Principal officer liability under income-tax law survives company discharge when company contravention is still alleged.

Prosecution of a company's secretary or other principal officer for tax contraventions remains maintainable where the company is alleged to have committed the offence, even if the company has been discharged at a pre-evidence stage rather than acquitted on merits. The statutory scheme under the Income-tax Act treats a company as capable of committing the contravention and permits proceeding against the person in charge once responsibility is established by notice or other statutory conditions. Non-prosecution or discharge of the company does not, by itself, bar liability of the principal officer for offences relating to failure to deposit tax deducted at source.

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Issues: (i) Whether prosecution of the secretary as principal officer was maintainable when the company had been discharged and not acquitted on merits; (ii) whether the company's non-prosecution or discharge barred liability of the person in charge for an offence under the income-tax provisions.

Issue (i): Whether prosecution of the secretary as principal officer was maintainable when the company had been discharged and not acquitted on merits.

Analysis: The complaint alleged non-deposit of tax deducted at source, an offence punishable with mandatory imprisonment and fine. The company had been discharged at the pre-evidence stage under Section 245(2) of the Code of Criminal Procedure, 1973, and not acquitted after trial. On the materials before the court, the discharge did not negate the allegation that the company had committed the contravention. The statutory scheme also treated the secretary as a principal officer after notice under Section 2(35) of the Income-tax Act, 1961.

Conclusion: Prosecution of the secretary as principal officer was maintainable.

Issue (ii): Whether the company's non-prosecution or discharge barred liability of the person in charge for an offence under the income-tax provisions.

Analysis: The court relied on the statutory definitions of "person" and "principal officer" and on the scheme of Sections 276B, 278B and 278E of the Income-tax Act, 1961. It held that a company can commit the offence even though it cannot undergo imprisonment, and that prosecution of the person in charge or officer is not excluded merely because the company is not arraigned or has been discharged. The person responsible for the company's conduct may be proceeded against independently once the company's contravention is alleged.

Conclusion: The company's discharge did not bar prosecution and liability of the secretary.

Final Conclusion: The revision failed and the order permitting the prosecution to proceed against the secretary was upheld, while the stay of proceedings was vacated.

Ratio Decidendi: For an offence under the Income-tax Act, 1961 committed by a company, prosecution of the person in charge or principal officer is maintainable even if the company is not prosecuted or has been discharged, provided the contravention by the company is alleged and the statutory conditions of responsibility are satisfied.

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