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Prosecution of a private limited company under section 276B of the Income-tax Act, 1961 - Competency of prosecuting a company for an offence punishable with imprisonment and fine. Detailed Analysis: The petitioner, a private limited company, sought to quash the proceedings in two cases where it was being prosecuted for an offence under section 276B of the Income-tax Act, 1961, which carries imprisonment and fine as punishment. The main contention raised was that prosecuting a company for such an offence is incompetent as no sentence of imprisonment can be imposed on a company. This argument was presented before the Magistrate in both cases but was not accepted, leading the petitioner to seek revision. The advocate for the petitioner argued that a company, being a juristic or artificial person, cannot be imprisoned, and hence, prosecution against it should not be initiated. Reference was made to a decision by the Delhi High Court which held that since a juridical person cannot be imprisoned, it cannot be prosecuted under section 276B. However, conflicting views were noted from the Allahabad and Madras High Courts, which opined that a company can be prosecuted under section 276B as the definition of "person" in the Act includes a company. The judgment highlighted the necessity to interpret the provisions of the Act harmoniously and avoid absurd situations. It emphasized that a court, mandated to pass a sentence of imprisonment in case of conviction under section 276B, cannot impose a sentence that a company cannot fulfill. It was deemed unreasonable to expect the principal officer to serve a sentence for an offence committed by the company. The judgment concluded that while a company cannot be prosecuted under section 276B, the principal officer may be prosecuted for such an offence. Additionally, it was noted that in a previous case, it was observed that if the company is not impleaded through its principal officer, the prosecution cannot proceed against the company. In the present case, as the company was not impleaded through its principal officer, the previous decision did not support the prosecution's case. Consequently, the court held that the prosecutions against the petitioner were incompetent and quashed the proceedings, making both rules absolute.
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