MEHAR CHAND OM PARKASH AND OTHERS vs Income Tax OFFICER AND ANOTHER.

J. B. GARG J. - Messrs. Mehar Chand Om Parkash a partnership-firm of Barnala through its partner, Om Parkash, and other partners such as Vidyawati, wife of Mehar Chand, Smt. Shakuntla Devi, wife of Harish Kumar, and Surinder Kumar, son of Om Parkash, have moved this petition u/s 482 of the Code of Criminal Procedure for quashing the complaint instituted by the Income Tax Officer, Ward II(7), for an offence u/s 276E of the Income Tax Act, 1961.

It shall be useful to refer to the complaint (annexure P-1) wherein it has been averred that the Income Tax return for the year 1986-87 was filed by the partnership-firm in question on July 24, 1986, declaring the income at Rs. 68,376, that the return contained a sum of Rs. 30,000 in the books of the aforesaid firm on March 26, 1980, in the name of one late Sarwan Singh as if it was deposited by him on account of the sale of agricultural land, that during the assessment year 1986-87, it came to notice that the assessee paid sums of Rs. 15,000 each to the son and grandson of late Shri Sarwan Singh and it was in violation of the provisions of section 269I of the Income Tax Act, 1961, that a notice was also served on the assessee to explain the entry dated January 18, 1988, and its reply was that the deposit made by Sarwan Singh of Rs. 30,000 was not covered under the definition of the term "deposit" u/s 269T inasmuch as it was repayable on notice or repayable after a particular period. It was further been alleged in the complaint that since no hundi or receipt was issued by the assessee to the aforesaid depositor the aforesaid explanation was not satisfactory and it was for this reason that the aforesaid complaint was instituted which is pending in the Court of the Chief Judicial Magistrate, Sangrur.

The main plea taken in paragraph No. 6 of the present petition is that section 276E has been omitted with effect from April 1, 1989, by the Act of Parliament passed in the year 1987 and the complaint instituted on March 18, 1990, after the enforcement of the amendment, is liable to be quashed, that the Chief Judicial Magistrate did not apply his mind before passing the impugned order, that Vidyawati and Shakuntla Devi, the two women, never participated in the conduct of the business, that the complaint was required to specifically allege and show as to how "all the partners of the firm" were liable for prosecution, that after the omission of section 276E, the intention of the Legislature became clear that it never wanted to initiate criminal proceedings after April 1, 1985, that the alleged omission occurred in the year 1986 when the amount in question was paid in cash instead of through a cheque or bank draft.

No reply was filed by the respondent though opportunity for this purpose was specifically given as is evident from the proceedings held on January 23, 1991.

Learned counsel for the petitioners has argued that though section 276E of the Income Tax Act, 1961, was deleted with effect from April 1, 1989, yet it require retrospective application because it also modifies the rigour of the criminal law and in this regard Rattan Lal Vs. State of Punjab, , has been referred to where in a case u/s 354 of the Indian Penal Code, the accused, a boy aged 16, was given the benefit of the Probation of Offenders Act with effect from September 1, 1962, though the occurrence related to May 31, 1962. The circumstances are distinguishable inasmuch as here the quantum of punishment is not under consideration. It is only to be seen whether the allegations made in the complaint did constitute violation of section 269T of the Income Tax Act, 1961, or not when the assessing authority examined the return for the year 1986-87.

It has next been argued that the complainant has not taken into consideration the fact that Vidyawati, petitioner No. 3, Shakuntla Devi, petitioner No. 4 and Surinder Kumar, son of Om Parkash, had nothing to do directly with the filing of the return which was signed and verified by Om Parkash of Messrs. Mehar Chand Om Parkash, Barnala. The fact that Om Parkash, partner of the firm, verified the return also finds mention in paragraph No. 2 of the complaint. Learned counsel for the respondent has pointed out that these three petitioners were also members of the partnership-firm and were liable as detailed in the complaint. However, on the contrary, learned counsel for the petitioners has referred to Sat Pal v. State of Punjab [1993] 3 R C. R. 21 where, in similar circumstances, it was observed that in the case of an alleged erroneous return a partner against whom there was no specific allegation, could not be held liable. The conclusion is that the present petition is partly accepted and the complaint (annexure P-1) and the summoning order (annexure P-2) are hereby quashed qua petitioners Nos. 3, 4 and 5 only. As regards petitioners Nos. 1 and 2, the present petition is dismissed.

This also disposes of Criminal Miscellaneous No. 4217-M of 1992 where also the complaint qua Promila Devi, a partner, who has not verified the return is hereby quashed. As regards the co-accused, Satpal, the trial court shall proceed, provided there is sufficient evidence, in accordance with law.