1995 (9) TMI 10 - HC - Income Tax

Summary

Issues:
Interpretation of liability under section 276B of the Income-tax Act, 1961 for a company and its principal officer.

Analysis:
The case involved a petition of complaint filed against a company and its secretary for failing to deposit deducted taxes to the Central Government within the prescribed time. The magistrate directed the case to proceed only against the secretary, not the company, as imprisonment cannot be imposed on a juristic person. The prosecution argued that the liability of the secretary, as the person in charge, remains despite the discharge of the company. The court noted that the company was discharged under section 245(2) of the Criminal Procedure Code, not acquitted on merits, and may have committed the offence. The court emphasized that the culpability presumption under section 278E applies to both natural and juristic persons.

The court considered various legal precedents and provisions of the Income-tax Act. It clarified that the prosecution of a person in charge or an officer of a company is not precluded if the company itself is not prosecuted, provided there is a finding of contravention by the company. The court highlighted that the definition of "person" in the Act includes a company and its principal officer, making both independently liable. The introduction of section 278B deems individuals in charge of the company at the time of the offence to be guilty and liable for punishment.

In conclusion, the court held that all individuals mentioned in the relevant sections, including the company and its principal officer, are liable for the offence committed by the company. The revision against the magistrate's order failed, and the stay of proceedings was vacated, instructing the lower court to expedite the case.

This detailed analysis of the judgment clarifies the interpretation of liability under section 276B of the Income-tax Act, 1961 for both a company and its principal officer, emphasizing the independent and primary liability of the principal officer in such cases.