effect of enabling such person to evade any tax, penalty or interest chargeable or imposable under this Act or the payment thereof. " "277. If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As already noticed by me above, the complaint makes certain specific allegations with regard to violation of sections 276C and 277 of the Act. Specific instances have been given in the complaint for the assessment year 1984-85 where the assessees have evaded the payment of tax on the one hand and on the other hand had verified false statements. The provisions of section 276C of the Act cover a wider field. Under sub-section (1) of the said section any person who wilfully makes any attempt in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under the Act is liable to be proceeded against. While the provisions of section 277 of the Act render the person liable for prosecution under the Act or under any rule made thereunder or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true. Thus, this complaint does not lack complete particulars which would render the complaint liable to be quashed on the ground that it does not disclose any offence under the provisions of the Act. There are specific allegations based upon facts and figures given in the complaint, with specific averme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 226 of the Constitution of India by the High Court for quashing criminal proceedings or complaints, etc., has been circumscribed by the Supreme Court in the case of State of Haryana v. Ch. Bhajan Lal, AIR 1992 SC 604 ; [1990] 4 JT 650 (SC), where the Supreme Court has categorised such cases under seven different heads. While considering a prima facie case at this stage, the court has to keep in view these categories. The court is not concerned with the ultimate result of the proceedings initiated on the basis of the complaint. It is irrelevant whether ultimately the accused would be convicted or would be entitled to be acquitted after facing the trial. Once the complaint discloses an offence and brings out clear infringement of certain provisions of law tantamounting to a criminal offence, it renders the accused liable for prosecution. The court has no further jurisdiction to go into the merits or demerits of the complaint or conviction or otherwise at this stage. In a very recent case State of West Bengal v. Mohammed Khalid, AIR 1995 SC 785 ; [1994] 7 JT 660 (SC), the Supreme Court further restricted the scope of jurisdiction exercisable by the High Court in such circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct of the firm as well as the firm. The accused were dealing in purchase and sale of Tata diesel chassis and its parts and also derived income from the workshop during the relevant record." These allegations which have been imputed by the Department against the accused are sought to be proved before the court of competent jurisdiction by leading oral as well as documentary evidence. The documents have been filed on record as per list annexed to the complaint. To attract the provisions of section 278B of the Act, all that the Department has to discharge is the primary burden at this stage of the proceedings to show and to allege that the person is in charge of and responsible for the conduct of the business of the company. While screening the contents of the complaint, the court has to find whether the allegations made in the complaint per se justify the prosecution of the accused persons. The language of section 278B of the Act clearly indicates the intention of the legislation in holding a person guilty of an offence, if he was responsible to the company for the conduct of the business of the company. It is provided that if the Department has discharged its primary burden unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act, has no force because as already noticed, there are specific and definite allegations and they are alleged to be responsible for the conduct of the business of the company/firm. It cannot be said that there is no application of mind in the present case because the order of assessment from where these offences have been attracted, has been upheld by the appellate authority and even show-cause notices had been given. Thus, it is neither a case of no pleading nor of no application of mind. Learned counsel for the petitioners has strongly relied upon the judgment of the Delhi High Court in Parmeet Singh Sawney v. Dinesh Verma [1988] 169 ITR 5. With respect to the learned judge, the case lays down a sweeping proposition, in my humble view and for the reasons recorded in this judgment, I respectfully differ therefrom. In that case, the authority had acted casually by impleading as an accused a minor who was a six year old boy and consequently was not liable for the acts of the partnership as postulated under the provisions of section 278B of the Act. Thus, the case cited by learned counsel for the petitioners, on the face of it, is distinguishable from the facts of the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsh Ahluwalia and Smt. Anjiv Ahluwalia v. Z. S. Klar, ITO [1988] 169 ITR 610 expressed the view that if it was not alleged that any other partner was in charge of or responsible to the firm for the conduct of its business at the time of commission of the offence, in that event, the complaint against the partner could not be sustained which necessarily implies that if such allegation was made in the complaint in that event, the complaint cannot be quashed even with regard to the partner and section 278B of the Act would come to aid the complainant. In the case of R. N. Bajaj v. K. Govindan, ITO [1992] 198 ITR 447, the Madras High Court after considering the various decisions, relied upon the case of Municipal Corporation of Delhi v. Ram Kishan Rohtagi, AIR 1983 SC 67, 70, where the Supreme Court had held as under (page 456) : " It is, therefore, manifestly clear that proceedings against an accused in the initial stages can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted. In other words, the test is that taking the allegations and the complaint as they are, without adding or subtracting anything if no offence is made out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he firm for the conduct of its business. So, it cannot be said that there are no averments to that effect. The question whether they were sleeping partners and they had nothing to do with the conduct of business of the firm is to be determined only after evidence is led to that effect. The allegations made in the complaint prima facie make out a case against the petitioners. No ground for quashing the complaint is made out and I find that the petition is without any merit. The same is hereby dismissed. " In the case of M. R. Punj v. The State [1993] 199 ITR 87 (Delhi), the only question raised in the petition was that summons to the accused could not be issued because they were not responsible for the affairs of the company and some of them were not even partners of the partnership concern at the relevant time. Further prayer was that the complaint should be quashed. In that situation, the Delhi High Court held as under (page 91) : " In view of this pronouncement of the Supreme Court, the petitioners cannot take advantage of the fact that since Mr. V. P. Punj, accused No. 8, signed the return, he alone is liable. Now, in view of the new section 278B, every partner of accused No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 656 (SC), the Supreme Court held as under (page 657) : " Having perused the impugned judgment in the light of the complaint and its accompaniments we are constrained to say, that the High Court exceeded its jurisdiction under section 482 of the Criminal Procedure Code in passing the impugned judgment and order. It is rather unfortunate that though the High Court referred to the decision in State of Haryana v. Bhajan Lal [1990] 4 JT 650 (SC) ; [1992] Supp 1 SCC 335, wherein this court has enumerated by way of illustration the categories of cases in which power to quash complaint or FIR can be exercised, it did not keep in mind--much less adhered to--The following note of caution given therein : 'We also give a note of caution to the effect that the power of quashing a criminal proceeding should be exercised very sparingly and with circumspection and that too in the rarest of rare cases ; that the court will not be justified in embarking upon an enquiry as to the reliability or genuineness or otherwise of the allegations made in the FIR or in the complaint and that the extraordinary or inherent powers do not confer an arbitrary jurisdiction on the court to act according to its whim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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