1. The five accused in the lower Court are partners of a firm of the name of Chotabhai Javerbhai, doing business in yarn and silver; and the sixth accused is the son of the first accused and the power-of-attorney agent of the firm in Madras. The sixth accused submitted an income-tax return showing profits of about Rs. 5,000. P. W. 4, the then Income-tax Officer, upon looking through the accounts of the accused firm, discovered that the figure '1' had been introduced in front of the figures 3180 on the debit side, thus indicating an expenditure of Rs. 10,000 more than if that '1' had not been inserted. This aroused P. W. 4's suspicions, and so he examined the accounts more closely. He then discovered that many fraudulent entries had been made in the accounts and that the profits were at least Rs. 41,672. After a full examination of the accounts he assessed the firm's profits at more than Rs. 65,000, but as an appeal is pending with regard to Rs. 24,000, the case proceeded on the footing that the profits of the firm for the year in question were Rs. 41,672. It was the sixth accused who had made calculations and submitted the return; but a complaint was filed by the Inspecting Assistant Commissioner against all the accused, alleging that they had fraudulently introduced these false entries into their accounts with a view to defraud the income-tax authorities and had thereby made themselves liable for punishment under Section 52 of the Income-tax Act and under Sections 193 and 196 of the Indian Penal Code. The learned Chief Presidency Magistrate by whom this case was tried, came to the conclusion that neither in law nor in fact was the sixth accused authorised to file an income-tax return and that therefore no prosecution could be launched with regard to a return which had no legal significance. In considering the charges under Sections 193 and 196 of the Penal Code, he came to the conclusion that although it was true that false entries had been made in these accounts, there was nothing to show that the sixth accused--and still less the other five accused--had any knowledge of these false entries and that the necessary mens rea for a criminal conviction was lacking. He therefore discharged all the accused. A revision petition has been filed by the Crown against this order of discharge.
2. It is not here disputed that the sixth accused was the agent of accused 1 to 5 in the conduct of the Madras business. A general power-of-attorney by the five partners in his favour has been marked as Ex. U. It is however argued by all the six accused that the sixth accused had no authority to file an income-tax return. The power-of-attorney is worded in the very widest terms, although no specific reference is made to the filing of income-tax returns. The sixth accused is empowered under Clause 5:
To sign arid verify plaints--and all other documents and papers and to institute or defend any proceeding in any Court of law etc.
3. In Clause 11 he is authorised to appear and represent the firm 'before any revenue officer--railways, Port Trust, Corporations and all departments of the Government or local authority'. Under Clause 14 he is authorised:
Generally to do all acts and things necessary or expedient in the interests of the said firm as fully and effectually as we could have done if personally present;
And the partners:
Agree to ratify and confirm all that our said attorney or attorneys shall do or cause to be done in the execution of these presents.
4. The sixth accused for many years acted as the agent of the firm, and in pursuance of this power-of-attorney dated the 7th February, 1935, he did, in fact, send in income-tax returns. The other partners of the firm knew that he was sending in income-tax returns and they of course knew in due course what profits he had shown in his accounts and in his returns to the Income-tax Officer; and they seem to have always approved of his conduct and his representations before the income-tax authorities. In the year in question, when he presented his return, P.W. 4 asked him why he had submitted his report and not the partners themselves; and the sixth accused's reply was that he was the accredited agent of the firm in Madras. In support of his statement he showed the Income-tax Officer Ex. U. P.W. 4 acted upon this representation as he or his predecessors had done in previous years. There can therefore be no doubt--whether the very wide and general terms of Ex. U extracted above expressly authorized the sixth accused or not--that the sixth accused regarded himself as the agent of the firm for the purpose of filing income-tax returns and that accused 1-5 intended him to file them and expressly or impliedly authorised him to file the return in question.
5. A more serious argument against the validity of the prosecution is that in law he was not the agent of the firm, in that the Income-tax Act does not permit of an agent's presenting an income-tax return. It is pointed out that Section 22 (2), for example, requires the Income-tax Officer to serve a notice upon any person whose total income in his opinion is such an amount as is liable to render such person liable to income-tax. That person is then required to make a report. The subsequent sections continue to refer to that person. That person may be a firm, it is argued; but it must be some individual or body of individuals, himself or themselves liable to assessment. I have not however been given any cogent reason why, if an assessee can present a return, his agent cannot do it for him. The principle 'qui facit per alium, facit per se' is of very wide and general application. An exception would arise if a person entered into a contract to have something done by one on whose personal skill he relied. There seems however to be nothing in the Income-tax Act which suggests that it is essential that this act of sending in an income-tax return should be done only by an assessee. It can be done not only equally well by the person in charge of the business; but very much better. Paragraph 90 of the instructions issued by the Central Board of Revenue says:
Returns and verifications required under the Act must be signed either by the assessee himself or by some representative duly authorised for the purpose in proper legal form, so that his acts will bind his principal.
6. Section 52, which is one of the provisions of law under which the accused have been charged, says:
If a person makes a statement in a verification mentioned in Section 19-A or S- 20-A or Section 22--which is false and which he either knows or believes to be false-(he) shall be deemed to have committed the offence described in S 177 of the Indian Penal Code.
7. Mr Venkatarama Sastri contends that the word 'person' referred to here means the assessee, as it does in Section 22 (2) and elsewhere, and that one should not give to the word 'person' in this section its ordinary meaning. I do not see why the word 'person' should not have its dictionary meaning in Section 52; but even if it means only what the same word means in Section 22 (2) I am satisfied for the reasons given above that the word 'person' includes a person duly authorised. Far from agreeing, therefore, with the learned Magistrate that 'the sixth accused had no authority in law or in fact to make the return which he did', I hold that the sixth accused had authority both in law and in fact to make the return he did.
8. The learned Magistrate has discussed but little the actual evidence against the accused which would go to support a chage under Section 52; because he had arrived at the conclusion that whatever may have been the guilty knowledge and intention of the sixth accused, he could not be liable under Section 52 of the Act. It has been argued by Mr. Venkatarama Sastri for the sixth accused that the evidence on record is insufficient to justify this Court in ordering any further proceedings. I wish to say as little about the matter as possible, because it is desirable that the Magistrate and not this Court should adjudicate upon the weight of the evidence and give a finding whether or no the evidence is sufficient to bring home the charge to the accused. I need only say that it is difficult in the absence of some sort of explanation by the sixth accused to understand how on one day a clerk or subordinate could put Rs. 10,000 in his pocket without the manager of the business being any the wiser, on another lay not long afterwards putting Rs. 8,400 in his pocket, and and the day after that again another Rs. 1,600. It is also difficult to understand how an intelligent man of business should not be aware that his business was making a substantial profit (Rs. 40,000 and more a year) and believe that his firm was doing so badly as to make only Rs. 5,000 a year. I do not wish to express any opinion whether this in itself would be sufficient evidence to justify a conviction. Still less do I wish to say that this is so conclusive against the accused that nothing he can say would rebut that evidence. But I think that these facts and the other evidence in the case require further consideration by the Magistrate.
9. With regard to the charge against the accused under Sections 193 and 196 of the Indian Penal Code, Mr. Venkatarama Sastri has put up a very strong argument which, if correct, would show that the complaint had not been made by the proper person within the meaning of Section 175 of the Code of Criminal Procedure. This objection to the complaint was not raised in the Magistrate's Court, and the learned Public Prosecutor points out that because that was not done, he is not in a position on the evidence on record to satisfy me that the complaint was made by a proper person. He however contends that if it is questioned in the trial Court, he is prepared to adduce evidence to satisfy the Court that the complaint made was a proper one upon which a Court can proceed. As the case is going back to the Magistrate, the question of the propriety of the complaint with regard to the charges under Sections 193 and 196, Indian Penal Code, will be left open for the consideration of the Magistrate.
10. Although the accused 1 to 5 knew that the sixth accused was showing that the firm had made a profit of nearly Rs. 5,000 and must have been somewhat surprised it was not doing better, yet in a criminal case where the burden of proving knowledge and intention is upon the prosecution, I do not think it can be said that the accused 1 to 5 knew beyond all reasonable doubt that the sixth accused was making fraudulent returns. So that I do not think it is in the interests of justice that I should require the Presidency Magistrate to make any further inquiry into the charges against them.
11. In the result, the order of discharge by the Presidency Magistrate with regard to the sixth accused only is set aside and some Magistrate other than the Magistrate against whose judgment this petition has been preferred is ordered to make further inquiry into the case against him.
12. The petition against accused 1 to 5 is dismissed.