1. The petitioner in these two Rules which is a private limited company is sought to be prosecuted in two cases for offence under s. 276B of the Income Tax Act which is punishable with the imprisonment and fire. In these Rules seeking to quash the proceedings, it has been contended that the prosecution of the company for such an offence is incompetent because no sentence of imprisonment can be imposed on it. This ground was canvassed before the learned Magistrate in both the cases but as it did not find favour with him, the petitioner has came up in revision.
2. The learned Advocate for the petitioner has argued that a company being a juristic or an artificial person cannot be committed to prison and, therefore, no prosecution can be started against it because even in case of conviction, sentence in the way indicated in s. 276B of the Income Tax Act could not be passed by the court. He has referred to a decision of Delhi High Court in D.C Goel v. B.L Verma (1974) 93 ITR 63. The learned Judge had taken the view that provision of s. 276B of the Act left no discretion to the court to impose any sentence but imprisonment and fine and since a juridical person could not be imprisoned, it could not also be prosecuted under the said section. On the other hand, it appears that a learned Single Judge of Allahabad High Court in M/S. Laxmi Ratan Cotton Mills v. S.K Bhatnagar 1975 Cri. L.J 1881, upon which the learned Magistrate has relied, and also a learned Single Judge of Madras High Court in Rayala Corporation P. Ltd. v. V.M Muthuramalingam, Income Tax Officer (1981) 129 ITR 675 have taken the view that a company can be prosecuted even under s. 276B of the Act, mainly on the ground that the word ‘person’ as occurring in this section must be held to include a company in view of the definition of person as given ins 2(31) of the Act. The learned Judge of the Allahabad High Court has also stated that in case of conviction, the sentence of imprisonment which is imposed upon the company would have to be undergone by the principal officer. It is no doubt true that the word ‘person’ us defined in the Act includes a company but with due regard to the learned Judges in the aforesaid two cases I am disposed to hold that the provisions of the Act must be construed harmoniously and not in a way to land upon an absurd situation. The court being under a mandate of law to pass a sentence of imprisonment in case of conviction under s. 276B of the Act, it will have to do so which, however, will be incapable of execution as a company cannot be committed to prison. Since a court is not expected to make an order which is likely to be infructuous it must be held that the legislature never intended the prosecution of a company for such an offence notwithstanding the definition of the word ‘poison’ as given in s. 2(31) of the Act it appears to me that it would be absolutely outrageous to call upon the principal officer to serve a sentence of imprisonment for an offence committed by the company. It is quite possible that a principal officer may also be prosecuted for an offence under s. 276B and in case he is found guilty he was to suffer imprisonment but only for the offence committed by himself and not for any offence committed by the company. Therefore, I am firmly of the opinion that a company cannot be prosecuted under s. 276B of the Income Tax Act. This does not mean that this section will be rendered nugatory because as stated above and as pointed out by the learned Judges of Allahabad and Madras High Courts, that the principal officer may be prosecuted for an offence punishable under s. 276B of the Act.
3. It may also be noted in this connection that in Laxmi Ratan Cotton Mills' case (supra) to which reference has been made by the learned Magistrate, his Lordship had observed that since in the case before him the company was not impleaded through its principal officer, the complaint could not proceed against the company. In the instant case also, the company was not impleaded through its principal officer and, therefore, the Allahabad decision does not come to the aid of the prosecution.
4. For reasons stated above it is held that the instant prosecutions against the petitioner ere incompetent and are accordingly quashed. Both the Rules are this, made absolute.
Rules made absolute.
Prosecution quashed.