The main legal point established in the judgment is the authority of the Commissioner to authorize prosecution, the liability of partners in a firm, and the liability of a juristic person under the Income Tax Act and the Indian Penal Code.

1. A complaint was filed by the Income Tax Officer (Special Circle, Ernakulam) against M/s Metalex Agencies and its partners and also some of its officers. The said Agency is a firm having eleven partners. The complaint was taken on the file of the Judicial Magistrate of the 1st Class, Ernakulam and was later transferred to the Court of the Addl. Chief Judicial Magistrate (Economic Offences), Ernakulam. There are seventeen accused of which the firm is the first accused. Offences alleged against the accused are those under S.277 and S.278 of the Income Tax Act, 1961 (for short 'the Act') besides offences under S.120B,193, 196, 420 and 109 of the IPC Almost a decade after the institution of the complaint, one of the accused (the 13th accused) filed a petition in the trial court praying for discharge of the accused on various grounds. The learned Magistrate dismissed the petition by order dated 12-3-1985, against which Crl. R. P. 201/85 has been filed. Not being satisfied with the said revision petition, the 13th accused filed Crl. M. C. 717/85 under S.482 of the Code of Criminal Procedure for quashing the complaint and all subsequent proceedings thereunder.

2. The allegations in the complaint are briefly these: On 26-6-1971 returns were filed by the partners of the firm showing the income during the assessment year 1971-72. The Total income shown in the returns is a little above Rs. 41/2 lakhs. The Income Tax Officer rejected the returns holding that the partners concealed substantial portion of their income and submitted false returns. He made bis best judgment assessment by adding an amount which is a little over Rs. 20 lakhs more to the returned income. But the Appellate Assistant Commissioner, on appeal filed by the assessee, slashed down the amount and modified the assessment by adding Rs. 3 lakhs to the income returned. When the above order of the Appellate Assistant Commissioner was challenged in second appeal by both the revenue and the assessees, the Appellate Tribunal enhanced the additional income from Rs. 3 lakhs to Rs. 41/2 lakhs. The Inspecting Assistant Commissioner under S.271(1) of the Act imposed a penalty of Rs. 5 lakhs on the firm, but that was subsequently quashed by the Appellate Tribunal on the ground that the Inspecting Assistant Commissioner has no jurisdiction to impose penalty. However, regarding the question of jurisdiction of the Inspecting Assistant Commissioner, a reference has been made at the instance of the revenue under S.256(1) of the Act.

3. The complaint was filed by the Income Tax Officer (Special Circle) as early as 29-9-1975. Even penalty proceedings under S.271(1)(c) of the Act were not completed by the Inspecting Assistant Commissioner on the date when the complaint was filed. Encouraged by the Tribunal's order quashing the penalty imposed, the 13th accused contended that the complaint will not stand for the reasons stated in this petition. The learned Magistrate was not persuaded to uphold even one of the grounds urged and hence he dismissed the petition and proceeded with the complaint. On the filing of this revision petition, this Court stayed the proceedings in the lower court.

4. Before I discuss the points urged during the time of arguments, some more facts are to be stated. S.279 of the Act provides that no person shall be proceeded against for certain offences (including offence under S.277) under the Act "except at the instance of the Commissioner". So the complainant has stated in Para.13 of the complaint that the Commissioner of Income Tax (Kerala II) has authorised the complainant to file the complaint. A copy of the authorisation issued by the Commissioner has been produced along with the complaint. When the order of the Appellate Assistant Commissioner was challenged both by the revenue as well as by the assessee, the Judicial Member of the Income Tax Appellate Tribunal has observed that the partners of the firm are innocent of the concealment and that the conceal