Assistant Commissioner of Income Tax Vs. Jawahar Mills Ltd. - Court Judgment

C.A. No. 64 7 of 1990

1. This appeal is preferred by the complainant, Assistant Commissioner, Salem, against the order of acquittal passed in F.O.C.C. No. 341 of 1989. The case of the complainant is that the first accused is a private limited company engaged in running a spinning mill in the name and the style of 'Jawahar Mills Limited'.

The second, third and fourth accused are the principal officers of the first accused who are responsible for the conduct of the business. The provisions of section 269SS of the Income Tax Act, 1961 ('the Act') prescribed the mode of acceptance of any deposit or loan by the income-tax assessee. The above provision has come into force with effect from 1-7-1984. On scrutiny of the books of account of the first accused company for the year 31-3-1985, it was noticed that the first accused accepted deposit of Rs. 10,000 or more violating the provisions of section 269SS. In the case of Vaiyapuri, an amount of Rs. 30,000 was received in cash on 8-1-1985.

The complainant issued summons to the accused to produce books of account on 16-3-1988. In response to his summons, the second accused had appeared before the complainant with the relevant books of account. The second accused has admitted the default under section 276DD of the Act and pleaded his ignorance of the provision and represented the same as unintentional. A show-cause notice under section 278AA was also issued to the accused. The first accused company has violated section 269SS by acceptance of loans and deposits otherwise than by account payee cheque or bank draft. The first accused has committed an offence punishable under section 276DD. The second, third and fourth accused being the executives of the first accused who were in charge and responsible for conduct of the business have committed an offence punishable under section 276DD, read with section 278B.

2. The complaint was examined as P.W. 1 who is an authorised representative of the Tribunal, Chennai. When P.W. 1 perused the account produced by the accused, it is revealed that a sum of Rs. 30,000 was received by the accused. Ex. P. 1 is the Fixed Deposit Register, Ex. P. 2 is the corresponding entry in the cash register. Ex. P. 3 is the corresponding entry in the ledger. Ex. P. 4 is the order of sanction for launching prosecution against the accused. Ex. P. 5 to P. 7 are the statements given by the accused in the enquiry. After enquiry the Income Tax Officer also issued show cause notice under Ex. P. 8 under section 2(35) of the Act. Ex. P. 9 is another notice issued to the accused. Ex. P. 10 is the reply given by the accused.

3. When the incriminating circumstances appearing against the accused were explained to them under section 313 of the Code of Criminal Procedure ('the Code'), the accused denied the evidence. On consideration of oral and documentary evidence, the trial Court acquitted the accused holding that the accused are not guilty under section 276DD.

CA. No. 648 of 1990

The appeal is preferred by the complainant, the Assistant Commissioner, against the order of acquittal passed in F.O.C.C. No. 342 of 1989. The above complaint is filed in respect of amount of Rs. 10,000 received by the respondent in cash on 26-11-1984. Except the above fact, all other allegations in the complaint are similar to the complaint filed in the case relating to C.A. No. 647 of 1990. The complainant has also marked Ex. P. 1 to P. 10. The accused denied the evidence of PM. 1 in 313 Explanation.

CA. No. 649 of 1990

This appeal is preferred by the complainant, the Assistant Commissioner, against. the order of acquittal passed in F.O.C.C. No. 343 of 1989. The complaint is filed in respect of receipt of Rs. 14,000 in cash by the accused on 15-10-1984. The other averments in the complaint are similar to the complaint filed in the other cases. PM. 1, the complainant, has marked Ex. P. 1 to P.10. The accused is examined under section 313 of the Code and he denied the evidence of PM. 1.

C.A. No. 650 of 1990

The appeal is preferred by the Assistant Commissioner against the order of acquittal passed in F.O.C.C. No. 344 of 1989. The complaint in the above case was filed in respect of amount of Rs. 20,000 received in cash by the accused on 10 - 1- 1985. The other grounds in the complaint are similar to the complaint filed in the other case. PM. 1, the complainant, has marked Ex. P. 1 to P. 10. The incriminating materials available in the evidence of PM. 1 were explained to the accused and the accused denied the same.

C.A. No. 651 of 1990

The appeal is preferred by the Assistant Commissioner against the order of acquittal passed in F.O.C.C. No. 347 of 1989. The complaint was filed in respect of Rs. 10,000 received by the accused in cash on 17-10-1984. The other averments in the complaint are similar to the complaint filed in C.A. No. 647 of 1990. In this case also PM. 1 was examined and documents Exs. P. 1 to P. 10 were marked. The accused denied the evidence of PM. 1, who was examined under 313 of the Code.

C.A. No. 652 of 1990

The appeal is preferred by the Assistant Commissioner against the order of acquittal passed in F.O.C.C. No. 346 of 1989. The above complaint was filed in respect of amount of Rs. 30,000 received by the accused in cash on 16-10-1984. In this case also PM. 1 was examined and document Exs. P. 1 to P. 10 were marked. The accused denied the evidence of PM. 1, when they were examined by the Court under section 313 of the Code.

C.A. No. 653 of 1990

The appeal is preferred by the Assistant Commissioner against the order of acquittal passed in F.O.C.C. No. 347 of 1989. The above complaint was filed in respect of Rs. 10,000 received by the accused in cash on 24-8-1984.

In this case also P.W 1 was examined and documents Exs. P. 1 to P. 10 were marked. The accused denied the evidence of P.W. 1, when they were examined under section 313 of the Code.

4. All the above complaints were filed against the same accused/respondents. The case of the complaint in all the above cases is that the accused received the amount in cash in violation of section 269SS, and that the accused ought to have received the amount only by way of account payee cheque or bank draft.

5. The Trial Court on consideration of oral and documentary evidence has held that the accused have obtained the affidavits from their customers, for remitting the amount in cash, and that those affidavits were not produced by the complainant in the Court and the burden is upon the complainant to prove that the explanation offered by the accused are not acceptable and that as the complainant failed to produce the affidavits, the benefit of doubt has to be given to the accused.

6. In all the appeals preferred by the complainant, the common contentions raised are as follows:

The learned Magistrate has not even whispered a word on the documentary evidence let in by the prosecution. The Trial Court has riot appreciated and analysed the evidence of the prosecution found in Exs. P. 1 to P. 10. The Trial Court has acquitted the accused solely on the ground that the prosecution has not produced the affidavit sworn in by the person who deposited the amount with the respondents.

The affidavit of the depositor is the document of the respondents and if there is any reasonable cause for receiving the amount, otherwise than by the account payee cheque or bank draft, it is the duty of the respondent to file copy of the affidavit before the Court. It is the duty of the respondents to establish before the Trial Court that they have such reasonable cause or excuse for accepting the amount in cash. The Trial Court has completely misconstrued the provisions of sections 278AA and 278E. The Trial Court has wrongly held that the prosecution should prove that the respondents had no reasonable cause or excuse. The Trial Court has the power to call for the production of the affidavit either from the prosecution or from the respondents under section 165 of the Indian Evidence Act. The Trial Court failed to see that the complaint was instituted well before the omission of the penal section 276DD, and in view of the provisions of section 6 of the General Clauses Act, 1897, it is the duty of the Trial Court to try the case as if the penal provision has not been omitted. The judgment of the learned Judicial Magistrate is contrary to law. The learned counsel for the respondents advanced arguments in all the appeals. As all the appeals involve common question of fact and law, this common judgment is delivered.

7. The point for determination in all the appeals is whether the accused are liable to be punished for alleged violation of section 269SS.

8. The first accused is a Private Ltd. Co. running a spinning mill in Salem. It is not in dispute that the accused 2 to 4 are Managing Director, Wholetime Director and Sales Director of the first accused company. The complainant/ appellant, the Income-tax department, has filed these complaints against the accused under sections 269SS and 276DD, read with section 278B. It is alleged by the complainant in all these cases that the accused accepted. certain deposits of Rs. 10,000 or more in contravention of section 269SS C.A. 647 of 1990 is filed against the order passed in C.C. No. 341 of 1989. It is stated that the accused received a sum of Rs. 30,000 in cash on 8-1-1985; C.A. 648 of 1990 relates to payment of Rs. 10,000 in cash dated 26-11-1984; C.A. 649 of 1990 relates to the receipt of Rs. 14,000 in cash on IS- 10- 1984; C.A. 650 of 1990 relates to deposit of Rs. 20,000 dated 10- 1- 1985; C.A. 651 of 1990 relates to deposit of Rs. 10,000 in cash dated 17-10-1984; C.A. 652 of 1990 relates to deposit of Rs. 30,000 dated 16-10-1984 and C.A. 653 of 1990 relates to deposit of Rs. 10,000 dated 24-8-1984.

9. Section 269SS came into force with effect from 1-7-1984. Section 269SS states thus:

'Mode of taking or accepting certain loans and deposits.-No person shall, after the 30th day of June 1984, take or accept from any other person (hereafter in this section referred as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank, draft if

[the amount is Rs. 10,000 or more].'

Subsequently, the above section was amended. As per the above amendments, the word 'Rs. 10,000' is substituted by 'Rs. 20,000' or more.

10. It is not disputed by the accused that they received the amount mentioned in the complaint in cash. It is only alleged by the accused in Ex. P.8, the letters sent by them to the Income Tax Officer, that the deposits were accepted from ex-employees who had deposited their money with them in cash, since they had assured that they had no bank account of their own. With regard to the deposit of amount in cash from persons who had bank account, the accused have stated that the amount was received in cash f or the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittance to bank to reduce the overdraft. But the complainant-department not satisfied with the above explanation has launched prosecution against the accused.

11. P.W. 1, the Assistant Commissioner, has stated that he verified the accounts of the first accused company and that Ex. P- 1 is the Deposit Register and that Ex. P-2 is the entry in Cash Register. Ex. P-4 is the authorisation given by the department to launch the prosecution. Exs. P-5 to P-7 are the statements given by the accused. The Income-tax department also issued show-cause notice to the accused under Ex. P-9. The reply given by the accused is marked as Ex. P-10. It is stated in Ex. P- 10 that due to prevalent tight money conditions at that time, it was very difficult to mobilise the deposits and that too at the lowest rate of 15 and that they have no other alternative, except accepting the above deposits to meet out their working capital requirements. In the statement recorded in the enquiry, the accused have stated that at the time of accepting the deposits they did not know the provisions of the Act and that, therefore, they accepted it. It is admitted that the accused have also submitted affidavits of persons from whom they received cash to the department. P.W. 1 has admitted that the said affidavits are in their file. The Trial Court has held that the complainant failed to produce the affidavit and that the complainant failed to show that the averments contained in the affidavit will not amount to a valid explanation and that, therefore ' the accused are not guilty of section 269SS.

12. The learned counsel for the appellants, Thiru Ramaswamy, contended that the Trial Court failed to advert to the various aspects of the case and that when once the amount was received in cash, the offence is made out and that it is for the accused to prove that they have reasonable cause to receive the amount in cash and that the burden is not upon the complainant to establish the same. On the other hand, the learned counsel for the accused, Thiru Gopinath, contended that the complainant ought to have produced the affidavits of depositors from whom the accused received cash and that it is for the complainant to prove that the accused without reasonable cause or excuse accepted deposits in contravention of section 269SS.

13. For proper appreciation of the rival contention of the parties, it would be useful to refer to the relevant provisions of the Income Tax Act. As already stated, section 269SS came into force with effect from 1-7-1988. Section 276DD is the penal provision for violation of section 269SS. As per the above section, if a person without reasonable cause or excuse takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be punishable with imprisonment for a term which may extend to two years and also liable to a fine equal to the amount of such loan or deposit. But the above section 276DD was omitted with effect from 1-4-1989. New section 271D came into force with effect from 1-4-1989. Under the above provisions, the person who contravenes section 269SS shall be liable to pay a sum equal to the amount of the loan or deposit as penalty. The punishment of imprisonment for a term which may extend to 2 years is omitted in the above new section. In all these cases, the offence is said to have been committed before deleting section 276DD. As the old section 276DD was in force when the proceedings were initiated, the complaint filed under old section 276DD is maintainable. The question whether the accused is guilty of the offence for violation of section 269SS has to be decided only with reference to old section 276DD and not new section 27 1 D.

14. The learned counsel for the appellant relies upon a decision reported in CA. Baloo v. Union of India : [1992]197ITR545(Mad) . It is stated in the above decision that the principle enacted in section 6 of the General Clauses Act, unless a contrary, intention appears, that the repeal of an Act would not affect any right, privilege, obligation or liability accrued under any enactment so repealed, would apply to a repeal of one of the sections of the Income Tax Act. It is also held in the above decision that with effect from 1-4-1989 section 271 D had been introduced while omitting section 276DD with effect from the same date and that it is not possible to gather a contrary intention that the Legislature desired that prosecutions, which are permissible under section 276DD and already initiated before insertion of the new section, were to be erased or obliterated. It is, thus, clear from the above decision that the repeal of section 276DD after the proceedings were initiated by the department will not take away the rights of the department to prove the case against the accused as per old section 276DD.

15. 11 is contended by the learned counsel for the respondents /accused that the complainant should prove that the accused without reasonable cause or excuse have contravened section 269SS. But the learned counsel for the complainant contends that it is for the accused to prove that they had reasonable cause for accepting the amount in cash. Both parties rely upon certain decisions on this aspect.

16. The learned counsel for the appellant relies upon a decision reported in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The facts of the above case will show that the assessee filed wealth-tax returns belatedly and that though he applied for extension of time, the returns were filed after the expiry of the period of extension. It is also held that the assessee was conscious of the fact that the wealth-tax returns should be filed within the time stipulated under section 14(1) of the Act. Relying upon the above facts, the Division Bench has held thus:

'... It was not for the department to establish that the assessee was guilty of contumacious conduct and acted in conscious disregard of his obligation. It was for the assessee to plead and prove that the delay in filing the returns was due to reasonable cause. Such reasonable cause was not pleaded....' (p. 8 05)

The Division Bench also relied upon a decision of the Supreme Court in Addl. CIT v. LM. Patel & Co. : [1992]196ITR297(SC) .

17. In L.M. Pate] & Co's case (supra), the Supreme Court in a case arising under section 271(1)(a) of the Act has held thus :

'There is nothing in section 271 (1)(a) of the Income Tax Act, 1961, which requires that mens rea has to be established by the department before penalty can be levied under that section for delay in filing the return. It is for the assessee, should he file a belated return, to show 'reasonable cause' for the delay' (p. 297)

Section 271(1)(a) imposes penalty for failure to furnish returns and comply with the Notice and concealment of income. Section 271(1)(a) reads 'as without reasonable cause fail to furnish'. Sub-clause (b) reads ,as without reasonable cause fail to comply with the notice'. As per amended section 276C which came into effect from 1- 10- 1975, if a person wilfully attempts to evade any tax, penalty, or interest, he shall, without prejudice to any penalty that may be imposable on him under any other provision of the Act, be punishable with rigorous imprisonment which shall not be less than six months but which may extend to seven years. In the above decision, the Supreme Court has held that section 271 (1)(a) provides that penalty may be imposed if the Income Tax Officer is satisfied that any person has without reasonable cause failed to furnish the returns of the total income and that it is clear that in the above case, what is intended is a civil obligation while in the latter, that is, section 276(C), what is imposed is a criminal sentence. The Court had further held that there can be no dispute that having regard to the provisions of section 276(C) which speak of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. lt is also held in the above decision that reasonable cause is an ingredient of the offence for which the punishment is provided and the taxing authority has prima facie to prove absence of reasonable cause in the sense that has been explained above. The distinction between sections 276C and 271(1)(a) has been communicated in the above decision. The above decision is referred to in P Nainakhan's case (supra). The case reported in P Nainakhan's case (supra) relates to non-filing of wealth-tax returns within the time stipulated under section 14(1) of the Wealth- tax Act, 1957. Section 18(1)(a) of the Wealth Tax Act imposes penalty for failure to furnish wealth-tax returns. Under the above provisions, a sum equal to 2% per cent of the assessed tax for every month shall be imposed as penalty. Therefore, it is held in the above decision that in such cases mens rea is not essential.

18. The learned counsel for the respondent /accused relies upon the decision reported in Sequoia Construction Co. (P.) Ltd v. PP. Suri, Income Tax Officer : [1986]158ITR496(Delhi) . The liability of the assessee under section 201(1) of the Act and section 276B of the Act is elaborately discussed in the above decision. Section 276B imposes punishment of imprisonment on a person who without reasonable cause or excuse fails to deduct the tax. But under section 201, read with 221 no imprisonment is provided. But only penalty equivalent to certain percentage of amount has to be imposed. Bearing in mind the language employed in the above two provisions, the Court has held thus:

'The standard of proof and explanation and onus of proof to be discharged by the assessee in penalty proceedings under section 201 (1) is much higher and heavy. In a criminal prosecution for an offence under section 276B, however, the dictates of law merely demand the requirement of reasonable cause i.e. what appears ex facie to reasons, which is much more milder....' (p. 496)

19. The learned counsel for the respondent also relies upon a decision of the Patna High Court reported in Income Tax Officer v. Taurus Equipment (P.) Ltd. : [1979]118ITR982(Patna) . It is seen from the facts of the above case that the Income tax department filed complaint under section 276B. As already stated, the above section reads 'if a person without reasonable cause or excuse'. Section 276DD also reads 'if a person without reasonable cause or excuse'. While interpreting the above words, the Patna High Court has held that the prosecution must prove that there was no reasonable cause or excuse f or not filing the returns. The relevant observation of the Patna High Court is extracted below :

'The words 'fails without reasonable cause or excuse' occurring in section 276 (now and section 272(2) of the Income Tax Act, 1961, show that mens rea is an ingredient before punishing the defaulter. It must be shown that the default was deliberate and conscious. It is not enough for the department to show that the payment or return was not made or filed in time. It has to go further and prove that it was without reasonable cause or excuse. Unless the prosecution proves by' evidence that there was no reasonable cause or excuse for not filing the return or depositing the money within the prescribed time, no offence can be said to have been committed.' (p. 982)

In the above decision, the decision of the Supreme Court reported in CIT v. Anwar Ali [1970] 76 ITR 69 is referred to. In the above decision, it is held thus :

'... Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars. . .

(p. 696)

It is, thus, clear from the above decisions that it is for the prosecution to prove that the accused without reasonable cause or excuse failed to receive the amount by way of cheque. The Patna High Court has further held that the words 'fails without reasonable cause of excuse' will show that mens rea is an ingredient to be proved by the department before punishing the defaulter. It is, thus, seen that application of mens rea would depend upon the language used in a particular provision and nature or penalty. It is no doubt true that mens rea is not a necessary ingredient to prove when the person who contravenes the provisions of the Act is imposed with only penalty by way of amount. But, if a particular provision imposes imprisonment for a specific term on the assessee, it is for the prosecution to prove mens rea. Bearing the principles of law laid down in the above decisions in mind, the case on hand has to be decided.

20. It is pointed out by the learned counsel for the respondent that the words 'without reasonable cause or excuse' are absent in the complaint. In paragraph 5 of the complaint, it is only stated that the first accused accepted deposits violating section 269SS. It is alleged in paragraph 6 that the department issued summons to the accused requiring them to produce books of account and that in the enquiry the accused admitted default under section 276DD and pleaded ignorance of the provisions. It is significant to note that the department recorded the statement of the accused in the form of questions and answers. The above statements are marked as Exs. P-5 to P-7. In the above statements, the accused have stated that they are not aware of the new provisions and that they needed cash urgently to meet day-to-day expenses and that some of the depositors had no bank accounts. In the letter Ex. P-8 addressed to the department, the accused have stated that cash received from depositors who had bank accounts was taken for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittances to bank and that as cash was urgently required for their immediate needs which cannot wait till the cheques are collected by the bank, the deposits were accepted from the parties who had bank accounts. It is, thus, clear that the accused gave explanation for accepting deposits in cash in the above enquiry proceedings. It is also admitted by P.W 1 that the accused produced affidavits of persons from whom they received cash of more than Rs. 10,000 and that affidavits are in their file. The explanation given by the accused during the enquiry proceedings and also affidavits of depositors produced by the accused were in the file of the complainant. But, unfortunately, the complainant has not even stated in the complaint that the explanation and reasons given by the accused for receiving the deposits in cash are not true and that the accused without any reasonable excuse received the cash. The complainant ought to have given reasons in the complaint as to why the explanation given by the accused is not valid in law. It is no doubt true that the ignorance of law is not an excuse for committing the offense. But the other reasons given by the accused for accepting cash could have been considered by the department before launching the prosecution. As already stated, mere acceptance of cash from the depositors is not an offence. The complainant must further allege and prove that the accused accepted the loan or deposit without reasonable cause or excuse. The circumstances under which the accused accepted the cash could be proved only by producing the affidavits sworn in by the depositors. But the learned counsel for the appellant contended that the burden is upon the accused to prove that they have reasonable cause to accept the deposits. As already stated, when a particular provision imposes imprisonment, the prosecution must prove the ingredients of the offence and section 276DD clearly states that only if a person without reasonable cause or excuse accepts the loan or deposits, he is liable to be punished. That being the position of law, I am unable to subscribe to the contention of the learned counsel for the appellant that the burden is upon the accused to prove that they have valid reasons to accept the deposits in cash.

21. Section 278AA came into force with effect from 10-9-1986. The section reads thus :

'Punishment not to be imposed in certain cases. -Notwithstanding anything contained in the provisions of section 276A, section 276AB, or section 276B, no persons shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.'

But with effect from 1-4-1989, section 276DD is omitted in the above section. However, it is clear that even in the new provision which was in force on 10-9-1986, no person can be punished under section 276DD if he proves that there was reasonable cause for such failure. But the words 'if lie proves' are absent in the original section 276DD. After amendment of section 278AA, the burden lies upon the accused to prove that there was reasonable cause for such failure. But the accused are alleged to have contravened section 269SS while old section 276DD was in force. Hence, the prosecution has to aver and prove that the accused contravened the rule without reasonable cause or excuse-vide Greatway (P.) Ltd. v. Asstt. CIT [ 1992] 105 CTR (P & H.) 82.

22. The complainant could have produced the affidavits sworn in by the depositor, produced by the accused to the department, in the Trial Court and shown that the explanation given by the accused for accepting the deposits in cash is not true. The Trial Court acquitted the accused solely on the ground that the complainant failed to produce the affidavits and prove the charge levelled against the accused. Now, the learned counsel for the appellant contended that the accused could have produced the copies of affidavits or requested the Court to send for the affidavits under known process of law. 1 am unable to accept the above contention of the appellant. The complainant is in possession of the affidavits produced by the accused. The law is well-settled that the party who is in custody of best evidence must produce the same before the Court and in such cases he cannot invoke the abstract doctrine of burden of proof. Therefore, it has to be held that the complainant who is in possession of the best evidence failed to produce it before the Trial Court and invite the Court to give a finding on the question whether the explanation trotted out by the accused is true or not. From the facts discussed above, it has to beheld that mere contravention of section 269SS is not an offence unless and until it is proved that the accused have no reasonable cause or excuse to accept the loan or deposits in cash. I hold that the complainant failed to aver and prove that the accused without reasonable cause or excuse accepted the deposits in cash. In the absence of allegation in the complaint that the accused without reasonable cause or excuse accepted the deposits in cash, the accused cannot be said to have committed an offence under section 276DD.

23. The learned counsel for the respondent further contended that when the of fence under the Act is committed by the company, every person who at the time when the offence was committed was incharge 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. It is contended by the learned counsel for the respondent that it is not specifically alleged in the complaint as to who is the principal officer responsible for the day-to-day affairs of the company and that in the absence of the necessary averments to bring the company within the ambit of section 278B the complaint is not maintainable. In support of the same, the accused also relies upon certain decisions. In State of Karnataka v. Pratap Chand AlR 1981 SC 872, it is held that where a partnership firm was charged for the offence under section 18 of the Drugs and Cosmetics Act, the partner of the firm who was in overall control of the day-to-day business of the firm would alone be liable to be convicted.

24. In a decision reported in Sham Sundar v. State of Haryana [1989] Crl. LJ. 2201, it is held thus :

'More often it is common that sonic of the partners of the firm may not even be knowing of what is going on day-to-day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection (1) of section 10 that the offence was committed without their knowledge. The obligation for the accused took place without his knowledge or that he exercised all due diligence to prevent such offence to arise only when the prosecution established that the requisite condition mentioned in sub-section (1) is established. The requisite condition is that the partner was responsible for carrying 'on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. Thus, where the documents produced by the prosecution do not indicate even remotely that all the partners were doing the business of the firm and that there was no other evidence on record on this aspect, it could not be said that when the offence was committed all the partners were conducting the business of the firm. Therefore, they would not be liable for conviction.'

In Greatway (P) Ltd. case (supra), it is held that when the complaint is silent as to whether any person had been appointed as the principal officer of the petitioner-company and in the absence of such appointment a Director or the Managing Director of the company could not be prosecuted. It is alleged in the complaint that the first accused is the company and accused 2 to 4 are the principal officers of the first accused who are responsible for the conduct of the business of the first accused company. In paragraph 8 of the complaint, it is stated that the accused 2 to 4 being the executives on the first accused at the material time who were in charge of' and reasonable for the conduct of the business have committed the offence. PM. 1 was not cross-examined on this aspect by the accused. Further, in the statements given by the accused, Exs. P-5 to P-8, they did not state that they or any of them were not responsible for the day-to-day administration of the company. It is significant to note that all the accused have given one and the same statement. In the above circumstances, I am not inclined to accept the contention now raised by the respondent counsel that the complaint has to fail as ingredients of section 278B are not made out. I hold that the contention raised by the respondent counsel on the above aspect has to be rejected.

25. The learned counsel for the respondent also relies upon two decisions and contends that the appellate Court should not normally interfere with the order of acquittal passed by the Trial Court. Ramesh B. Doshi v. State of Gujarat [1996] Crl. L.J. 2867, Awaddhesh v. State of M.P. [1998] Crl. L.J. 1154. It is no doubt true that the order of acquittal passed by the Trial Court would not normally be interfered with in the appeal, unless the view taken by the Trial Court is wholly unreasonable or erroneous. In the instant case, though the Trial Court acquitted the accused solely on the ground that the complainant failed to produce the affidavits, the Trial Court did not advert to other aspect of the case. It is open to the Appellate Court to give finding on all the points involved in the case, even though the same was not considered by the Trial Court. In any event, the reasons given by the Trial Court for acquitting the accused cannot be said to be unsustainable. For the above reasons, I hold that the order of acquittal passed by the Trial Court is not liable to be set aside. The complaint failed to prove the ingredients of the offence alleged in section 276DD of the old Act. The complainant also failed to aver and prove that the reason given by the accused for accepting the amount in cash is not true. Further, the complainant failed to produce the affidavits sworn in by the depositors to prove that the accused without reasonable cause or excuse accepted the amount in cash. For the above reasons, I hold that the contention raised by the learned counsel for the appellant in this appeal cannot be accepted and as such, I hold that the order of acquittal passed by the Trial Court has to be confirmed.

26. CA. No. 647 of 1990

ln the result, the criminal appeal is dismissed. The order of acquittal is confirmed.

CA. No. 648 of 1990

In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.

CA. No. 649 of 1990

In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.

CA. No. 650 of 1990

In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.

CA. No. 651 of 1990

In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.

CA. No. 652 of 1990

In the result, the criminal appeal is dismissed. The order of acquittal is confirmed of acquittal is confirmed.