Super Cassettes Industries Ltd. ... vs Acmm Through State
2005 Latest Caselaw 125 Del

JUDGMENT

Manju Goel, J

1. This revision petition is directed against the order dated 17.6.1994 rejecting the application of the accused/revision petitioner for dropping the proceedings. The revision petition was filed by two petitioners, viz, M/s Super Cassettes Industries Pvt. Ltd. and Shri Gulshan Kumar who was the Managing Director of the Company.

2. The wealth tax return of the company for the assessment year 1985-86 was due to be filed on or before 30.6.1985. The same was filed only on 27.8.1987 along with the wealth tax returns for the assessment year and 1984-85 and 1986-87. As such there was delay in filing the wealth tax return for the assessment year in question by 25 months. This constitutes an offence under Section 35B of the Wealth Tax Act.

3. The question that arises in this revision petition is whether a company can be prosecuted for an offence punishable with a minimum period of imprisonment. The offence involved in this case is under Section 35B of the Wealth Tax Act which is extracted below:

"35B. If a person willfully fails to furnish in due time the return of his net wealth which he is required to furnish under sub-section (1) of section 14 or by notice given under sub-section (2) of section 14 or under sub-section (1) of section 17, he shall be punishable,-

(i) in a case where the amount of tax, which would have been evaded if the failure had not been discovered, exceeds one hundred thousand rupees, with rigorous imprisonment for term which shall not be less than six months but which may extend to seven years and with fine;

(ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine:

Provided that a person shall not be proceeded against under this section for failure to furnish in due time the return of net wealth under sub-section (1) of section 14-

(i) for any assessment year commencing prior to the 1st day of April 1975; or

(ii) for any assessment year commencing on or after the 1st day of April, 1975, if-

a) the return is furnished by him before the expiry of the assessment year; or

b) the tax payable by him on his net wealth determined on regular assessment does not exceed three thousand rupees.

4. Counsel for the petitioner relies upon the judgment of the Supreme Court in the case of Assistant Commissioner, Assessment II, Bangalore and Ors. v. Velliappa Textiles Ltd. and Anr., Vol.263 ITR 550 in which certain penal provisions of Income Tax Act were under consideration. By a majority judgment the Supreme Court has held that a company cannot be prosecuted for offences under Sections 276C & 277 of Income Tax Act where imprisonment was compulsory punishment. The provisions of Section 35B also show that the offence is punishable with a minimum period of imprisonment whether amount of tax evaded exceeds hundred thousand rupees or less. It can be seen that fine is one of the punishments but fine is not an alternative to imprisonment. Fine can be imposed in addition to imprisonment.

5. In the case of Super Cassettes Industries Ltd. and Ors. v. Asstt. Commissioner of Income Tax and Ors. in . Crl. W. 588/1992 a Division Bench of this Court held that the offence under Section 276B is pari materia with section 276C, 277 and 278 of the Income Tax Act as it was also one such offence for which an imprisonment was an essential punishment. Following the decision in the case of Vellliappa Textiles Ltd. (supra) the Supreme Court observed that the petitioner company namely M/s Super Cassettes Industries Ltd. could not be prosecuted for the offence under section 276B of the Income Tax Act. Following the same principle I hold that a company cannot be prosecuted for an offence u/s 35B of the Wealth Tax Act.

6. Initially the prosecution was against the company as well as against its directors. However, during pendency of the writ petition which was filed in 1994 the director Gulshan Kumar has expired. His name has been deleted from the array of parties vide order dated 10.9.2004. The only revisionist before this Court is the company known by M/s Super Cassettes Industries Ltd. The only surviving accused before the Court of ACMM where prosecution under Section 35B of the Wealth Tax Act is pending is the surviving revision petitioner, that is, the company. In view of this legal situation the prosecution under Section 35B of the Wealth Tax Act must also go and has to be quashed. It is not necessary now to go into the other questions involved in the petition under Section 482 of the Cr.P.C. The petition is accordingly allowed and proceedings pending before the Court of ACMM under Section 35B of the Wealth Tax Act bearing No. 826/1994 is hereby quashed.