1984 (7) TMI 53 - HC - Income Tax

Court dismisses firm partners' petitions challenging income concealment orders under Income Tax Act, liability extends to all involved.

The court dismissed the petitions filed by partners of a firm challenging complaints and summoning orders for alleged income concealment under the Income ... False Statement In Verification, Firm, Offences And Prosecution Issues:1. Alleged concealment of income by a firm and its partners leading to criminal complaints under sections 277 and 278 of the Income Tax Act.2. Interpretation of section 277 of the Income Tax Act regarding liability for false statements in returns.3. Challenge to the order of summoning passed by the trial Magistrate under section 482 of the Code of Criminal Procedure.Analysis:The judgment pertains to two petitions filed by partners of a firm, challenging the complaints and summoning orders issued against them for alleged concealment of income under the Income Tax Act. The petitioners contended that since the verification in the returns was done by a single partner, they cannot be held criminally liable under section 277 of the Act. However, the court rejected this argument, emphasizing that liability also extends to those who deliver false statements. The complaints alleged that all accused, with a common intention to avoid tax liabilities, knowingly submitted false documents. The court noted that the balance-sheets attached to the returns were signed by all petitioners, supporting the allegations of deliberate falsehood. The trial Magistrate's role was deemed to be limited to assessing the prima facie case for summoning the petitioners, which was found to be established based on the material available. Consequently, the court dismissed the petitions, allowing the objections to be raised during the charge framing stage in the trial court.In conclusion, the judgment highlights the strict liability imposed by section 277 of the Income Tax Act, extending to individuals involved in delivering false statements, not just those verifying them. The court's analysis focused on the sufficiency of material to establish a prima facie case for summoning the petitioners, emphasizing the importance of signed documents in supporting the allegations of deliberate concealment of income. The dismissal of the petitions underscores the need for accused parties to address objections during subsequent stages of the legal proceedings, while also directing them to appear before the trial court as scheduled.