Smt. Shashi Jain vs Dy. Commissioner of Income Tax

Sabina, J.—Assistant Commissioner, Investigation Circle II(1), Ludhiana filed a complaint alleging therein that accused No. 1-M/s Shipley Hosiery & Textile, Wait Ganj, Ludhiana had filed their Income Tax return for assessment year 1985-86 on 3-8-1987 at Rs. 1,02,768 which was duly verified by Smt. Shashi Jain-accused No. 2 as a partner of the firm. The Income Tax return should have been filed latest by 31-7-1985 but the same has been filed late by more than two years.

Notice was issued to the accused under Sections 274 and 271(1)(a) dated 27-11-1987 requiring the accused to show cause as to why order imposing penalty for the said default be not made. Accused furnished an explanation on 24-2-1989. A penalty of Rs. 10,582 was imposed on the accused vide order dated 7-3-1989. Accused preferred an appeal against the said order and the same was dismissed by the Deputy Commissioner (Appeals), Ludhiana vide order dated 8-2-1980 (sic). Hence, the accused was guilty of wilful default in furnishing the return of the Income Tax within the statutory period permissible under law.

Complainant led its pre-charge evidence. Vide order dated 30-3-1996, the Additional Chief Judicial Magistrate, Ludhaina discharged the accused and held that no case was made out against the accused to frame a charge against them.

Aggrieved by the same, the Income Tax Department filed a revision petition against the said order and the same was allowed by the Sessions Judge, Ludhina vide order dated 1-10-1996.

The Additional Chief Judicial Magistrate, Ludhaina, after remand vide order dated 3-6-2000 discharged accused No. 2 (present Petitioner) and ordered that the charge be framed against the firm (accused No. 1).

Aggrieved by the said order, Income Tax Department again preferred a revision petition before the Sessions Judge, Ludhiana. Vide order dated 1-3-2001, the revision petition was allowed and the Additional Chief Judicial Magistrate, Ludhiana was directed to proceed further in the case in accordance with the provisions of law after framing appropriate charges against the accused/Respondents. Hence, the present revision petition by the Petitioner-Smt. Shashi Jain.

Learned Counsel for the Petitioner has submitted that there was not sufficient material on record to connect (contend) that the Petitioner was responsible for filing the return at the relevant time. There were other partners of the firm also. In fact, the signatures of the Petitioner had been taken on the return, inadvertently, by the accountant although the Petitioner was no longer a partner of the firm on 3-8-1987 when the Income Tax returns were filed. Advance-tax had been deposited by the firm and hence, there was no loss of revenue to the Income Tax Department.

Learned Counsel for the Respondent has argued that the return had been presented under the signature of the Petitioner and as such, she was liable to be prosecuted along with firm as the Income Tax return had not been filed within the statutory period.

It was noticed by the Trial court that Chaman Lal, one of the active partners of the firm had died on 20-12-1986. Smt. Shubh Jain and Shashi Jain, partners of the firm retired on 20-12-1986 and the new partners, i.e., Nagina Devi and Subhash Jain, joined the firm. Since the Petitioner stood already retired as a partner from the firm, there was no occasion for her to file return on 3-8-1987. Hence, there was no sufficient material on record to connect (contend) that the Petitioner was responsible for filing the Income Tax return at the relevant time, i.e., 3-8-1987. In these circumstances, the learned Sessions Judge erred in reversing the order of discharge of the Petitioner passed by the Trial Court vide its impugned judgment dated 1-3-2001.

Accordingly, this petition is allowed. The impugned judgment and order passed by the Sessions Judge, Ludhiana, dated 1-3-2001 is set a side.