I.S Tiwana, J. (Oral):— The four petitioners who have happened to be partners of the firm known as M/s Sohan Lal Savinder Singh, are sought to be prosecuted under Section 277 of the Income Tax Act (for short the ‘Act’) read with some of the offences of the Indian Penal Code such as sections 467, 468 and 471 for filing a return on behalf of the firm on 1st October, 1971, with a false verification or at least knowing it to be false. The relevant allegations in this regard are contained in para 6 of the complaint, Annexure P. 1, which reads as follows:
That in the return of income tax filed by the firm on 1.10.1971 in the office of the Income Tax Officer duly signed and verified by Shri Sohan Lal partner on 29.9.1971 at Jagadhari and an income of Rs. 68207/- was shown in the said return. Although form No. 12 was duly signed by all the 7 partners on 25.3.71 and along with it the assessees filed the profit & loss account in which it was shown that the assessees have paid a commission of Rs. 73068.79 to M/s Anand Sales Corporation.”
2. As a result of the pre-charge evidence recorded by the trial Court, the petitioners along with four others, i.e, the firm, Sohan Lal, who actually signed and verified the above noted return and had filed the relevant account Sawal Singh and Faqir Chand, since dead were sommoned vide its order dated 14th November, 1986. The petitioners impugn these proceedings and pray for the quashing of the same qua them atleast in view of the non-fulfilment of section 278-B of the Income Tax Act. The relevant part of this section i.e sub-section (1) reads as follows:—
“S. 278-B (1) Where an offence under this Act has been committed by a company every person who, at the time the offence was committed, was incharge 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 offence 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 any punishment if he proves that the offence was cammitted without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.”
3. The solitary submission of Mr. Seth, learned Senior Advocate, for the petitioners, is that it has nowhere been alleged by the complainant, i.e, the Income Tax Officer, A ward, Yamuna Nagar, in the complaint Annexure P1, that any of the petitioners was either incharge of, or was responsible to the Company or the firm for the conduct of its business and in the absence of the same, the petitioners could not be proceeded against for the offence under section 277 of the Act. On the contrary says the learned counsel that it is the precise case of the complainant that it was only Sohan Lal partner of the firm who had signed and verified the return filed on 1st October, 1971 and again it was he alone who had filed the requisite supporting material along with the return, i.e the accounts etc. To counter this argument Mr. Ashok Bhan, the learned Senior Advocate for the complainant though sought to argue at one stage that the case in hand is covered by sub-section (2) of Section 278-B of the Act at a later stage he accepted the position that for an offence under section 277 of the Act only that person who actually makes a statement or verifies the return filed under the Act is liable to be prosecuted, if it can be shown that the said statement or the verification was false to his knowledge or he believed it to be false or did not believe it to be true. In the light of this accepted position by Mr. Ashok Bhan. It is patent that the petitioners who never signed the above noted verification of the return nor made any statement before the Income Tax Officer or produced any account in that regard cannot possibly be proceeded against. This is more so when there is not even an allegation to the effect that at the time of the commission of the offence they were incharge of the affairs of the firm or were conducting its business in any manner. Similarly, it is nowhere alleged that the petitioners prepared any false record or accounts and used these in any manner.
4. In an earlier case under the Foreign Exchange Regulation Act. 1973 i.e Criminal Misc. No. 528-M/87 K.D Woollen Mills Private Ltd. v. The Assistant Director, Enforcement Directorate, Ministry of Finance, Government of India, 39-A, Green Park, Jalandhar City, decided on 6th April, 1287. I had almost in similar circumstances taken the view which is propounded on behalf of the petitioners. The relevant section i.e section 68 of the abovesaid Act and section 278-B of the present act are almost in pari materia. Thus, for all the reasons recorded in that judgment i.e K.D Woollen Mills (supra) I allow this petition and quash the proceedings so far as these concern the petitioners. For clarity sake, it may be mentioned here that the prosecution of Sohan Lal firm as such would not be affected in any manner by this order.