TMI Blog1990 (4) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... ) for the assessment year 1976-77 has filed a return with false particulars and with false verification by one of its partners on behalf of the firm before the Income-tax Officer, Ward-A, Rourkela, in August, 1976, and thereby all the petitioners rendered themselves liable under section 277 read with section 278B of the Act. The complainant has examined some witnesses in support of the allegations in the complaint petition. On a consideration of the evidence and after hearing counsel for both the parties, the learned Additional Chief judicial Magistrate by his impugned order dated October 30, 1989, framed charges under sections 277 and 278B of the Act against all the accused persons (the present petitioners). Hence, this revision. Learned counsel for the petitioners, Mr. A. Patnaik, contended that even if all the allegations in the complaint petition were to be accepted as true, they do not disclose a case under sections 277 and 278B of the Act against all the petitioners and, therefore, the learned Additional Chief judicial Magistrate acted illegally in framing charges under sections 277 and 278B of the Act against all the petitioners. Section 278B of the Act deals with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct of the business of the firm as well as the firm shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Admittedly, the return of the firm in question for the assessment year 1976-77 was duly signed and verified by the managing partner, Jagabandhu Behura (petitioner No. 2), on behalf of the firm. The statement on oath of M. P. Agarwala (since deceased) before the Income-tax Officer, marked as exhibit 15 in the case, discloses that he and the accountant were looking after the accounting work of the firm. Learned counsel for the petitioners submitted that as there is nothing in the complaint petition or the evidence placed on record to show that any of petitioners Nos. 3 to 7 were in charge of and responsible to the firm for the conduct of the business of the firm at the time of commission of the alleged offence, the trial court ought to have discharged them. On a careful reading of the complaint petition, it is seen that the complainant wants the court to hold petitioners Nos. 3 to 7 liable under section 277 of the Act only on the ground that all of them are also partners of the firm. The impugned order discloses that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company , shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. 23C. (2) Notwithstanding anything contained in sub-section (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation. - For the purposes of this section, (a) `company' means any body corporate and includes a firm or other association of individuals ; and (b) `director', in rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin its fold. Section 10 does not provide for such liability. It does not make all the partners liable for the offence whether they do business or not. The wording in the proviso to section 10(1) of the Essential Commodities Act is similar to the wording in the proviso to section 278B(1) of the Income-tax Act. Mr. M. R. Patnaik, learned counsel for the opposite party, contended that because of the proviso to section 278B(1) of the Act, the learned Additional Chief judicial Magistrate was justified in framing the charges against all the petitioners as it was open to petitioners Nos. 3 to 7 to show that the offence was committed without their knowledge so that they will be ultimately acquitted. That such a contention is without substance is evident from the following observations of the Supreme Court in Sham Sunder's case [1990] 67 Comp Cas 1, while dealing with the proviso to sub-section (1) of section 10 of the Essential Commodities Act (at page 4) : It is, therefore, necessary to add an emphatic note of caution in this regard. More often, it is common that some of the partners of firm may not even be knowing of what is going on day-to-day in the firm. There may be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quashed against an accused, their Lordships of the Supreme Court in Municipal Corporation of Delhi v. Ram Kishan Rohtagi, AIR 1983 SC 67, observed thus (at page 70) : 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 then the High Court will be justified in quashing the proceedings in exercise of its powers under section 482 of the present Code. As pointed out earlier, section 278B of the Income-tax Act, section 68 of the Foreign Exchange Regulation Act, 1973 (which corresponds to section 23C of the Foreign Exchange Regulation Act, 1947), section 10 of the Essential Commodities Act, 1955 and section 17 of the Prevention of Food Adulteration Act, 1954, contain provisions indicating the circumstances tinder which natural persons can be made vicariously liable for an offence committed under these Acts by a firm or company. While construing such provisions, the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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