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Issues:
1. Challenge to the rejection of application for discharging the petitioner of alleged offences. 2. Legal implications of nationalization of the petitioner-company. 3. Interpretation of sections 277 and 278 of the Income-tax Act, 1961. 4. Consideration of the necessity of proceeding with the trial against a body corporate. Analysis: 1. The petitioner, a scheduled bank and company, sought to challenge the rejection of its application for discharging it from offences alleged under sections 277 and 278 of the Income-tax Act, 1961. The complaints were filed for failure to submit required information on interest payments exceeding Rs. 400 to fictitious persons during specific financial years. The court observed that the nationalization of the petitioner-company did not absolve it of criminal liability, and the new chairman was not personally liable. The court rejected the application for discharge, leading to the revision petition. 2. The petitioner argued that post-nationalization, the proceedings against the company as it existed before nationalization should not continue. However, the court held that the criminal liability could not be transferred to the new company post-nationalization. The court reasoned that the liability of the company to answer the charges persisted, even if the new chairman was not personally liable. The rejection of the application for discharge was upheld based on these grounds. 3. The interpretation of sections 277 and 278 of the Income-tax Act was crucial in determining the liability of the petitioner-company. The petitioner contended that since the offence under section 277 mandated imprisonment, and a body corporate like the petitioner could not be imprisoned, the proceedings should be quashed. The court examined various authorities and noted that mens rea was an essential element of the offence under section 277. The court referred to a Calcutta High Court judgment emphasizing that a company or juristic person could not be imprisoned, and imposing a fine would alter the legislative scheme. 4. The court considered whether proceeding against a body corporate, given the mandatory imprisonment provision under section 277, served any purpose. Citing a Supreme Court case, the court highlighted that there was no statutory compulsion to prosecute a company alongside its officers. The court opined that prosecuting the company in such circumstances would be futile and potentially an abuse of the court's process. Consequently, the court allowed the petition and quashed the criminal proceedings against the petitioner-company. In conclusion, the judgment addressed the challenges raised by the petitioner regarding the rejection of the discharge application, the impact of nationalization on the legal liabilities of the company, the interpretation of relevant sections of the Income-tax Act, and the necessity of proceeding with criminal trial against a body corporate. The court's analysis focused on the legal intricacies of corporate criminal liability and the practical implications of imposing imprisonment on entities that cannot be incarcerated.
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