TaxTMI 
TaxTMI 
2005 (3) TMI 39
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....l Magistrate, by his order dated October 28, 1991, had dismissed the complaint filed by the petitioner against 17 partners of firm, M/s. Shiv Sewak Cotton Company, Kot Kapura, under section 276B read with section 278B of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and discharged the accused. During the pendency of the instant petition, respondents Nos. 5, 7, 12 and 18 have expired and proceedings qua them were ordered to be abated vide order dated May 29, 2002. In this case, the complaint was filed by the petitioner on the allegation that the respondent-firm M/s. Shiv Sewak Cotton Company filed a return of its income for the assessment year 1980-81 showing an income of Rs. 54,966. During the said assessment year, ....
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....ion 2(35) of the Act and without serving such notice, the partners cannot be considered as principal officers and as such, they cannot be convicted under section 278B of the Act. In this regard, the learned trial court relied upon a decision of the Madras High Court in Shital N. Shah v. ITO [1991] 188 ITR 376, wherein it was held that the partner of a firm cannot be treated as person responsible to the firm for the conduct of its business unless notice of the Income-tax Officer's intention to treat him as such is served on him. It was held by the trial court that in the case in hand, no such notice was ever given to any of the partners of the firm by the Income-tax Officer showing his intention to treat those partners as principal officers ....
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....tion to treat the partner as principal officer of the firm. In this case, no such notice was given to any of the partners." Counsel for the petitioner submitted that the question whether the partners are liable to be prosecuted on the failure of the firm to pay tax deducted at source is a question of fact and the complaint filed under section 276B of the Act cannot be quashed. In this regard, he relied upon a decision of the Madras High Court in S.M. Kabeer v. ITO [1995] 216 ITR 359. Counsel for the petitioner further submitted that for the purpose of prosecuting a partner of a firm for an offence under section 276B of the Act, issue of a separate notice to the partner is not necessary and a notice to the firm is sufficient. He submitted....
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....leged that they were conducting business of the firm in any manner. There was no allegation that the accused had prepared a false record and used the same in any manner. They had not signed or verified the return, as such they were not liable to be prosecuted. Counsel for the respondents further submitted that in the absence of any allegation made in the complaint about the involvement of the respondents accused in submitting a false return by the managing partner and any wilful attempt made by them to evade tax, it cannot be held that the order of discharge, passed by the courts below, is illegal. Relying on the aforesaid judgment, counsel for the respondents submitted that the trial court was justified in discharging the accused partners ....