Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Bom) 1050

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
JITENDRA JAIN, J.
M/s. Shah Rameshchandra Nihalchand & Co. - Appellant
Versus
S. Bose Commissioner of Tax-13 - Respondent
Criminal Revision Application No.597 Of 2011 With Criminal Revision Application No.595 Of 2011 With Criminal Revision Application No.598 Of 2011
Decided on : 18-07-2025

Advocates:
Advocate Appeared:
For the Appellant :Mr. Girish Kulkarni, Senior Advocate i/b Mr. M.G. Shukla
For the Respondent: Mr. A. R. Metkari, Adv

A valid sanction is mandatory for prosecuting partners of a firm under Section 279 of the Income Tax Act; without it, applications under Section 319 of the Cr.P.C. to add accused are invalid.

Headnote:(A) Section 319 of the Criminal Procedure Code - Section 279 of the Income Tax Act - Application to implead partners of firm as accused - Absence of requisite sanction for prosecution of partners under Section 279 - Court ruled that the lack of sanction precludes application being valid. (Paras 11, 17, 18, 32)

(B) Process of law - The power under Section 319 is discretionary and should not be exercised lightly in absence of strong evidence. Court emphasized the necessity for a more than prima facie case for imposition of charges. (Paras 26, 34)

Facts of the case:
The Applicants, partners of a firm, challenged the Sessions Court's order allowing an application to add them as accused concerning alleged tax offences stemming from the actions of a deceased partner. The original complaint did not include the remaining partners due to lack of sanction.

Findings of Court:
The order by the Sessions Court was quashed, determining that Respondent lacked the requisite sanction to add the partners as accused; previous acceptance of their representation as non-accused stands.

Issues: The court primarily addressed whether the Respondent could add partners as accused without required sanction and the validity of using Section 319 of the Cr.P.C. without evidence of culpability.

Ratio Decidendi: The court concluded that the earlier acceptance that the partners were not accused, alongside the absence of necessary sanction, negates the current prosecution attempts; sanction is mandatory for application under Section 319.

Result: Criminal Revision Applications allowed.

Table of Content
1. overview of applications and parties involved. (Para 1 , 2 , 7 , 8 , 10)
2. evidence gathering and appearance of respondents dictates court procedure. (Para 3 , 5)
3. motion for adding accused under section 319 requires judicial scrutiny. (Para 6)
4. prior court orders and their significance. (Para 11 , 13 , 14 , 15)
5. arguments against adding applicants as accused. (Para 12 , 16 , 19)
6. conditions for proceeding against additional accused under cr.p.c. (Para 17 , 18 , 20 , 21 , 22)
7. union of sections 278b and 319 regarding firm’s criminal liability. (Para 27 , 29 , 30 , 31)
8. requirement of sanction under income tax act is crucial in legal proceedings. (Para 28)
9. liability arises only under circumstances of involvement in misconduct. (Para 33)
10. final order allowing the revision application. (Para 34 , 35)

JUDGMENT :

Jitendra Jain, J.

1. The facts and the legal issues involved in these three Applications are identical and therefore, are disposed of by common order, by consent of the parties, by taking Criminal Revision Application No.597 of 2011 as a lead matter.

2. The present Application is filed challenging the order dated 18 November 2011 passed by the learned Sessions Judge whereby the order of learned Chief Metropolitan Magistrate rejecting Respondent No.1’s Application under Section 319 of the CRIMINAL PROCEDURE CODE (Cr. P. C.) was set aside.

3. On 5 March 2012, none appeared for the Respondent-Commissioner of Income Tax. On 19 March 2012, also none appeared for the Commissioner of Income Tax-Respondent. On 2 April 2012, this Court noted the above absence of appearances on behalf of the Commissioner of Income Tax and passed the following order:

“1. These three revision Applications show seriousness with which the Income Tax Department deals with the cases pending in which interim orders were passed on 30^th January, 2012. Interim orders were continued on 5^th March, 2012 as none appeared for the Union of India. Again on 19^th March, 2012, none appeared for Union of India. Interim orders were continued. Today none appears for the Union of India. Issue fresh notice to the Respondent indicating that the matter would be disposed of admission stage on 16^th April, 2012 irrespective whether Respondent appears on not.

2. Learned counsel for the Applicant to file entire compilation of record from the trial Court. Stand over to 16.04.2012.”

4. On 11 June 2012, again, none appeared for the Respondent-Income Tax Department. This Court, therefore admitted the matter and granted interim stay and the hearing was expedited. On 19 July 2012, Mr. Inamdar appeared for Respondent No.1-Commissioner of Income Tax.

5. The matter was listed for final hearing on 17 July 2025 and was called out in the morning session. However, since none appeared for Respondent No.1 and to give one more opportunity, the matter was kept back and called out in the afternoon session. In the afternoon session also, none appeared for Respondent-Commissioner of Income Tax.

6. In the light of the above, since consistently there is no appearance on behalf of Respondent No.1 and the Revision Application is of the year 2011, I have no choice, but to proceed with the final hearing.

BRIEF FACTS :-

7. The Applicant No.1 is a partnership firm and Applicant Nos.2 to 4 are the partners of the said firm.

8. On 17 March, 1982 search proceedings were initiated by the Customs and Income Tax Authorities at the business premises of the firm, wherein, the deceased Kapoorchand Jain, father of Applicant Nos.2 to 4 was also residing. Certain gold and silver along with the books of accounts were seized. 9. Respondent No.1 filed three complaints against the firm-accused no.1 and Mr. Kapporchand Jain-accused no.2 for the Assessment Year 1981-1982, 1982-1983 and 1983- 1984 alleging offence committed under Section 276C and 277 of the INCOME TAX ACT . While the complaint was pending, Mr. Kapoorchand Jain, accused no.2 in the original complaint died.

10. Respondent No.1 made an Application