- (1.) This application has been filed for quashing of entire proceeding pending in connection with complaint case no. 25 of 1993 under Section 276C and Section 277 of the Income Tax Act, 1961 pending in the Special Court, Economic Offences, Dhanbad. It is alleged that petitioner no. 2 being partner of petitioner no. 1, a firm namely D.N. Singh Construction Company, Chitra Deoghar, filed return showing total income of petitioner no. 1 Rs. 1,62,9907- for the assessment year 1989-90. It is further alleged that on completion of assessment it was found that actual income of firm was Rs. 2,55,878/-. It is alleged that accordingly a penalty proceeding under Section 271(1)(c) of the Income Tax Act has been initiated against accused. It is also alleged that petitioner no. 2 wilfully made a false statement in the verification portion of the return concealing the true particulars of income. Accordingly, present complaint petition filed against petitioner no. 1 and its all partners (petitioner nos. 2 to 5) under Section 276C and 277 of the Income Tax Act, 1961. It further appears that said complaint received in the Special Court, Economic Offences, Dhanbad, on 15.3.1993, on that day itself cognizance of offences under Sections 276C and 277 of Income Tax Act, 1961 was taken against petitioners.
(2.) White assailing the criminal proceeding initiated against petitioners Mrs. Anubha Rawat Choudhary, learned counsel for the petitioners, submits that in the instant case difference of income shown in the return and income assessed by assessing authority is less than Rs. 15,000/-, thus, as per circular of Govt. of India prosecution of petitioners under Sections 276C and '277 of Income Tax Act is not tenable. In support of aforesaid submission she relied upon a unreported judgment of Hon'ble Patna High Court in Cr. Misc. No. 6400 of 1993 dated 18.8.1998. It is further submitted that from perusal of assessment order it is clear that Income Tax authority had not initiated any proceeding under Section 271(1)(c) of the Income Tax Act. It is submitted that Hon'ble Supreme Court in K.C. Builders and Another vs. Assistant Commissioner of Income Tax, 2004 2 SCC 731had held that in the absence of any proceeding under Section 271(1)(c) of Income Tax Act prosecution under Section 276C of Income Tax Act will automatically be liable to quashed. It is submitted that as in the instant case, no proceeding under Section 271(1)(c) of Income Tax Act initiated, thus question of prosecuting petitioners under Section 276C does not arise. Learned counsel lastly submits that according to Section 278B of Income Tax Act, the person, who is in-charge of company for the conduct of its business, shall be liable to be prosecuted. It is submitted that it has been held by their Lordships of Supreme Court in National Small Industries Corporation Ltd. vs. Harmeet Singh Pental and Another, 2010 3 SCC 330that it is imperative for the complainant to make necessary averment in the complaint petition as to how and in what manner the accused persons are responsible for the conduct of the business of company. Mrs. Choudhary submits that merely by saying in the complaint petition that all accused persons are responsible for the conduct of the business of company is not sufficient to prosecute them. She submits that in the complaint petition it is specifically mentioned that petitioner no. 2 signed the return, thus, at the time the offence committed he was incharge and responsible for the conduct of business of the company, therefore, prosecution of petitioner nos. 3, 4 and 5 cannot be sustained in view of Section 278B of the Income Tax Act.
(3.) Sri Deepak Roshan appearing for the opposite party no. 2 submits that from Annexure-1 (return filed by petitioners) it is clear that petitioners shown income of firm Rs. 1,62,990/-, whereas Assessing Authority assessed its income Rs. 2,31,567/-. Thus, difference between income shown in the return and income assessed by assessing authority is more than Rs. 25,000/-. Thus, the circular issued by Government of India has no application in the facts of this case, consequently, judgment of the Patna High Court has no application in this case. Sri Roshan further submits that in the complaint petition, as well as in the sanction order, it is clearly mentioned that penalty proceeding under Section 271(1)(c) has already been initiated. Thus, non-mentioning of the same in the assessment order has no consequence. It is submitted that it is not mandatory for the assessing authority to write in the assessment order that proceeding under Section 271(1)(c) has been initiated. Sri Roshan further submits that in paragraph no. 2 of complaint petition, complainant stated that all partners are equally responsible for every act and transaction of the business of the said firm, therefore requirement as contained under Section 278B of the Income Tax Act has been complied, thus, there is no impediment in prosecution of petitioner nos. 3, 4 and 5.;