Madras H.C : 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 Ltd.”.

High Court Of Madras

Assistant Commissioner Of Income Tax vs. Jawahar Mills Ltd. & Ors.

Sections 269SS, 276DD, 278B

V. Bakthavatsalu, J.

Crl. Appeal Nos. 647 to 653 of 1990

10th March, 1998

Counsel Appeared

Ramasamy, for the Appellant : Gopinath, for the Respondents

JUDGMENT

V. BAKTHAVATSALU, J. :

Crl. Appeal No. 647 of 1990 This appeal is preferred by the complainant, Asstt. CIT, 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 Ltd.”. 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 s. 269SS of the IT Act, 1961 (‘the Act’) prescribed the mode of acceptance any deposit or loan by the income-tax assessee. The above provision has come into force w.e.f. 1st July, 1984. On scrutiny of books of account of the first accused company for the year 31st March, 1985, it was noticed that the first accused accepted deposit of Rs. 10,000 or more violating the provisions of s. 269SS of the Act. In the case of Vaiyapuri, an amount of Rs. 30,000 was received in cash on 8th Jan., 1985. The complainant issued summons to the accused to produce books of account on 16th March, 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 s. 276DD of the Act and pleaded his ignorance of the provision and represented the same as unintentional. A show- cause notice under s. 278AA was also issued to the accused. The first accused company has violated s. 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 s. 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 offencepunishable under s. 276DD, r/w s. 278B of the IT Act. The complainant 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 and Ex. P. 5 to P. 7 are the statements given by the accused in the enquiry. After enquiry the ITO also issued show-cause notice Ex. P. 8 under s. 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. When the incriminating circumstances appearing against the accused were explained to them under s. 313 of the Cr.P.C. (‘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 s. 276DD of the Act.

C.A. No. 648 of 1990

2. The appeal is preferred by the complainant, the Asstt. CIT, against the order of acquittal passed in FOCC No. 342 of 1989. The above complaint is filed in respect of amount of Rs. 10,000 received by the respondent in cash on 26th Nov., 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 Exs. P. 1 to P. 10. The accused denied the evidence of P.W. 1 in s. 313 Expln.

C.A. No. 649 of 1990

3. The appeal is preferred by the complainant, the Asstt. CIT 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 15th Oct., 1984. The other averments in the complaint are similar to the complaint filed in the other cases. P.W. 1, the complainant, has marked Exs. P. 1 to P. 10. The accused is examined under s. 313 of the Code and he denied the evidence of P.W. 1.

C.A. No. 650 of 1990

4. The appeal is preferred by the Asstt. CIT 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 10th Jan., 1985. The other grounds in the complaint are similar to the complaint filed in the other case. P.W. 1, the complainant, has marked Exs. P. 1 to P. 10. The incriminating materials available in the evidence of P.W. 1 were explained to the accused and the accused denied the same.

C.A. No. 651 of 1990

5. The appeal is preferred by the Asstt. CIT against the order of acquittal passed in F.O.C.C. No. 345 of 1989. The complaint was filed in respect of Rs. 10,000 received by the accused in cash on 17th Oct., 1984. The other averments in the complaint are similar to the complaint filed in C.A. No. 647 of 1990. 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 examined under 313 of the CrPC.

C.A. No. 652 of 1990

6. The appeal is preferred by the Asstt. CIT 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 16th Oct., 1984. In this case also P.W. 1 was examined and document Exs. P. 1 to P. 10 were marked. The accused denied the evidence of P.W. 1, when they were examined by the Court under s. 313 of the CrPC.

C.A. No. 653 of 1990

7. The appeal is preferred by the Asstt. CIT 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 24th Aug., 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 s. 313 of the CrPC.

8. 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 s. 269SS, and that the accused ought to have received the amount only by way of account payee cheque or bank draft. 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 examination 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.

9. 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 not 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 respondents to file a 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 rial Court has completely misconstrued the provisions of ss. 278AA and 278E of the IT Act. 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 s. 165 of the Indian Evidence Act. The trial Court failed to see that the complaint was instituted well before the omission of the penal s. 276DD of the IT Act and in view of the provisions of s. 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 therespondents advanced arguments in all the appeals. As all the appeals involve common question of fact and law, this common judgment is delivered.

The point for determination in all the appeals is whether the accused are liable to be punished for alleged violation of s. 269SS. The first accused is a private limited company running spinning mill in Salem. It is not in dispute that the accused Nos. 2 to 4 are managing director, wholetime director and sales director of the first accused company. The complainant/appellant, the IT Department, has filed these complaints against the accused under ss. 269SS and 276DD, r/w s. 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 s. 269SS of the Act, 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 8th Jan., 1985, C.A. 648 of 1990 relates to payment of Rs. 10,000 in cash, dt. 26th Nov., 1984; C.A. 649 of 1990 relates to the receipt of Rs. 14,000 in cash on 15th Oct., 1984; C.A. 650 of 1990 relates to deposit of Rs. 20,000, dt. 10th Jan., 1985; C.A. 651 of 1990 relates to deposit of Rs. 10,000 in cash dt. 17th Oct., 1984; C.A. 652 of 1990 relates to deposit of Rs. 30,000, dt. 16th Oct., 1984 and C.A. 653 of 1990 relates to deposit of Rs. 10,000, dt. 24th Aug., 1984.

12. Sec. 269SS came into force w.e.f. 1st April, 1984. Sec. 269SS states thus :— “Mode of taking or accepting certain loans and deposits.—No person shall, after the 30th June, 1984, take or accept from any other person (hereinafter 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 amendment, the word ‘Rs. 10,000’ is substituted by ‘Rs. 20,000’ or more.

13. 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 ITO, 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 amounts in cash from persons who had bank accounts, the accused have stated that the amount was received in cash for 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. P.W. 1, the Asstt. CIT, 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 IT 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 per cent 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 complaint 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 s. 269SS. 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 s. 269SS. For proper appreciation of the rival contention of the parties, it would be useful to refer to the relevant provisions of the IT Act. As already stated, s. 269SS came into force w.e.f. 1st April, 1988. Sec. 276DD is the penal provision for violation of s. 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 s. 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 s. 276DD was omitted w.e.f. 1st April, 1989. New s. 271D came into force w.e.f. 1st April, 1989. Under the above provisions, the person who contravenes s. 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 s. 276DD. As the old s. 276DD was in force when the proceedings were initiated, the complaint filed under old s. 276DD is maintainable. The question whether the accused is guilty of the offences for violation of s. 269SS has to be decided only with reference to old s. 276DD and not new s. 271D. The learned counsel for the appellant relies upon a decision in C.A. Baloo vs. Union of India (1992) 197 ITR 545 (Mad) : TC 48R.622. It is stated in the above decision that the principle enacted in s. 6 of the General Clauses Act, unless a contrary intention appears, the repeal of an Act would no effect any right, privilege, obligation or liability accrued under any enactment so repealed, would apply to a repeal of one of the sections of the IT Act. It is also held in the above decision that w.e.f. 1st April, 1989 s. 271D had been introduced while omitting s. 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 s. 276DD of the Act 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 s. 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 s. 276DD. It 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 s. 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.

18. The learned counsel for the appellant relies upon a decision in CWT vs. P. Nainakhan (1997) 141 CTR (Mad) 332 : (1996) 221 ITR 805 (Mad) : TC 66R.757. The facts of the above case will show that the assessee filedwealth- 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 s. 14(1) of the Act. Relying upon the above facts, the Division Bench has held thus (head note) : “. . . . .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” The Division Bench also relied upon a decision of the Supreme Court in Addl. CIT vs. I.M. Patel & Co. (1992) 105 CTR (SC) 195 : (1992) 196 ITR 297 (SC) : TC 49R.673 In I.M. Patel & Co.’s case (supra), the Supreme Court in the case arising under s. 271(1)(a) of the Act has held thus : “There is nothing in section 271(1)(a) of the IT 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” Sec. 271(1)(a) imposes penalty for failure to furnish returns and comply with the notice and concealment of income. Sec. 271(1)(a) reads “as without reasonable cause failed to furnish”. Sub-cl. (b) reads ‘has without reasonable cause failed to comply with the notice’. As per amended s. 276C which came into effect from 1st Oct., 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 s. 271(1)(a) provides that penalty may be imposed if the ITO is satisfied that any person has without reasonable cause failed to furnish the return 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, s. 276C, 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 s. 276C which speaks 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. It 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 ss. 276C and 271(1)(a) has been communicated in the above decision. The above decision is referred to in CWT vs.P. Nainakhan’s case (supra). The case CWT vs. P. Nainakhan’s case (supra) relates to non-filing of wealth-tax returns within the time stipulated under s. 14(1) of the WT Act, 1957. Sec. 18(1)(a) of the WT 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.

19. The learned counsel for the respondent/accused relies upon the decision Sequoia Construction Co. (P) Ltd. vs. P.P. Suri, ITO (1985) 47 CTR (Del) 277 : (1986) 158 ITR 496 (Del) : TC 48R.297. The liability of the assessee under s. 201(1) of the Act and s. 276B of the Act is elaborately discussed in the above decision. Sec. 276B imposes punishment of imprisonment on a person who without reasonable cause or excuse fails to deduct the tax. But under s. 201, r/w 221 no imprisonment is provided. But only penalty equivalent to a 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 s. 201(1) is much higher and heavy. In a criminal prosecution for an offence under s. 276B, however, the dictates of law merely demand the requirement of reasonable cause i.e. what appears ex-facie to reason; which is much more milder” The learned counsel for the respondent also relies upon a decision of the Patna High Court in ITO vs. Taurus Equipment (P) Ltd. (1979) 118 ITR 982 (Pat) : TC 48R.294. It is seen from the facts of the above case that the IT Department filed complaint under s. 276B. As already stated, the above section reads ‘if a person without reasonable cause or excuse’. Sec. 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 for not filing the returns. The relevant observations of the Patna High Court is extracted below : “The words “fails without reasonable cause or excuse” occurring in s. 276 [now s. 272(2)] of the IT 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.”

In the above decision, the decision of the Supreme Court in CIT vs. Anwar Ali (1970) 76 ITR 69 (SC) : TC 50R.276 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” It is, thus, clear from the above decision 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 or 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 of 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 para 5 of the complaint, it is only stated that the first accused accepted deposits violating s. 269SS. It is alleged in para 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 s. 276DD and pleaded ignorance of the provisions. It is significant to note that the Department recorded the statement of 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 the depositors who had bank accounts were taken for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittances to the 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 or 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 offence. 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 s. 276DD clearly states that only if a person without reasonable cause or excuse accepts the loan or deposit, 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. Sec. 278AA came into force w.e.f. 10th Sept., 1986. The section reads thus: “278AA Punishment not to be imposed in certain cases.—Notwithstanding anything contained in the provisions of s. 276A, s. 276AB, or s. 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there wasreasonable cause for such failure.” But w.e.f. 1st April, 1989, s. 276DD is omitted in the above section. However, it is clear that even in the new provision which was in force on 10th Sept., 1986, no person can be punished under s. 276DD if he proves that there was reasonable cause for such failure. But the words ‘if he proves’ are absent in the original s. 276DD. After amendment of s. 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 s. 269SS while old s. 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. vs. Asstt. CIT (1992) 105 CTR (P&H) 82 : (1993) 199 ITR 391 (P&H) : TC 48R.274.

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. I 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 the 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 be held that mere contravention of s. 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 the 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 s. 276DD.

23. The learned counsel for the respondent further contended that when the offence under the Act is committed by the company, every person who at the time when the offence was committed was in charge 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 s. 278B the complaint is not maintainable. In support of the same, the accused also relies upon certain decisions. In State of Karnataka vs. Pratap Chand AIR 1981 SC 872, it is held that where a partnership firm was charged for the offences under s. 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 in Sham Sundar vs. State of Haryana (1989) Crl. LJ. 2201, it is held thus : “More often it is common that some 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 travesty of justice to prosecute all partners and ask them to prove under the proviso to sub-s. (1) of s. 10 that the offence was committed without their knowledge. The obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence to arises only when the prosecution established that therequisite condition mentioned in sub-s. (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.”

25. 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 para 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 responsible for the conduct of the business have committed the offence. P.W. 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 s. 278B are not made out. I hold that the contention raised by the respondent counsel on the above aspect has to be rejected.

26. 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 vs. State of Gujarat (1996) Crl. L.J. p. 2867, Awaddhesh vs. State of M.P. (1998) Crl. L.J. p. 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 aspects 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 complainant failed to prove the ingredients of the offence alleged in s. 276DD of the old Act. The complanant also failed to aver and prove that the reasons 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.

C.A. No. 647 of 1990

27. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed. C.A. No. 648 to 1990

28. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed. C.A. No. 649 of 1990

29. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed. C.A. No. 650 of 1990

30. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed. C.A. No. 651 of 1990

31. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed. C.A. No. 652 of 1990

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

[Citation : 242 ITR 89]

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