The Bombay High Court harmoniously read Section 278B of the Income Tax Act and Section 319 of the CrPC to rule that the provisions of Section 319 will be triggered for trying the other partners for the offence of Sections 276C and 277 of the Income Tax Act, which appears to have been committed, only if, in the course of enquiry or trial of an offence, it appears from the evidence that the other partners who were not impleaded as accused in the original complaint were in charge of and responsible to the firm for the conduct of the business of the firm or the offence has been committed with the consent or connivance or is attributable to any neglect on the part of the partner.
A Single Judge Bench of Justice Jitendra Jain observed that when none of the remaining partners of the firm were in-charge of or were responsible for the conduct of the business, or they had not consented to the commission of an offence, or no negligence is attributable to any of those partners, then in the absence of prima facie satisfaction of the conditions required for fulfilment of Section 278 B of the Income Tax Act, the Session Judge could not have allowed the application under Section 319 of the CrPC directing impleadment of the remaining partners as “accused”.
The Bench also referred Section 278B of the Income Tax Act which reads that where an offence has been committed by a company, every person who, at the time the offence was committed, was in charge 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.
In this case, search proceedings were initiated by the Customs and Income Tax Authorities in the year 1982 at the business premises of the applicant partnership firm, leading to seizure of certain gold and silver along with the books of accounts. Resultantly, three complaints were filed against the firm and its partners alleging commission of offence under Sections 276C and 277 of the Income Tax Act. While the complaint was pending, one of the accused died, and an application was filed to make the remaining applicants as representatives of the first accused, i.e., the firm. This action was contested on the ground that no sanction was obtained from the Commissioner of Income Tax. In the year 1996, the Metropolitan Magistrate observed that since the remaining applicants were not brought on record as “accused,” but they were sought to be brought on record in order to represent the firm, sanction was not required. Thereafter, in the year 2008, an application was filed under Section 319 of the CrPC before the Metropolitan Magistrate praying for impleading those remaining applicants as “accused” in the trial, which was dismissed primarily on the ground that no sanction of Commissioner of Income Tax under Section 279 has been obtained, and that when the complaint was filed, the deceased accused was treated as a partner in-charge of day-to-day affairs of the firm. The Sessions Court, however, set aside this order and allowed the application filed under Section 319 of CrPC to treat the remaining applicants as accused.
When the matter reached the High Court, it was noted that when the application was previously preferred to array the remaining partners of the firm only as representatives of the accused, then such application u/s 319 CrPC cannot be preferred again after 12 years to array them as accused, without obtaining sanction under Section 279, which provides that a person shall not be proceeded against for offence specified therein except with previous sanction of the authorities viz., Principal Commissioner or Commissioner or Joint Commissioner (Appeal) or Commissioner (Appeal) or the appropriate authority. In the absence of any sanction as required under Section 279 of the Income Tax Act, the application under Section 319 of CrPC to make remaining applicants as accused is without jurisdiction.
Appearances:
Senior Advocate Girish Kulkarni and Advocate M. G. Shukla, for the Applicants
APP A. R. Metkari, for the Respondent