- (1.) MRS. Saroi Bafa, J. By means of this application under Section 482, Cr. P. C, the applicants have prayed for quashing the complaint of Criminal Case No. 834 of 1985, Union of India through Income-tax Officer, Fatehgarh v. M/s Neeraj Dyeing and others, under Section 277 of the Income Tax Act, 1961 (hereinafter referred to as the 'act') pending in the Court of Special Chief Judicial Magistrate (Economic Offences), Allahabad.
(2.) THE relevant facts giving rise to these proceedings are: - THE Criminal Complaint was instituted with the allegations that accused ap plicant No. 1 was a firm registered with the Income Tax Department and accused applicants No. 2 to 4 are its partners having shares of profit and loss at the rate of 60%, 25% and 15% respectively. THE return of the firm for the assessment year 1983-84 showing income at Rs. 30, 780 was verified by accused applicant No. 2. THE search of business and residential premises of applicants under Section 132 (1) of the Act was conducted and unaccounted purchases were detected from the purchase vouchers seized. THE purchase made through vouchers seized was not entered in the account book. Unaccounted Hundis and loan transactions were also detected. THE accused applicant No. 2 Suraj Prasad when confronted of fered Rs. 80, 000 to be clubbed in the income of the firm for the assessment year 1983-84. A revised return under Section 139 (5) of the Act was filed by him on 19. 1. 1984 showing income of Rs. 1, 10, 780 for the assessment year 1983-84. It was alleged that the accused-applicant No. 2 verified the return for the assess ment year 1983-84 submitted on 28. 7, 83 and delivered false account which he knew or believed to be false. The contention of the applicants is that the Commissioner, Income Tax, Agra came to Farrukhabad or camp ten days after the raid. Applicant No. 2 met him and the Commissioner, Income Tax asked him for agreed assessment on the lines of other assessees. The applicant No. 2 moved an application on 1. 12. 83 stating that he was agreeable for agreed assessment on mutual settlement ba sis. Another application was moved on 2. 12. 83 agreeing that a sum of Rs. 80. 000/- be added in the income over and above the income disclosed in the return relating to the assessment year 1983-84. A revised return was filed on 24. 2. 1984 for the assessment year 1983-84. The proceedings for imposing penalty con cluded on 20. 7. 1984. An application for reduction or waiver of penalty imposed was also made by applicant No. 1 which was rejected by the order dated 10. 1. 86. The present complaint was instituted prior to the dismissal of the application moved for reduction or waiver of penalty. The order of refusal of reduction or waiver of penalty was challenged by applicant No. 1 in the writ petition No. 432 of 1986 which is pending disposal. The prosecution of the applicants during the pendency of writ petition was abuse of process of the Court. According to the applicants the Income-tax return was filed by the firm applicant No. 1 and was verified by appli cant No. 2. There are no allegations against the applicants No. 3 and 4 for consti tuting the offence under Section 277 of the Act. Heard Sri V. K. Goyal, learned Counsel for the applicants, Sri Dhananjay Awasthi, the learned Counsel appearing on behalf of opposite parties No. 1 and 2, learned A. G. A. and have perused the record.
(3.) THE learned Counsel for the applicants submitted that applicants No. 3 and 4 having not verified the return, their prosecution is sheer misuse of the process of the Court. It was argued that there are no allegations of abetment or knowledge about submission of false return against applicants No. 3 and 4. THE statement of account having been verified by applicant No. 2 he is liable. THE learned Counsel urged that under Section 278 of the Act a person In charge of and responsible to the Company for the conduct of the business of the Company as well as the Company is liable to be proceeded against. According to the learned Counsel applicant No. 2 was liable for the affairs of the Company. The learned Counsel for the opposite parties No. 1 and 2 submitted that a person abetting or inducing another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true is liable. The applicants No. 3 and 4 having abetted and induced the applicant No. 2 to submit a false return they are equally liable for prosecution. It was argued that the Mag istrate is empowered to examine which of the applicant is to be exonerated from the prosecution. The applicants No. 3 and 4 being partners of the firm are respon sible for its affairs.;