The credit entries shown in the books of account on the dates of issue of self-cheques were wrong, as the cheques were actually encashed on later dates.

S.D.Bajaj, J.

1. M/s Khukhrain Brothers A.S.C. Contractors is a partnership concern. Petitioners No. 2 and 4 to 7 are partners therein while petitioner No. 3 is a minor admitted to the benefits of partnership business. It deals in supply of vegetable and others goods to the army. There is another sister concern of it also working under the name and styple of M/s Khukhrain Brothers Commission Agents in the ground floor of the same premises in shop No. 1, Section 26 (Vegetable Market), Chandigarh.

2. From through Vasdev Sahni petitioner No. 2 filed income-tax return on July 30, 1979 for the year 1979-80 declaring an income of Rs. 1,35,040/-. Inspecting Assistant Commissioner (A) Chandigarh, on February 26, 1982 framed the assessment in terms of Section 143(3) of the Income-tax Act on the income of the Rs. 1,50,000/- giving a finding that credits of Rs. 10,000/- on November 11, 1978, Rs. 8,000/- on January 20, 1979 and 10,000/- on March 15, 1979 through crashment of self cheques were in fact and undisclosed income. The decision aforesaid was affirmed by the Commissioner Income-tax (Appeals) on July 19, 1983 and by the Income-tax Appellate Tribunal (Chandigarh Branch) on May 14, 1985.

3. In this view of the matter, the Income-tax Officer, District 1 (2), Chandigarh, filed against the firm and all its seven partners complaint Annexure P.4 before the learned Chief Judicial Magistrate, Chandigarh on January 16,1987 for their prosecution under sections 276-C and 277 of the Income-tax Act, 1981. In pursuance thereto the learned Chief Judicial Magistrate, Chandigarh summoned the petitioners before him through non-bailable warrants of arrest, initially for January 19, 1988 and thereafter for February 29, 1988. Firm as also its seven partners have moved this Court through Cr.M.No. 787-M of 1988 for quashing the complaint.

4. Reason assigned by the petitioner for describing the charge against them as groundless is that petitioner No. 1 had got these self-cheques encashed through their sister concern M/s Khukhrain Brothers Commission Agents on the respective dates of their issue and thereby shown credits for realisation in its own books of account on the same date even though these cheques were got encashed from the Bank by the sister-concern on November 13, 1978 January 22, 1979 and March 16, 1979 respectively. The stand of the Income-tax Department is that there were no debit entries in the book of accounts of the sister-concern on November 11, 1978, January 20, 1979 and March 15, 1979 corresponding to the credit entries in the bookd of account of the petitioner No. 1 on these dates through encashed of self-cheques and, therefore, the explanation offered was incredible. The Department has consistently taken the view that since the cheques were got encashed from the Bank on November 13, 1978, January 2, 1979 and March 16, 1979, the credits entries through encashment of self-cheques made on November 11, 1968, January 20, 1979 and March 15, 1979 in the account books of the petitioner No. 1 disclosed unaccounted for income.

5. I have heard Shri R.K. Chhibbar, Advocate for the petitioner, Shri Ashok Bhan, Sr. Advocate with Mr. A.K. Mittal, Advocate for respondent and have carefully gone through the relevant record.

6. Much capital has been made by the learned counsel for the petitioners of the findings by the Income-tax Authorities that sister concern of the petitioners working under the name and style of M/s Khukhrain Brothers Commission Agent being possessed of cash on the relevant dates. It has also been asserted that self-cheques issued by petitioner No. 1 were as good as cash in the hand of the sister concern and as such there was no need for the sister concern to make any debit entry in there own books of account by petitioner No. 1. Kulathooraiyan Chidambara Iyer v. Ananthakrishna Iyer Janardhana Iyer, A.I.R. 1954 Travencore-Cochin 231 and Mohideen Bi and others v. Khatoon Bi and others. A.I.R. 1966 Madras 435 have been cited as