Retrospective penal liability and partner vicarious liability require strict pleading; vague tax prosecution allegations were quashed.

A penal provision cannot be applied retrospectively to create criminal liability for conduct alleged before the substituted section 276C came into force on 1 October 1975, so prosecution on that basis was not maintainable. Vicarious liability of partners under section 278B also requires specific averments that each accused was in charge of and responsible for the conduct of the firm's business at the relevant time; a mere recital of statutory language is insufficient. The complaint further lacked clear particulars on verification of the return and the role of each partner, and the partnership firm could not be effectively prosecuted for offences carrying compulsory imprisonment. The criminal proceedings were therefore quashed.

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Issues: (i) Whether an offence under section 276C of the Income-tax Act, 1961 could be applied to an act committed before the substituted provision came into force; (ii) Whether the complaint could proceed against the partnership firm and its partners in the absence of specific averments showing responsibility for conduct of business and the relevant verification of the return.

Issue (i): Whether an offence under section 276C of the Income-tax Act, 1961 could be applied to an act committed before the substituted provision came into force.

Analysis: The earlier section 276C penalised failure to furnish returns, whereas the substituted provision, effective from 1 October 1975, punished wilful attempts to evade tax, penalty or interest. A penal provision cannot be applied retrospectively to create liability for conduct which was not punishable under the later form of the section on the date of the alleged offence.

Conclusion: The prosecution under section 276C could not survive for the offence alleged to have been committed before 1 October 1975, and that complaint was not maintainable against the petitioners on that basis.

Issue (ii): Whether the complaint could proceed against the partnership firm and its partners in the absence of specific averments showing responsibility for conduct of business and the relevant verification of the return.

Analysis: Criminal liability of partners under section 278B arises only when the complaint specifically alleges that the concerned partner was in charge of and responsible for the conduct of the business at the relevant time. Mere reproduction of the statutory language is insufficient. A partnership firm, not being a natural person, cannot itself undergo imprisonment, and the complaint also lacked particulars as to who signed the verification or how each partner was connected with the alleged false statement under section 277.

Conclusion: In the absence of specific averments, the partners could not be proceeded against vicariously and the firm could not be effectively prosecuted for offences carrying compulsory imprisonment.

Final Conclusion: The criminal proceedings, including the cognizance order and the order refusing discharge, were quashed as an abuse of the process of court.

Ratio Decidendi: A penal provision cannot be applied retrospectively to enlarge criminal liability, and vicarious liability of partners under section 278B requires clear and specific pleadings that the particular accused was in charge of and responsible for the business at the relevant time.

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