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Issues: (i) whether a company or firm can be prosecuted under section 276B of the Income-tax Act, 1961, read with section 278B, where the prescribed punishment includes mandatory imprisonment and fine; (ii) whether the discharge of the other accused could be sustained in the absence of any finding supporting that result.
Issue (i): Whether a company or firm can be prosecuted under section 276B of the Income-tax Act, 1961, read with section 278B, where the prescribed punishment includes mandatory imprisonment and fine.
Analysis: Section 278B expressly provides that where an offence under the Act is committed by a company, the company, every person in charge of its business, and other responsible officers may be proceeded against and punished. A firm is included within the expression "company" for this purpose. The provision was read harmoniously with section 276B and the object of the legislation. The impossibility of imposing imprisonment on a juristic person does not nullify the prosecution itself; in such a case, the punishment is to be adapted so that fine may be imposed on the company while imprisonment and fine apply to natural persons where permissible.
Conclusion: The company or firm can be prosecuted and convicted under section 276B read with section 278B, and the prosecution is legally maintainable; only the sentence of imprisonment cannot be imposed on the juristic person.
Issue (ii): Whether the discharge of the other accused could be sustained in the absence of any finding supporting that result.
Analysis: The discharge of the remaining accused had been upheld without an independent finding that justified affirming the trial court's reasoning. In the absence of such a finding, the order could not be sustained.
Conclusion: The discharge of the other accused was not sustainable on the record.
Final Conclusion: The impugned order was set aside and the revision petition was directed to be heard afresh in accordance with law.
Ratio Decidendi: A company or firm included within the definition of "company" under section 278B of the Income-tax Act, 1961 can be prosecuted for an offence under section 276B notwithstanding that imprisonment cannot be imposed on it; in such a case, fine is the workable punishment for the juristic person.
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