November 2008
Prosecution : Willful attempt to evade tax and false verification : S. 276C and S. 277 : Firm : Partners liability : Failure by prosecution to adduce evidence to show partners had active role in business : Trial Judge acquitting accused : Proper.
By K. B. Bhujle, Advocate
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21 Prosecution : Willful attempt to evade
tax and false verification : S. 276C and S. 277 of Income-tax Act, 1961 : A.Y.
1981-82 : Firm : Partners liability : Failure by prosecution to adduce evidence
to show partners had active role in business : Trial Judge acquitting accused :
Proper.
[UOI v. Nalinidevi and another, 304 ITR 382 (MP)]
The accused in this case were partners of the assessee firm.
The two accused set up the defence that they being only housewives were not in
charge of the business of the firm. On the basis of the evidence led by the
prosecution, the trial judge found that the two individual members of the firm
were not guilty of any offence and as such they were acquitted.
The Madhya Pradesh High Court dismissed the appeal filed by
the Revenue and held as under :
“(i) Every partner of the firm is an agent and thus
vicariously liable, but that liability is restricted only to civil liability
and does not extend to criminal liability. The burden is always upon the
prosecution to prove that the accused person had an active role to play in the
business of the firm.
(ii) As the prosecution had failed to adduce any evidence to show that the
acquitted women had any active role to play in the business of the firm, the
Trial Court had no option but to acquit the accused members of the firm.”
