HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
M. V. Javali v. Mahajan Borewell & Co. and Others
Criminal Appeal No. 899 of 1997
[1997] Supp. 4 SCR 320 ·
Income-tax Act, 1961: sections 194C(2), 276B, 278B and 279(1)
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Two-judge bench · M. K. Mukherjee, J. · M. Jagannadha Rao, J.
01 · Facts of the case
An Assistant Commissioner filed a complaint against a partnership firm and three partners alleging failure to deposit tax deducted under section 194C(2), an offence under section 276B read with section 278B. The Special Court discharged all respondents, and the High Court sustained the discharge on the view that a firm could not be prosecuted where imprisonment was mandatory (SCR pp.320-322; PDF pp.1-3).
02 · Discussion by the Hon’ble Court
Section 278B expressly made the company, including a firm, and responsible persons liable to prosecution. Excluding the firm would defeat that text. The Court harmonised section 276B by holding that imprisonment and fine apply where both can be imposed, while a juristic company can receive the fine alone. It rejected interpretations under which the company could not be prosecuted or could be convicted without punishment (SCR pp.322-326; PDF pp.3-7).
03 · Judicial decision
The appeal was allowed, the High Court order upholding discharge was set aside, and the High Court was directed to rehear Revenue's revision in accordance with law.
04 · Outcome / in whose favour
In favour of Revenue only on maintainability and remand. No final conviction or merits finding was made against the firm or partners.
05 · AKHB REVIEW POINT
AKHB analysis: separate corporate criminal liability from the sentencing form available against a juristic person, and separately prove the responsibility and statutory defences of partners or officers. A restored prosecution is not a finding of guilt. Verify the present text and later authorities before relying on this 1997 construction.
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