Mohan Lal and others V. The Income Tax Officer District 1(4), Patiala

CRR/737/1992

AI Insights

The case involves a revision petition by Mohan Lal and others against the order of the Additional Sessions Judge, Patiala, which had set aside the trial Court's decision. The original complaint by the Income Tax Officer accused the partners of M/S Gunna Ram Mohan Lal, including Mohan Lal, of filing a false income return and attempting to conceal income to evade tax, thus violating sections 277 and 276-C of the Income Tax Act, 1961. The key legal issue was whether Mohan Lal, not being in charge of the firm's affairs at the time the false return was filed, could be held vicariously liable. The court referenced a similar case (Criminal Revision No.736 of 1992) where it was determined that a partner not in charge of the business cannot be held responsible for the actions of other partners.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 808209 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 23-07-2009
• Assessment Year: misc
• Other Referred Cases: State of Haryana Versus Brij Lal Mittal, 1998(2) R.C.R.(Criminal) 608 (S.C.), Anil Puri Versus M/S Makhan Lal Vinod Kumar and others, 2006(3) R.C.R. (Criminal) 939 (P&H)
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NEMO
• Assessee Lawyers: A K JAIN
• Keywords: Criminal Revision; False return; Partnership firm; Vicarious Liability
• Section: 276 C; 277

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Crl.Revision No.737 of 1992 (O&M) Date of Decision: 23.7.2009 Mohan Lal and others. ....... Petitioners through Shri A.K. Jain, Advocate. Versus The Income Tax Officer District 1(4), Patiala. ....... Respondent through Nemo. CORAM: HON'BLE MR.JUSTICE MAHESH GROVER .... 1. Whether Reporters of Local Newspapers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? .... Mahesh Grover,J. This revision petition is directed against order dated 1.10.1992 passed by the Additional Sessions Judge, Patiala (hereinafter described as `the appellate Court') vide which order dated 23.5.1989 of the Judicial Magistrate Ist Class, Patiala (referred to hereinafter as `the trial Court') was set aside. At the out-set, learned counsel for the petitioner contended that in similar circumstances, Criminal Revision No.736 of 1992 arising out of order dated 1.10.1992 of the appellate Court was accepted by this Court vide order dated 9.10.2002. He has placed on record a copy of the said judgment. It is the contended case of the petitioners that the complaint Crl.Revision No.737 of 1992 (O&M) -2- .... preferred by the respondent was against M/S Gunna Ram Mohan Lal, New Grain Market, Patiala through its partner, Shri Mohan Lal; Shri Gunna Ram and Shri Mohan Lal and the following averments were made in paragraph 13 thereof:- “13. Sh. Wazir Chand s/o Ghunna Ram, Partner of M/S Ghunna Ram Mohan Lal, New Grain Market, Patiala, made statement in verification in the original return, which verification was necessary under the provision of Income Tax Act and Rules made thereunder and delivered an account of income which was false and which he and other partners of the assessee firm know or believe to be false and did not believe to be true. Sh. Mohan Lal, Wazir Chand and Ghunna Ram, partners of M/S Ghunna Ram Mohan Lal, New Grain Market were incharge of and responsible to the said firm for the conduct of the business of the said firm at the time of offences were committed and as such, aforesaid firm and S/Shri Mohan Lal, Ghunna Ram, partners were liable to be prosecuted for the commission of the offences committed by them. The said offences were committed with the consent and connivance of the said partners and for that reasons, also they are liable to be prosecuted for the commission thereof. They, thus, committed an offence punishable u/s 277 of the Income Tax Act. The assessee firm also willfully attempted to conceal its income to evade the payment of tax and thereby the aforesaid firm and its Crl.Revision No.737 of 1992 (O&M) -3- .... partners committed an offence punishable u/s 276-C of the Income Tax Act,1961.” It has been pointed out that Shri Wazir Chand was also a partner in M/S Ghunna Ram and Sons, Patiala against which the complaint under the similar provisions of law was the subject-matter of Criminal Revision No. 736 of 1992. He further pointed out that the return of income of the firm was filed by Shri Wazir Chand in the instant case as well as in the case relating to the aforesaid revision petition and that he has since expired. Learned counsel for the petitioners submitted that at the time of filing of the complaint, Shri Wazir Chand was not alive and thereafter, another partner of the firm, namely, Shri Ghunna Ram also expired and only Mohan Lal survives. He further submitted that since there is no averment in the complaint as to whether Mohan Lal was incharge of the affairs of the firm, he cannot be vicariously held liable for the acts done by Shri Wazir Chand. In support of his contention, he placed reliance on State of Haryana Versus Brij Lal Mittal, 1998(2) R.C.R.(Criminal) 608 (S.C.) and Anil Puri Versus M/S Makhan Lal Vinod Kumar and others, 2006(3) R.C.R. (Criminal) 939 (P&H). No one has appeared on behalf of the respondent. I have thoughtfully considered the contentions of the learned counsel for the petitioner and have gone through the judgments relied upon by him. In my opinion, this matter is squarely covered by the judgment dated 9.10.2002 of this Court in Criminal Revision No.736 of 1992 Crl.Revision No.737 of 1992 (O&M) -4- .... whereby the order of the appellate Court was set aside in similar circumstances. In judgment dated 9.10.1992, it was observed as under:- “When a partner of partnership firm is not the incharge and is not responsible to the conduct of business of partnership firm, then such partner cannot be held responsible for the act of other partners. In view of the above discussion, it is established that the petitioners were not responsible for the conduct of the business of the firm nor they had verified the false return. The return has been filed by Wazir Chand deceased, therefore, the prosecution of the present petitioners will be illegal.” In the present case, the complaint does not disclose any such averments qua the petitioners. Accordingly, the instant revision petition is accepted and order dated 1.10.1992 is set aside on the parity of the reasoning given in judgment dated 9.10.2002 rendered in Criminal Revision No.736 of 1992. July 23,2009 ( Mahesh Grover ) “SCM” Judge "