Corporate criminal liability under the Income-tax Act fails where mandatory imprisonment cannot be imposed on a body corporate.

Criminal prosecution under the Income-tax Act against a company was found unsustainable where the relevant penal provision required rigorous imprisonment as part of the punishment and the accused was a body corporate incapable of being sentenced to imprisonment. The commentary notes that mens rea was an essential element of the alleged offence, but the statutory punishment scheme could not be adapted to a company by judicial interpretation. It also records that proceedings against company officers need not depend on simultaneous prosecution of the company, so continuing the case against the company itself served no useful purpose and was liable to be quashed.

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Issues: Whether criminal proceedings for offences under the Income-tax Act could continue against a company when conviction under the relevant penal provision carried compulsory imprisonment and the company, being a body corporate, could not be sentenced to imprisonment.

Analysis: The provisions governing the alleged offence required proof of a false statement made knowingly or believing it to be false, making mens rea an essential element. Although the statutory definition of "person" was wide, the penal provision, as amended, mandated rigorous imprisonment in addition to fine. The Court held that this scheme could not sensibly be applied to a company because imprisonment could not be imposed on a body corporate, and it was not open to the Court to alter the statutory punishment structure. The Court also noted that prosecution of company officers did not require simultaneous prosecution of the company itself, so continuation of proceedings against the company served no useful purpose.

Conclusion: Proceedings against the company were not maintainable and deserved to be quashed; the revision was allowed in favour of the petitioner-company.

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