New Delhi, March 27 (PTI): An employer or the principal officers of an organisation are liable for criminal prosecution if they fail to pay income-tax to the government, the Supreme Court has held.

“It is true that the (income tax) act provides for imposition of penalty for non-payment of tax. That, however, does not take away the power to prosecute accused persons if an offence has been committed by them,” the bench of justices C.K. Thakker and P.K. Balasubramanyan said while dismissing an appeal by Madhumilan Syntex Limited.

The company had filed an appeal challenging the criminal prosecution launched by the department for non-remittance of Rs 1,29,348 tax deducted at source (TDS) collected from the employees for the assessment year of 1989-90.

Though the company later paid the amount with interest, the department launched criminal proceedings against the officials.

The directors were made criminally liable as they were deemed to be the “principal officers” of the organisation responsible under the act for collection and remittance of the TDS.