Partnership firm can face prosecution for tax-deduction default under section 276B despite imprisonment being part of the punishment

A partnership firm is a "person" under section 2(31) of the Income-tax Act, 1961, and can be prosecuted for contravention of section 276B for failure to deduct and deposit tax on interest payments. The fact that the statutory punishment includes imprisonment does not bar criminal liability or conviction of the firm for the tax default. The firm's conviction was therefore sustained, along with the fine imposed.

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Issues: Whether a partnership firm could be prosecuted and convicted for contravention of section 276B of the Income-tax Act, 1961, notwithstanding that the prescribed punishment included imprisonment.

Analysis: The default related to failure to deduct and deposit tax on interest paid by the partnership concern. The Court treated a firm as a person within the meaning of section 2(31) of the Income-tax Act, 1961, and held that criminal liability for breach of section 276B was attracted. The circumstance that the statutory punishment also contemplated imprisonment did not prevent prosecution and conviction of the firm for the tax default.

Conclusion: The partnership concern was held liable under section 276B of the Income-tax Act, 1961, and the conviction with the fine was sustained.

Ratio Decidendi: A partnership firm is amenable to prosecution for contravention of section 276B of the Income-tax Act, 1961, and the inclusion of imprisonment in the prescribed punishment does not bar conviction for the tax offence.

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