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Judgment
A.C. Arumugaperumal Adityan, J.—This revision has been preferred against the order passed in Crl. R.C. 1 No. 136 of 1993 on the file of the II Additional Sessions Judge, Coimbatore, against the order in Crl. M.P. No. 2597 of 1992 in C. C. No. 127 of 1991 on the file of the Chief Judicial Magistrate, Coimbatore. The accused in C.C. No. 127 of 1991 on the file of the Chief Judicial Magistrate, Coimbatore, have filed Crl. M.P. No. 2597 of 1992 u/s 245 of the Cr.P.C., for discharge of them from the offence alleged against them in C.C. No. 127 of 1991. The learned trial judge, after going through the affidavit to the petition and also the counter filed by the respondent, has dismissed the petition. Aggrieved by the findings of the learned trial judge, the accused have preferred a Criminal Revision Petition No. 136 of 1993 before the II Additional Sessions Judge, Coimbatore. The learned Sessions judge, after giving due deliberations to the submissions made by learned Counsel on both sides and after going through the oral and documentary evidence let in before the trial court, has allowed the revision thereby setting aside the order passed in Crl. M.P. No. 2597 of 1992 in C.C. No. 127 of 1991, resulting discharge of the accused from the criminal liability alleged against them, which necessitated the revision before this court.
The only point to be decided in this revision is whether there is any 2 prima facie case against the accused to proceed with the trial in C.C. No. 127 of 1991 ?
The point:
3(a) The complaint was preferred by Range No. II, Income Tax Commissioner, Coimbatore Division, against the accused under Sections 276C and 277 of the Income Tax Act and also under Sections 193 and 196 of the Indian Penal Code. The learned Sessions Judge has discharged the accused on two grounds. The learned Sessions Judge would state that the Income Tax department has levied penalty for an offence contemplated u/s 277C(1) of the Income Tax Act for concealment of income by the accused. The learned Sessions Judge relied on the provision contemplated u/s 279(1A) of the Income Tax Act to the effect that if a penalty levied by the department is waived or reduced then he cannot be prosecuted. The power of waiving or reducing the penalty has been given to the Commissioner of Income Tax u/s 273A of the Income Tax Act. The learned Special Public Prosecutor for Income Tax Cases Thiru Ramasamy K. would focus the attention of this court to Section 273A of the Income Tax Act and would contend that Chapter XXI of the Income Tax Act deals with penal Section and Chapter XXII of the Income Tax Act deals with prosecution and both can simultaneously be initiated against an Income Tax evader. The learned Special Public Prosecutor would contend that the reasoning of the learned Sessions Judge that since penalty has been imposed on the accused he cannot be prosecuted cannot be a sound reasoning. In support of this contention the learned Special Public Prosecutor would rely on P. Jayappan Vs. S.K. Perumal, First Income Tax Officer, Tuticorin, , wherein it has been held by the honourable apex court that Section 279(1A) does not provide that the mere fact that there is a possibility of the Commissioner passing an order waiving or reducing the penalty imposed or imposable on the accused u/s 271(1)(c), prosecution for an offence u/s 276C or 277 shall not be instituted. For the same proposition of law the learned Special Public Prosecutor would rely on Universal Supply Corporation and Others Vs. State of Rajasthan and Another, , wherein the extract of the Honourable Supreme Court has been reproduced by the Rajasthan High Court, Jaipur Bench, as follows (page 234):
We do not, however, agree with the view expressed by the High Court of Calcutta in Jyoti Prakash Mitter Vs. Haramohan Chowdhury, . In that case on a complaint made against the assessee for an offence punishable u/s 277 of the Act, the Chief Metropolitan Magistrate issued process. Thereupon the assessee questioned the validity of the initiation of the criminal proceedings before the High Court of Calcutta on the ground that until the penalty proceedings initiated in respect of the same period u/s 271(1)(c) of the Act were finally disposed of, no complaint could be filed. The contention of the assessee was that the prosecution was opposed to the principles of natural justice as he would be deprived of the benefit of a finding which was likely to be recorded in his favour in the penalty proceedings. It was urged on behalf of the department that the penalty proceedings u/s 271(1)(c) had no direct bearing on the maintainability of a prosecution launched under Chapter XXII of the Act. The High Court took the view, which according to us, is an erroneous one, that the provisions of Section 279(1A) of the Act established the necessity for the completion of the penalty proceedings before the institution of the prosecution and, therefore, as long as the penalty proceedings were pending, the criminal proceedings could not be instituted.
So the first reasoning given by the learned Sessions Judge that since penalty has been levied under exhibit page 15, prosecution against the accused cannot be proceeded with is erroneous.
3(b) The next ground on which the learned Sessions Judge has allowed the revision was that one Sampath, managing partner of Al-partnership-firm had filed the Income Tax return for Al-partnership-firm for the assessment year 1980-81 and, according to the prosecution, the concealment of income by Al-partnership-firm was to the tune of Rs. 2,20,000 and that for this lapse a penalty has been levied under exhibit P. 15 and that there was no material to show that the other accused had knowledge or connivance with the said Sampath to submit a false Income Tax return. The learned senior Counsel Thiru Gopinath relying on exhibit P. 15, would contend that for the concealment of income to the tune of Rs. 2,20,000 alone a penalty of Rs. 63,360 was levied as per Section 271(1)(c) of the Income Tax Act. Learned senior Counsel would attract the attention of this court to the evidence of P.Ws. 1 to 3, the Income Tax officials, deposed before the trial court before framing of charges by the trial court. In the chief examination P.Ws.1 and 3 would admit that A2 to A9 are the partners in Al-partnership-firm and that A4 and A6 are now no more and that P.W. 2 has not impleaded the accused in his evidence in respect of the concealment of income of Rs. 2,20,000. Learned senior Counsel would rely on the deposition of P.W.3 in the cross-examination to the effect that Thiru Sampath is the managing partner of Al-partnership firm and that even during his investigation Sampath was not alive, but A2 has given a statement to the effect that he is responsible for the concealment of income for the Kalinga Industries also. In this regard the learned Special Public Prosecutor would draw the attention of this court to the complaint filed in the case wherein it has been stated that in the revised return filed on behalf of Al-partnership firm for the assessment year 1980-81, the concealment of income of Rs. 2,20,000 has been admitted and besides that it has also been admitted that the income from Kalinga Iron Works to the tune of Rs. 66,000 was also not disclosed. But as far as the concealment of Rs. 66,000 from out of the income from Kalinga Iron Works (twice) the evidence of P.Ws.1 to 3 are silent. But P.W. 3 in his evidence in chief-examination would state that the income of Rs. 66,000 was stated in the revised return submitted by Al-partnership firm. But, under exhibit P. 15, order of levy of penalty, it is silent with regard to the concealment of the income of Rs. 66,000. In this context, the learned Special Public Prosecutor would rely on exhibit D.1, letter written by A2 to the Inspecting Assistant Commissioner, Assessment Range No. I, Coimbatore, wherein it has been stated that the revised return for the assessment year 1980-81 revealing the mistake of concealment of Rs. 66,000 of income from Kalinga Iron Works and he has further stated that it was an accountancy error resulted in debit in the purchase account twice over of Rs. 66,014/21 and that the said Sampath, managing partner of Al-partnership-firm also expired on 17-2-1983, and that he was the person, who was looking after the day-to-day affairs of Al-partnership firm. It has further been stated in exhibit D.l itself that the deceased Sampath was the managing partner who was managing the business and other persons are not in the know of things. Learned senior Counsel relying on Alfred Borg and Co. India (P) Ltd. v. Antox India (P) Ltd. (1992) ITR 120, wherein it has been held as follows:
In a catena of cases, the apex court has held that initiating prosecution against the sleeping partners of women, when the company is the main offender, cannot be sustained unless there was a basic material to show that such partners or directors were also in charge of and responsible for the conduct of the business of the company. Merely, by alleging that directors are in charge of the company, as is found in paragraph 11 of the complaint, petitioners Nos. 2 to 6 cannot be prosecuted. The complainant should further show that petitioners Nos. 2 to 6 were also responsible for the day-to-day conduct of the business of the company.
The learned Special Public Prosecutor relied on Income Tax Officer Vs. Dinesh K. Shah and Others, , wherein a Bench of this court have held that in a case against a partnership firm notice need not be sent to each and every partner. The dictum laid in the said ratio decidendi is as follows:
In this context, a person ''in charge'' must mean a person in over all control of the day-to-day business of the company or firm or other association. Therefore, any person who at the time the offence was committed was in charge of and was responsible to the company, which includes a firm, for the conduct of the business, can be proceeded against u/s 278B of the Act notwithstanding the fact that the person proceeded against may not be either the ''principal officer'' or the ''person responsible for paying.
In view of the provisions of this section, non-issuance of individual notices to any of the partners is of no consequence. It is not necessary to issue any such notice. Section 2(35) defines the expression ''principal officer'' only with reference to a local authority or a company or any other public body or any association of persons or any body of individuals. The Act adopts the definition of the terms ''firm'', ''partner'' and ''partnership'' as contained in the Indian partnership Act, 1932. Each partner is an agent of another." But the abovesaid dictum will not be applicable to the present facts of 5 the case because the issue raised in this case is not that the notice was not served to each and every partner of the firm. But the point for determination is whether there is any basic material to show that these persons were also in-charge of and responsible for the conduct of the business of the company. Under such circumstances, there is absolutely no material on record to show that A2 to A9 (A4 and A6 died) also are in-charge of and responsible for the conduct of the business of the company at the relevant point of time, when Sampath alone, as a managing partner, was looking after the affairs of the company and had submitted the impugned Income Tax return for the assessment year 1980-81 in which he had concealed the income of Rs. 2,20,000. So under such circumstances, I do not find any reason to interfere with the orders of the learned first appellate judge in discharging A2 to A9 (A4 and A6 died). Admittedly, Al-partnership-firm is responsible for the concealment of the income of Rs. 2,20,000 for which Al (represented by managing partner S. Ramesh) necessarily to be prosecuted. The point is answered accordingly.
In fine, the revision is partly allowed with the following modification in the order in Crl. R.P. No. 136 of 1993 on the file of the II Additional Sessions Judge, Coimbatore: The prosecution against Al represented by a managing partner S. Ramesh is to be proceeded with in accordance with law. The trial court is directed to dispose of the matter within a period of three months from the date of receipt of copy of this order.