# M/s Neeraj Dyeing, Khatrana, Farukkhabad and others v. Union of India and others

- **Citation:** (2008) 2 ILRA 393
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2008-02-15
- **Case number:** Criminal Misc. Application No. 11946 of 1986
- **Bench:** Mrs.) Saroj Bala
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-neeraj-dyeing-khatrana-farukkhabad-and-others-v-union-of-india-and-others-41195
- **Pages:** 6

## Headnote

Code of Criminal Procedure-Section 482Quashing of Criminal proceeding-offence
under Section 277 of Income Tax Act-
394 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
applicants No. 3 and 4 are partner of the
firm-false returns verified by applicant
No.2-Magistrate committed gross error
issuing process against applicant No. 3
and 4-allegation in complaint do not
constitute any offence-to present the
abuse of the process of court-inherent
power can be exercised.

Held: Para 11

In the case in hand as already stated
above no offence under Section 277 of
the Act was made out against the
applicants No. 3 and 4 as the return in
question was verified by the applicant
No.2.
In
the
complaint
the
only
allegation against applicants No.3 and 4
was that they were partners of the firmapplicant no. 1. Having regard to the
facts stated the Magistrate committed
gross error in issuing process against the
applicants No. 3 and 4 for the offence
under Section 277 of the Act. On the face
of
the
material
brought
on record
process could have been issued only
against applicants No.1 and 2 for the
offence under Section 277 of the Act. The
allegations made in the Complaint do not
constitute
an
offence
against
the
applicants No.3 and 4, no useful purpose
would be served by allowing the criminal
prosecution to continue against them.
The inherent power under Section 482
Cr.P.C. can be exercised for quashing the
prosecution to prevent the abuse of the
process of any Court or otherwise to
secure the ends of justice.
Case law discussed:
1992 Supp (1) SCC 335 (Cri) 426, 1988 (25)
ACC 163 (SC), 2000 (40) ACC 680 (SC),

## Text

2 All] M/s Neeraj Dyeing, Khatrana and others V. Union of India and others
393
more than 10 years as required in terms of
clause 2 of the aforesaid G.O./Office
Memorandum dated 01.07.1989 for more
than 20 years of temporary service by
way of stop gap arrangement on the post
of Junior Engineer in terms of Clause 3.
In the present case, the petitioner fulfills
all the conditions and, therefore, he was
qualified for the pension, having been
retired as Junior Engineer on which post,
admittedly, he had been continuing to
work as such though on temporary or
officiating capacity in service, under the
orders of the authority concerned without
interruptions and, therefore, no reason
seems to take a different view, in the case
of the petitioner as the same view has
already been taken by this Court while
disposing the writ petition No. 3491 of
1988 (Abhimanyu Dev Pandey Vs. State
of U.P.) and writ petition no. 1782 (s/s)
2004 (Shamim Ahmad Siddique Vs. State
of
U.P.)
similarly
placed
boring
technician who promoted as Junior
Engineer as the petitioner was promoted
and they had been allowed pensionary
benefits of the post of Junior Engineer. In
the present case, there is no dispute that
the petitioner worked as Junior Engineer
till he attained the age of superannuation.
The petitioner was allowed higher pay
scale than that of the boring technician
right from the date of his promotion on
the post of Junior Engineer till the date of
his superannuation and the petitioner had
been discharging duties and responsibility
of the said post as such, therefore, period
of services of the petitioner cannot be
ignored by the respondents while settling
the pension and payment of other retiral
benefits admissible to him.

10. Accordingly, the impugned
order dated 13.09.2005 (Annexure No. 5
to the writ petition) passed by respondent
no. 4 is hereby quashed. The writ petition
is allowed. The respondents are directed
to calculate and settle the pension of the
petitioner and pay all post retiral benefit
to him taking into consideration that he
had worked on the post of Junior
Engineer w.e.f. 07.07.1983 till the date of
his retirement i.e. 31.07.2004 and shall
also
release
the
amount
so
recovered/adjusted vide dated 19.03.2005
(Annexure No. 14 to the counter affidavit)
passed
by
the
Block
Development
Officer, Hollagarh, Allahabad within a
period of three months from the date of
production of a certified copy of this
order before the authority concerned.
However, it is also provided that the
petitioner shall cooperate with the pension
sanctioning authority.
Petition Allowed.
---------
APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 15.02.2008

BEFORE
THE HON'BLE (MRS.) SAROJ BALA, J.

Criminal Misc. Application No. 11946 of
1986

M/s
Neeraj
Dyeing,
Khatrana,
Farukkhabad and others
...Applicants
Versus
Union of India and others ...Respondents

Counsel for the Applicants:
Sri V.K. Goel

Counsel for the Respondents:
Sri Bharat Ji Agrawal
Sri Shambhoo Chopra, S.C.
Sri Dhananjay Awasthi
A.G.A.

Code of Criminal Procedure-Section 482Quashing of Criminal proceeding-offence
under Section 277 of Income Tax Act-
394 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
applicants No. 3 and 4 are partner of the
firm-false returns verified by applicant
No.2-Magistrate committed gross error
issuing process against applicant No. 3
and 4-allegation in complaint do not
constitute any offence-to present the
abuse of the process of court-inherent
power can be exercised.

Held: Para 11

In the case in hand as already stated
above no offence under Section 277 of
the Act was made out against the
applicants No. 3 and 4 as the return in
question was verified by the applicant
No.2.
In
the
complaint
the
only
allegation against applicants No.3 and 4
was that they were partners of the firmapplicant no. 1. Having regard to the
facts stated the Magistrate committed
gross error in issuing process against the
applicants No. 3 and 4 for the offence
under Section 277 of the Act. On the face
of
the
material
brought
on record
process could have been issued only
against applicants No.1 and 2 for the
offence under Section 277 of the Act. The
allegations made in the Complaint do not
constitute
an
offence
against
the
applicants No.3 and 4, no useful purpose
would be served by allowing the criminal
prosecution to continue against them.
The inherent power under Section 482
Cr.P.C. can be exercised for quashing the
prosecution to prevent the abuse of the
process of any Court or otherwise to
secure the ends of justice.
Case law discussed:
1992 Supp (1) SCC 335 (Cri) 426, 1988 (25)
ACC 163 (SC), 2000 (40) ACC 680 (SC),

(Delivered by Hon'ble (Mrs.) Saroj Bala, J.)

1. By means of this application
under Section 482 Cr.P.C., the applicants
have prayed for quashing the complaint of
Criminal Case No. 834 of 1985-Union of
India
through
Income-tax
Officer,
Fatehgarh Vs. M/s Neeraj Dyeing &
others, under Section 277 of the Income
Tax Act 1961 (hereinafter referred to as
the 'Act') pending in the Court of Special
Chief Judicial Magistrate (Economic
Offences), Allahabad.

2. The relevant facts giving rise to
these proceedings are:

3. The Criminal Complaint was
instituted with the allegations that accused
applicant no. 1 was a firm registered with
the Income Tax Department and accused
applicants No.2 to 4 are its partners
having shares of profit and loss at the rate
of 60%, 25% and 15% respectively. The
return of the firm for the assessment year
1983-84 showing income at Rs.30,780/-
was verified by accused applicant No.2.
The search of business and residential
premises of applicants under Section 132
(1) of the Act was conducted and
unaccounted purchases were detected
from the purchase vouchers seized. The
purchase made through vouchers seized
was not entered in the account book.
Unaccounted
Hundis
and
loan
transactions were also detected. The
accused applicant No.2 Suraj Prasad when
confronted offered Rs.80,000/- to be
clubbed in the income of the firm for the
assessment year 1983-84. A revised return
under Section 139 (5) of the Act was filed
by him on 19.1.1984 showing income of
Rs.1,10,780/- for the assessment year
1983-84. It was alleged that the accusedapplicant No.2 verified the return for the
assessment year 1983-84 submitted on
28.7.83 and delivered false account which
he knew or believed to be false.

4. The contention of the applicants is
that the Commissioner, Income Tax, Agra
came to Farrukhabad on camp ten days
after the raid. Applicant no. 2 met him
and the Commissioner, Income Tax asked
2 All] M/s Neeraj Dyeing, Khatrana and others V. Union of India and others
395
him for agreed assessment on the lines of
other assessees. The applicant no. 2
moved an application on 1.12.83 stating
that
he
was
agreeable
for
agreed
assessment on mutual settlement basis.
Another application was moved on
2.12.83
agreeing
that
a
sum
of
Rs.80,000/- be added in the income over
and above the income disclosed in the
return relating to the assessment year
1983-84. A revised return was filed on
24.2.84 for the assessment year 1983-84.
The proceedings for imposing penalty
concluded on 20.7.84. An application for
reduction or waiver of penalty imposed
was also made by applicant no.1 which
was rejected by the order dated 10.1.86.
The present complaint was instituted prior
to the dismissal of the application moved
for reduction or waiver of penalty. The
order of refusal of reduction or waiver of
penalty was challenged by applicant no. 1
in the writ petition No. 432 of 1986 which
is pending disposal. The prosecution of
the applicants during the pendency of writ
petition was abuse of process of the
Court. According to the applicants the
Income-tax return was filed by the firm
applicant no. 1 and was verified by
applicant no. 2. There are no allegations
against the applicants No.3 and 4 for
constituting the offence under Section 277
of the Act.

5. Heard Sri V.K. Goyal, learned
counsel for the applicants, Sri Dhananjay
Awasthi, the learned counsel appearing on
behalf of Opposite Parties No. 1 and 2,
learned A.G.A. and have perused the
record.

6. The learned counsel for the
applicants submitted that applicants No. 3
and 4 having not verified the return, their
prosecution is sheer misuse of the process
of the Court. It was argued that there are
no allegations of abetment or knowledge
about submission of false return against
applicants No.3 and 4. The statement of
account having been verified by applicant
no. 2 he is liable. The learned counsel
urged that under Section 278 of the Act a
person Incharge of and responsible to the
Company for the conduct of the business
of the Company as well as the Company
is liable to be proceeded against.
According
to
the
learned
counsel
applicant no. 2 was liable for the affairs of
the Company.

7. The learned counsel for the
opposite parties No. 1 and 2 submitted
that a person abetting or inducing another
person to make and deliver an account or
a statement or declaration relating to any
income chargeable to tax which is false
and which he either knows to be false or
does not believe to be true is liable. The
applicants no. 3 and 4 having abetted and
induced the applicant no. 2 to submit a
false return they are equally liable for
prosecution. It was argued that the
Magistrate is empowered to examine
which of the applicant is to be exonerated
from the prosecution. The applicants no. 3
and 4 being partners of the firm are
responsible for its affairs.

8. Admittedly the return for the
assessment year 1983-84 was submitted
by applicant no. 2 Suraj Prasad on behalf
of the firm applicant no. 1. In para 3 of
the complaint it is stated that the return of
the firm for the assessment year 1983-84
was filed on 28.7.83 showing income of
Rs.30,780/ and the return was verified by
applicant no. 2 Suraj Prasad. In para 2 of
the complaint it is stated that applicants
no. 2 to 4 are partners of the firm having
profit and loss share at the rate of 60%
396 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
25%
and
15%
respectively.
The
allegations contained in para 3 to 8 of the
complaint are against applicant no. 2
Suraj Prasad. There are no allegations
against applicants No.3 and 4 about
abetment and knowledge about the filing
of false return.

9. Section 277 of the Act which is
relevant for the adjudication of the
question in controversy is reproduced as
below:

["False statement in verification,
etc.
277. If a person makes a statement in
any verification under this Act or under
any rule made thereunder, or delivers an
account or statement which is false, and
which he either knows or believes to be
false, or does not believe to be true, he
shall be punishable;-
(i) in case where the amount of tax,
which would have been evaded if the
statement or account had been accepted as
true, exceeds one hundred thousand
rupees, with rigorous imprisonment for a
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.]
[Falsification of books of account
or document, etc.
277 A. If any person (hereafter in
this section referred to as the first person)
wilfully and with intent to enable any
other person (hereafter in this section
referred to as the second person) to evade
any tax or interest or penalty chargeable
and imposable under this Act, makes or
causes to be made any entry or statement
which is false and which the first person
either knows to be false or does not
believe to be true, in any books of account
or other document relevant to or useful in
any proceedings against the first person or
the second person, under this Act, the first
person shall be punishable with rigorous
imprisonment for a term which shall not
be less than three months but which may
extend to three years and with fine.
Explanation-For the purposes of
establishing the charge under this section,
it shall not be necessary to prove that the
second person has actually evaded any
tax, penalty or interest chargeable or
imposable under this Act).]"

10. Section 277 of the Act provides
for the prosecution of a person making a
false
statement
in
any
verification,
delivering a false account or statement
which he either knows or believes to be
false. Section 278 of the Act provides for
prosecution of a person abetting or
inducing in any manner another person to
make and deliver a false account or
statement or declaration relating to any
income chargeable to tax. In the present
case the complaint has been instituted for
the offence under Section 277 of the Act.
There are no allegations that applicants
no. 3 and 4 abetted and induced the
applicant no. 2 to make and deliver a false
account or statement or declaration
relating to income of the firm for the
assessment year 1983-84. Section 277 of
the Act makes a person submitting false
statement
in
verification
liable
for
prosecution. The return for the assessment
year 1983-84 having been verified by
applicant
no.
2,
he
is
liable
for
prosecution. In the case of State of
Haryana Vs. Bhajan Lal, 1992 Supp (1)
SCC 335 (Cri) 426 the Apex Court has
held as under:
2 All] M/s Neeraj Dyeing, Khatrana and others V. Union of India and others
397
"(1) Where the allegations made in
the first information report or the
complaint, even if they are taken at their
face value and accepted in their entirety
do not prima facie constitute any offence
or make out a case against the accused.
(2) Where the allegations in the first
information report and other materials, if
any, accompanying the First Information
Report do not disclose a cognizable
offence, justifying an investigation by
police officers under section 156 (1) of
the Code except under an order of a
Magistrate within the purview of Section
155 (2) of the Code.
(3)
Where
the
uncontroverted
allegations made in the First Information
Report or complaint and the evidence
collected in support of the same do not
disclose the commission of any offence
and make out a case against the accused.
(4) Where the allegations in the First
Information Report do not constitute a
cognizable offence but constitute only a
non-cognizable offence, no investigation
is permitted by a police officer without an
order of a Magistrate as contemplated
under Section 155(2) of the Code.
(5) Where the allegations made in the
First Information Report or complaint are
so absurd and inherently improbable on
the basis of which no prudent person can
ever reach a just conclusion that there is
sufficient ground for proceeding against
the accused.
(6) Where there is an express legal
bar engrafted in any of the provisions of
the Code or the Act concerned (under
which a criminal proceeding is instituted)
to the institution and continuance of the
proceedings and/ or where there is a
specific provision in the Code or the Act
concerned, providing efficacious redress
for the grievance of the aggrieved party.
(7) Where a criminal proceeding is
manifestly attended with malafides and/
or where the proceeding is maliciously
instituted with an ulterior motive for
wreaking vengeance on the accused and
with a view to spite him due to private
and personal grudge."

In Madhavrao Jiwajirao Scindia
and
others
Vs.
Sambhajirao
Chandrojirao Angre and other- 1988
(25) ACC 163 (SC) the Apex Court has
held as under;

"The legal position is well settled
that when a prosecution at the initial stage
is asked to be quashed, the test to be
applied by the court is as to whether the
uncontroverted allegations as made prima
facie establish the offence. It is also for
the court to take into consideration any
special features which appear in a
particular case to consider whether it is
expedient and in the interest of justice to
permit a prosecution to continue. This is
so on the basis that the court cannot be
utilized for any oblique purpose and
where in the opinion of the court chances
of an ultimate conviction is bleak and,
therefore, no useful purpose is likely to be
served by allowing a criminal prosecution
to continue, the court may while taking
into consideration the special facts of a
case also quash the proceeding even
though it may be at a preliminary stage."

In Irisuns Industry and Medical
Chemicals & Pharma (P) Ltd. Vs.
Biological E. Ltd. and others- 2000 (40)
ACC 680 (SC) the Apex Court has held as
below:

"Exercise of jurisdiction under the
inherent power as envisaged under
Section 482 of Criminal Procedure Code
398 INDIAN LAW REPORTS ALLAHABAD SERIES [2008
to have the complaint or the charge-sheet
quashed is an exception rather than a rule
and the case for quashing at the initial
stage must have to be treated as rarest of
rare so as not to scuttle the prosecution. In
the event, however, the court on perusal
of the complaint comes to a conclusion
that the allegations levelled in the
complaint or charge-sheet on the face of it
does not constitute or disclose any offence
as alleged, there ought not to be any
hesitation to rise up to the expectation of
the people and deal with the situation as is
required under the law."

11. In the case in hand as already
stated above no offence under Section 277
of the Act was made out against the
applicants No. 3 and 4 as the return in
question was verified by the applicant
No.2. In the complaint the only allegation
against applicants No.3 and 4 was that
they were partners of the firm-applicant
no. 1. Having regard to the facts stated the
Magistrate committed gross error in
issuing process against the applicants No.
3 and 4 for the offence under Section 277
of the Act. On the face of the material
brought on record process could have
been issued only against applicants No.1
and 2 for the offence under Section 277 of
the Act. The allegations made in the
Complaint do not constitute an offence
against the applicants No.3 and 4, no
useful purpose would be served by
allowing the criminal prosecution to
continue against them. The inherent
power under Section 482 Cr.P.C. can be
exercised for quashing the prosecution to
prevent the abuse of the process of any
Court or otherwise to secure the ends of
justice.

12. Having regard to the facts and
circumstances discussed above, partly
allowing the application under Section
482
Cr.P.C.
the
prosecution
and
proceedings
of
abovementioned
complaint case against the applicants
No.3 and 4 being abuse of process of the
Court are quashed. The proceedings of
complaint case shall go on against the
applicants No. 1 and 2. Application
Allowed Partly.
---------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 06.02.2008

BEFORE
THE HON'BLE SUSHIL HARKAULI, J.
THE HON'BLE SUDHIR AGARWAL, J.

Civil Misc. Writ Petition No. 369 of 2002

Taj View Hotel, Agra & another ..Petitioner
Versus
State of U.P. and others ...Respondents

Counsel for the Petitioners:
Sri Mool Behari Saxena

Counsel for the Respondents:
S.C.

U.P. Taxation & Land Revenue Act, 1975Section 3(e), 5 (2)-Luxury Tax-liability of
Hotel to pay interest on Luxury Taxstarts after expiry of five days in each
falling months.

Held: Para 9

In the circumstances, we are of the
opinion that Section 5 (2) read with Rule
3 lay down that the liability to pay
interest would start running from the
end of five days after the end of the
month to which the tax relates, that is
the month in which the luxury was
availed by the customer in the hotel and
consequent liability to pay the luxury tax
arose.
The
respondent
no.
3
will,