TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether a firm or company can be prosecuted where the penal provision prescribes mandatory imprisonment and fine. (ii) Whether the prosecution could continue against the second and third petitioners for offences under section 276C(1) and section 277 of the Income-tax Act, 1961 in view of the dates of insertion of the relevant provisions and the role attributed to them. (iii) Whether the prosecution against the third petitioner and the firm could be sustained on the facts pleaded, including the validity of the partnership and the absence of specific allegations of responsibility.
Issue (i): Whether a firm or company can be prosecuted where the penal provision prescribes mandatory imprisonment and fine.
Analysis: A juristic entity cannot undergo imprisonment, but that does not by itself exclude it from prosecution where the statute otherwise brings it within the definition of "person" and the legislative object is to punish the offender. The relevant approach is to construe the penal provision so as to advance the remedy and suppress the mischief, and where imprisonment cannot in the nature of things be executed against a company or firm, the sentence may be confined to fine. The existence of mandatory imprisonment for natural persons does not create immunity for a firm or company if the offence is otherwise attributable to it.
Conclusion: The first petitioner was not immune from prosecution and, if found guilty, could be punished with fine alone.
Issue (ii): Whether the prosecution could continue against the second and third petitioners for offences under section 276C(1) and section 277 of the Income-tax Act, 1961 in view of the dates of insertion of the relevant provisions and the role attributed to them.
Analysis: Section 276C(1) and section 278B were inserted only with effect from 1 October 1975 and could not be applied retrospectively to offences pertaining to assessment years prior to that date. Accordingly, the charge under section 276C(1) could not survive for the assessment years that preceded the insertion. By contrast, section 277 operated independently, and the complaint specifically alleged that the second petitioner, as managing partner, had made the false verification. On those pleadings, the prosecution under section 277 could proceed against him. As regards the third petitioner, the complaint did not set out specific acts showing that she was in charge of and responsible for the conduct of the business or that she had personally taken part in the false verification.
Conclusion: The prosecution under section 276C(1) failed for the relevant earlier assessment years; the prosecution under section 277 survived against the second petitioner but not against the third petitioner.
Issue (iii): Whether the prosecution against the third petitioner and the firm could be sustained on the facts pleaded, including the validity of the partnership and the absence of specific allegations of responsibility.
Analysis: The materials at the stage of quashing did not establish that the partnership was void so as to defeat the proceedings in limine, but they also did not contain adequate factual averments to fasten criminal liability on the third petitioner. The absence of specific allegations that she was in charge of, and responsible for, the day-to-day conduct of the business was fatal to the complaint against her. As the offences under the Income-tax Act formed the foundation, the connected Indian Penal Code charges could not stand against her either.
Conclusion: The proceedings against the third petitioner were quashed in all the calendar cases, while the proceedings against the firm and the second petitioner survived to the extent indicated above.
Final Conclusion: The petitions succeeded only in part: the prosecution was quashed against the third petitioner entirely, the charge under section 276C(1) was quashed for the earlier assessment years, and the remaining prosecutions, including those under section 277 and the connected penal charges, were left to continue.
Ratio Decidendi: A juristic person or firm is not immune from criminal prosecution merely because the statute prescribes imprisonment and fine, provided the court can lawfully give effect to the provision by imposing the punishment that is executable in its case; however, penal provisions cannot be applied retrospectively, and criminal liability against a partner requires specific averments showing responsibility for the conduct of business.
TaxTMI 
TaxTMI 
