9911796707
TMI Blog1990 (8) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... tenced to imprisonment. It is against this acquittal of the firm that the Revenue has filed these appeals. Learned counsel for the Revenue contends that the firm could be sentenced to a fine, though not to imprisonment, since section 277 of the Act contemplates imposition of fine also besides sentencing to imprisonment. He submits that a combined reading of sections 277 and 278B (incorporated in 1975) of the Act makes it clear that a company can be proceeded against and punished for any offence committed under the Act. Mr. Dasaratharama Reddy, learned counsel appearing for the firm/ company, submitted that the very prosecution of the firm is illegal inasmuch as it cannot be sentenced to the minimum period of imprisonment contemplated by the provisions of the Income-tax Act even if it is found that the firm is guilty of the offence. His submission is that since imposition of sentence of imprisonment, which is mandatory, is impossible against a firm/company, the very trial of the firm/company amounts to an idle exercise and, therefore, the prosecution itself is bad in law. He further contended that imposition of a simple sentence of fine, while the law requires sentence of impris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the punishment will be rigorous imprisonment for a minimum term of three months and a maximum term of three years and fine. It is also worthy of note that section 278B was incorporated in the Income-tax Act through the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975, so as to place the matter beyond all controversy in cases where the offence is committed by a company, firm, etc. Section 278B runs as under : "278B. Offences by companies. -(1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: ... Explanation. -For the purposes of this section, (a) 'company' means a body corporate, and includes (i) a firm ; and (ii) an association of persons or a body of individuals whether incorporated or not ; and . . ." Section 278B has, thus, specifically rendered the company which includes a firm liable to prosecution for offences committed under the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general rule be indicted for its criminal acts which from the very necessity of the case must be performed by human agency and for this purpose there was no distinction between an intention or other function of the mind and any other form of activity, endorsed agreement with the same. The learned judge also agreed that a limited company cannot be indicted for offences like perjury, bigamy, murder, etc., and that they are exceptions to the general rule. In Moore v. Bresler Ltd. [1944] 2 All ER 515 (KB), Viscount Caldecote L. C. J., following the principle laid down in Director of Public Prosecutions' case [1944] 1 KB 146, held that the sales of the goods, though alleged to be with intent to defraud the company, were effected by the officers of the company, that those goods were the property of the company and intended for sale, that, therefore, the officers were acting within the scope of their authority and as agents of the company, and, therefore, by their act, they made the company also liable for the offence and, accordingly, the conviction of the company was upheld by setting aside the discharge order. In H. L. Bolton (Engineering) Co. Ltd. v. T. J.Graham and Sons Ltd. [195 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, refers to offences committed by company. Section 17 of the Prevention of Food Adulteration Act and section 278B of the Income-tax Act are substantially the same in effect. Yogeshwar Dayal J. (as he then was), speaking for the Full Bench, observed that, by a simple rule of interpretation, a company, as contemplated by section 17, is covered for the purpose of prosecution under section 16(1) of the Act, that the history of section 16 also shows the legislative intent that the idea of the Legislature was to make punishment more stringent and not to create an exemption in favour of companies. Addressing himself to the question as to in what way section 16(1), in view of its compulsory imprisonment which is not possible in the case of a company, could be interpreted, the learned judge referred, besides other principles, to the observation of Gajendragadkar J., in Siraj-ul-Haq-Khan v. Sunni Central Board of Waqf, AIR 1959 SC 198, viz., (headnote) : "It is well settled that in construing the provisions of a statute, courts should be slow to adopt a construction which tends to make any part of the statute meaningless or ineffective ; an attempt must always be made so to reconcile the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company, the company cannot be prosecuted, has sought to place reliance upon a decision of the Supreme Court in State of Maharashtra v. Jugmander, AIR 1966 SC 940. There, the Supreme Court, while interpreting a similar provision under section 3(1) of the Suppression of Immoral Traffic in Women and Girls Act, 1956, held that the expression "shall be punishable with imprisonment and also with fine" means that the court is bound to award a sentence consisting both of imprisonment and fine. This decision was given by the Supreme Court in view of the submission made by the respondent therein who desired the court to exercise its choice as to the nature of the punishment. The accused involved in that case, viz., a brothel, could suffer both the corporal punishment and the fine. The Supreme Court held that the accused was liable to suffer both types of punishment. There, the Supreme Court was not considering the question ; where the minimum sentence prescribed is both corporal and fine, whether it can be awarded to an artificial person, and if they could not be awarded cumulatively, whether the sentence, in so far as it was possible, could be awarded at all. The decision of the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit Ltd. v. Sixth ITO [1988] 170 ITR 55 (Kar). These are all decisions relating to offences that took place earlier to October 1, 1975, i.e., before the amendment of section 277 and incorporation of section 278B. At that point of time, the sentence prescribed was only imprisonment and imposition of fine was not contemplated by section 277 of the Income-tax Act. The judgment of this court in Crl. Appeal No. 1013/82 dated December 11, 1984, ITO v. K. R. Yellagowd [1991] 187 ITR 255, also is one in relation to an offence that took place earlier to October 1, 1975. Therefore, these decisions have no application to the present provisions as amended and incorporated. It is apposite here to note that, while interpreting the provisions in the statutes, such as section 277 in the instant case, the paramount object is to discover what the Legislature intended. As Mr. Justice Holmes warned, "Words are certainly not crystals, transparent and unchanged" (vide Towne v. Eisner [1918] 245 US 418 at 425). So much so, as put by Learned Hand J., "Statutes should be construed, not as theorems of Euclid, but with some imagination of the purposes which lie behind them (Lenigh Valley Coal Co. v. Yensa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
