Vedsons (P) Limited and ors. vs Chief Judicial Magistrate, Chandigarh and ors.

Ujagar Singh, J.

Respondent No. 2 filed a complaint against the present petitioners under Section 276 (D) of Income Tax Act, 1961 (Hereinafter referred to as the `Tax Act'') before the Court of Chief Judicial Magistrate, Chandigarh, with the averments that the Commissioner of Income Tax has directed the institution of this complaint as required under Section 279 of the Tax Act. It is further averred that the present petitioner No. 1 failed to the file the income tax return for the assessment year 198384, therefore, notice under Section 139(2) of the Tax Act was sent by the complainant to the petitioner No. 1 requiring it to file the relevant return within 30 days and this notice was served upon petitioner No. 1 on 28.3.1984 and petitioner No. 1 failed to file the requisite return. Another notice was issued by respondent No. 2 under Section 14 (1) of the Tax Act and the same was served on petitioner No. 1 on 11.7.1984 requiring the petitioners to produce certain account statements and other documents essential for finalisation of the said assessment. The petitioner No. 1 wilfully failed to comply with the requirements of this notice and as a result thereof, the petitioner No. 1 is liable to be prosecuted under Section 276 (D) of the Tax Act. Against petitioners No. 2 to 7, it is alleged that they are Directors of Petitioner No. 1 which is a company within the meaning of Section 278(B) of the Tax Act, and they were at the relevant time, incharge of and were responsible to the company for the conduct of its business and as such they are equally guilty for the offence committed by petitioner No. 1 and also liable for prosecution and to be punished accordingly. Along with the complaint, certain documents were also produced as annexures.

The complaint was presented on 8.10.1985 when Mrs. Sudha Sharma, Income Tax Officer, Central Circle, Chandigarh with Shri S.N. Gupta, Advocate, were present. The Chief Judicial Magistrate, passed the following order :

"Present : Mrs. Sudha Sharma, I.T.O. Central Circle, Chandigarh with Shri S.N. Gupta, Advocate.

The complaint presented today. It be registered. The accused be summoned for 20.11.1985.

So far as the application for exemption from personal appearance is concerned, as the complaint has been filed in an official capacity and the complainant has to attend her official duties as I.T.O. The personal appearance of the complainant is disposed with till further orders. In her place, the counsel for the complainant, Shri S.N. Gupta, shall put in appearance.

Sd/

Chief Judicial Magistrate,

Chandigarh. 8.10.1985.

Ultimately on 2.4.1986, the Chief Judicial Magistrate, directed the petitioners to be summoned through nonbailable warrants for 23.5.1986. The petitioners were not served and the warrants were received back unexecuted. The petitioners have filed this petition with following prayers :

(a) Complaint Annexure P/3 as well as the various orders passed on different dates being illegal and against the relevant provisions of law be quashed.

(b) JUDGMENT of Commissioner Annexure P/2 directing the prosecution, be cancelled.

The main grounds for challenging the sustainability are :

(i) The petitioners Nos. 2 to 5 have ceased to be the Directors of the Company since the year 1980 and were not incharge for the affairs of the company, in any manner, and were not also responsible to the company for the conduct of its business when the alleged offence under Section 142 (1) of the Tax Act, was committed or at the time of launching prosecution under Section 276 (D) of the Tax Act.

(ii) Notices under Sections 142 (1) and 143 (2) of the Tax Act, have not been served on the alleged Directors of the company itself and, therefore, said criminal proceedings are null and void.

(iii) Notice dated 21.3.1984, alleged to have been issued to the petitioner company under Section 139(1) of the Tax Act for filing the return, did not take notice of the return already filed by the company on or about 31.1.1984.

(iv) After filing of the voluntary return, respondent No. 2 issued the said notice and this notice was never served either on the company or any of its Directors, and on the file no proof of service is forthcoming.

(v) Respondent No. 3, issued orders annexure P/2 authorising respondent No. 2 for initiating the prosecution of the petitioner on the basis that no return had been filed and same was beyond jurisdiction as in fact the return had been filed.

(vi) The trial Court passed the summoning order without following the procedure prescribed under Sections 200 and 202 of the Code of Criminal Procedure (for short the `Code'').

(vii) There is no evidence to prove that the accounts and documents as referred to in the said notice were not produced wilfully and the petitioners also wilfully failed to comply with the directions issued by the respondent No. 2.

Notice of this petition was issued and the joint return was filed by respondents No. 2 and 3 controverting the allegations made in the petition.

The learned counsel for the petitioners has argued that the complaint filed by respondent No. 2 under the authority Annexure P/2, is not maintainable inasmuch as order Annexure P/2 authorisation, is to file a complaint against the petitioners describing petitioners No. 2 to 7 as Directors of petitioner No. 1, which was factually wrong and the respondent No. 3 has not applied his mind to the facts of the case before giving the authority. I have looked into Annexure P/2 and do not agree with the learned counsel for the petitioners. Section 279 of the Tax Act provides that a person shall not be proceeded against for an offence under Sections 275 (A), 276 (A), 276 (AA), 276 (B), 276 (C), 276(CC), 276 (D), 276 (E), 277 Section 278 or Section 278 (A) of the Tax Act except at the instance of the Commissioner. In this case order Annexure P/2 passed by respondent No. 3 specifically authorised respondent No. 2 to file the present complaint for an offence under Section 276 (D) of the Tax Act. So far as the question whether respondent No. 3 applied his mind before passing the order Annexure P/3 or not is concerned, prima facie Annexure P/2 is sufficient on that point and in case anything is found to be deficient by the complainant at the time of trial it can be proved by leading evidence to show that all the papers were put up before respondent No. 3. Before passing the order Annexure P/2 and it will be for the trial Court to decide whether this authorisation is legal or not. The learned counsel next urged that the trial Court committed an illegality in summoning the petitioners without examining any evidence. To support his argument, he has referred to the provisions of Section 203 of the Code, werein it is required for a Magistrate taking cognizance of an offence, on complaint, to examine upon oath the complainant and the witnesses present, if any, and the substance of such examination shall be reduced in writing and shall be signed by the complainant and the witnesses and also by the Magistrate. To this requirement a proviso has been added to the effect that the Magistrate need not examine the complainant and the witnesses, if a public servant acts or purporting to act in the discharge of his official duties or a Court has made a complaint.

I have considered this argument and regret my inability to agree with the learned counsel. In this case the respondent No. 2 was authorised under order Annexure P/2 to file the complaint and respondent No. 2 filed the complaint as a public servant acting in the discharge of his official duties and, therefore, the complainant or any of her witnesses was not required to be examined before summoning the accused petitioners.

The learned counsel for the petitioner has next urged that the notices issued were not served on the petitioners and without service of such notices, prosecution cannot be launched. This again is a matter of detailed evidence for the complainant to prove this fact and in proceedings under Section 482 of the Code have a limited scope for interference and so far as facts of particular case are concerned, the same cannot be gone into in these powers. At the time of trial, the trial Court can determine this point after going through the evidence led in the case.

The learned counsel further vehemently argued that the order of summoning passed by the trial Court, was passed just in routine and the trial Court did not apply its mind and, therefore, order of summoning is bad and is not sustainable. He has laid stress on the provisions of Section 204 of the Code wherein before summoning the accused, the trial Court has to go through the complainant and evidence, if any, and thereafter has to satisfy about the sufficiency of the grounds for proceedings against the accused.

In this case the order dated 8.10.1985 (reproduced above) indicates very clearly that noting was considered by the trial Court and the petitioners were summoned only by saying "Complaint presented today and it be registered and accused be summoned". This order of the trial Court does to satisfy the provisions of Section 204 of the Code which provides that if in the opinion of a Magistrate, taking cognizance of an offence, there is sufficient ground for proceeding and the case appears to be a summons case, he shall issue summons for the attendance of the accused or if the case appears to be a warrant the trial Court applied its mind to the facts mentioned in the complaint and without going into the complaint itself, the case was registered and petitioners were summoned. This type of order does not fulfill the mandatory provisions of Section 204 of the Code.

In view of the discussion made above, the order summoning the petitioners is bad and is not sustainable. This petition is, therefore, accepted and the summoning order is quashed. The trial Court is directed to pass an order in accordance with law.