Surinder Singh, J.
1. Both the petitions titled above preferred under Section 482 of the Cr.PC read with Article 227 of the Constitution of India involve the common questions of law, therefore, taken together for its disposal. The respondent has filed two complaints--one bearing No. 196-III/20G5 against petitioners M/s Onkar Chand and its partners; and another Complaint No. 195-III/2005 against its sister concern M/s Shankar Dass Bal Ram Kumar and its partners under Sections 276C(1), 277 and 278B of the Income Tax Act, 1961, (in short the Act) allegedly for concealing the particulars of income to evade tax, wilfully and intentionally, which otherwise was payable under the Act.
2. Finding reasonable grounds to summon the petitioners, the learned trial Court (Addl. Chief Judicial Magistrate) issued the process against the petitioner firms and to all its partners, which have been assailed in these petitions.
3. Admittedly, the petitioner firms, in both the petitions are business firms dealing in foodgrains and Karyana goods in Village Jhalera, Tehsil and District Una, H.P.
4. On 16-12-1991, the respondent department conducted the survey in the premises of the petitioner firms, which was converted into search and seizure under Section 132 of the Act. Both the firms in both the petitions had offered an amount of Rs. 13 lacs for their taxing. The petitioner firm in Criminal MMO No. 107 of 2007 filed the return on 30-10-1992, declaring their income to the tune of Rs. 1,29,390. The return of the income was duly signed and verified by Mr. Onkar Chand s/o late Shri Shanker Dass, on 29-10-1992 in his capacity as a partner of the firm. The assessing authority after completing the assessment under Section 143 of the Act at Rs. 23,68,060 enhanced the amount after rectification to Rs. 25,79,710 and with regard to the addition of Rs. 2,10,382 the Tribunal remanded back the matter to the assessing authority, who computed the income at Rs. 14,20,120 and penalty of Rs. 12,57,360 was imposed which was reduced in appeal to Rs. 7,26,814.
5. In Criminal MMO No. 109 of 2007 the petitioner firm filed return on 31-8-1992, declaring their income to the tune of Rs. 2,22,020. The return of the income was duly signed and verified by Mr. Yash Pal s/o late Shri Shanker Dass, on 28-10-1992 in the capacity of the partner of the firm. Similarly the assessing authority completed the assessment under Section 143 of the Act on Rs. 31,63,438, which amount was reduced in appeal to Rs. 25,37,120 and in further appeal, it was reduced to the tune of Rs. 18,66,158 by the Tribunal and returned the matter to the assessing authority, who imposed penalty of Rs. 8,62,524 under Section 271(1)(c) of the Act.
6. The petitioner firms were given a show-cause notice for furnishing incorrect income, which was replied to by them. After considering their objections, the prosecution was launched against them after the sanction was accorded by the CIT, for the offences above-mentioned.
7. Now, the contentions of the learned Counsel for the petitioners are that:
(i) the learned Addl. Chief Judicial Magistrate, Palampur, has no territorial jurisdiction to try and hear the case;
(ii) All its partners were not in-charge and responsible for the conduct of business of the firm(s) and no allegation has been imputed against them in the complaint(s), therefore, the proceedings against them deserves to be dropped and prayed to dismiss the complaints.
8. The learned Counsel for the petitioners has not seriously contested the first point but however, it is borne out from the record that although the petitioner firms are engaged in business in Una, where the learned Addl. Chief Judicial Magistrate, Palampur, District Kangra has no territorial jurisdiction, but it is alleged that the petitioner firm(s) through its partner had filed false and incorrect returns before the Asstt. CIT in his office at Palampur (Kangra).
9. Section 177 of the Code of Criminal Procedure (hereinafter referred to as the Code) is for the trial of cases and it reads as under:
177. Ordinary place of inquiry and trial.--Every offence shall ordinarily be inquired into and tried by a court within whose local jurisdiction it was committed.
10. This section governs all the trials held under the Code, which includes even the trials of all the offences punishable under local or special laws. The word 'ordinarily' used in this section means except where otherwise provided in the Code itself or in any other law.
11. The Income Tax Act, 1961, as amended from time to time, does not make any provision for the trial of offences committed under the Act, otherwise than as provided in Section 177 of the Code.
12. In the instant case as stated above, the false and incorrect returns were allegedly filed/delivered at Palampur, by the said firms. Thus the offence prima facie is complete at Palampur, therefore, in my opinion, the learned Addl. Chief Judicial Magistrate, Palampur has a territorial jurisdiction to try the offence(s) and in the circumstances, the court also feels that the trial of the offence(s) shall take place before the said court against the persons against whom there are reasonable grounds to proceed.
13. As far as the second contention is concerned, the petitioners are sought to be prosecuted for the offences under Sections 276C(1), 277 and 278B of the Income Tax Act. In Complaint No. 196-III/2005, in para 3 it is alleged:
The assessee had filed the return of income-tax on 30-12-1992, declaring net taxable income for Rs. 1,29,390. The return of income-tax was duly signed and verified by Shri Onkar Chand s/o Shri Shankar Dass, on 28-10-1992, in the capacity of the partner of the firm.
14. Apart from the firm and Onkar Chand, the action has been sought against other partners, namely, Smt. Usha and Santosh, being its partners.
15. Similarly, in Complaint No. 195-III of 2005, against M/s Shanker Dass Balram Kumar, in para 3, the alleged taxable income was declared to the tune of Rs. 2,22,020 under the verification of Shri Yash Paul s/o Sh. Shanker Dass, its partner. Besides the firms and Yash Paul Srv. Sh. Tilak Raj, Surinder Kumar, Kamal Kumar and Smt. Lajya Devi, have been impleaded as accused.
16. Except Srv. Shri Onkar Chand and his brother Yash Paul, in the above complaints, there is no allegation against other accused persons whether they have committed or that they were responsible for the commission of such offences. There is also not even a fleeting reference against them that they have made the false entries or made any false statements before the Asstt. CIT or other tax authorities.
17. Section 278B of the Income Tax Act reads as under:
278B.(1) Where an offence under the Act has been committed by acompany, every person who, at the time the offence was committed, was in-charge of, and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
18. The company includes a firm or other association, and the same test must apply to a director in-charge and a partner of a firm in-charge of a business. In that context a person in charge would mean that the person should be in overall control of the day-to-day business of the company or firm.
19. A liability under Section 278B(1) of the Income Tax Act is sought to be fastened vicariously on the partners of the firm, where principal accused is the firm itself. Thus a clear case should be spelt out in the complaint against the partners sought to be made liable, which has not been done in the present case. There is almost unanimous judicial opinion even by the Apex Court that necessary averments are to be contained in a complaint before a person can be subjected to criminal process.
20. Adverting to the facts of the present case, in both the complaints there is no allegation worth the name against the partners namely, Smt. Usha and Santosh, in Complaint No. 196-III of 2005 against which Criminal MMO No. 107 of 2007 is filed and also against Tilak Raj, Surinder Kumar, Kamal Kumar and Smt. Lajya Devi, in Criminal Complaint No. 195-III of 2005 in Criminal MMO No. 109 of 2007, except that the above named persons happened to be the partners of respective firms not even in-charge or responsible to the business of the firm.
21. Therefore, in these circumstances, the prosecution against them is not sustainable. Accordingly, both the petitions are partly allowed, to the extent that in Complaint No. 195-III of 2005, the issuing of process against petitioners, Tilak Raj, Surinder Kumar, Kamal Kumar and Smt. Lajya Devi and in Complaint No. 196-III of 2005 against Smt. Usha and Santosh, as accused is hereby quashed and set aside, the proceedings against them are ordered to be dropped. However, qua other accused petitioners it shall continue.
22. Parties are directed to be present before the learned Addl. Chief Judicial Magistrate at Palampur on 21-4-2008.
The records of the Trial Court be returned forthwith.