Finance Act, 2026: Not amended by the Finance Act, 2026.
Mechanism: Where an offence is committed by an HUF, the karta is deemed guilty (with a without-knowledge/due-diligence proviso); a member is liable where the offence is attributable to his consent, connivance or neglect.
Litigation profile: Sparse — no direct reported merits authority; governed by section 278B principles applied to the HUF.
A. COMMENTARY
Karta and member liability
Section 278C maps the corporate-liability template of section 278B onto the Hindu undivided family. Where an offence under the Act is committed by an HUF, the karta is deemed guilty and liable to be proceeded against and punished — subject to a proviso exonerating a karta who proves the offence was committed without his knowledge or that he exercised all due diligence to prevent it. Sub-section (2) independently fixes a member with liability where the offence was committed with his consent or connivance, or is attributable to his neglect. The structure deliberately parallels section 278B(1) and (2).
Because the architecture is identical, the discipline developed under section 278B governs: the complaint must disclose the karta's position (which, for the manager of the family, ordinarily follows from his office) and, where a member is sought to be made liable, must aver the consent, connivance or neglect attributed to him. The without-knowledge/due-diligence proviso casts an evidential burden on the karta, consistent with the section 278E presumption of culpable mental state.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
Text reproduced verbatim from the bare Act; section 278C is not amended by the Finance Act, 2026.
Offences by Hindu undivided families.
278C. (1) Where an offence under this Act has been committed by a Hindu undivided family, the karta thereof shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render the karta liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act, has been committed by a Hindu undivided family and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any member of the Hindu undivided family, such member shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
C. AUTHORITIES
No reported merits decision construes section 278C directly (candour rule). It is governed by the vicarious-liability principles settled under section 278B, applied to the karta/member of an HUF.
Cognate authority — vicarious liability (applied to the HUF)
National Small Industries Corp. Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330 (SC)
Court/Year Supreme Court, 2010.
Holding Vicarious penal liability must be specifically pleaded — applied to a member sought to be made liable under section 278C(2) for consent/connivance/neglect.
Standard Chartered Bank v. Directorate of Enforcement (2005) 4 SCC 530 (SC)
CHAPTER XXII — OFFENCES AND PROSECUTIONS
Section 278C — Offences by Hindu undivided families
Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise
Status: Live. The HUF analogue of section 278B.
Finance Act, 2026: Not amended by the Finance Act, 2026.
Mechanism: Where an offence is committed by an HUF, the karta is deemed guilty (with a without-knowledge/due-diligence proviso); a member is liable where the offence is attributable to his consent, connivance or neglect.
Litigation profile: Sparse — no direct reported merits authority; governed by section 278B principles applied to the HUF.
A. COMMENTARY
Karta and member liability
Section 278C maps the corporate-liability template of section 278B onto the Hindu undivided family. Where an offence under the Act is committed by an HUF, the karta is deemed guilty and liable to be proceeded against and punished — subject to a proviso exonerating a karta who proves the offence was committed without his knowledge or that he exercised all due diligence to prevent it. Sub-section (2) independently fixes a member with liability where the offence was committed with his consent or connivance, or is attributable to his neglect. The structure deliberately parallels section 278B(1) and (2).
Application of section 278B principles
Because the architecture is identical, the discipline developed under section 278B governs: the complaint must disclose the karta's position (which, for the manager of the family, ordinarily follows from his office) and, where a member is sought to be made liable, must aver the consent, connivance or neglect attributed to him. The without-knowledge/due-diligence proviso casts an evidential burden on the karta, consistent with the section 278E presumption of culpable mental state.
B. STATUTORY TEXT (verbatim — pre-Finance Act, 2026 text)
Text reproduced verbatim from the bare Act; section 278C is not amended by the Finance Act, 2026.
Offences by Hindu undivided families.
278C. (1) Where an offence under this Act has been committed by a Hindu undivided family, the karta thereof shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render the karta liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act, has been committed by a Hindu undivided family and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any member of the Hindu undivided family, such member shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
C. AUTHORITIES
No reported merits decision construes section 278C directly (candour rule). It is governed by the vicarious-liability principles settled under section 278B, applied to the karta/member of an HUF.
Cognate authority — vicarious liability (applied to the HUF)
National Small Industries Corp. Ltd. v. Harmeet Singh Paintal (2010) 3 SCC 330 (SC)
Court/Year Supreme Court, 2010.
Holding Vicarious penal liability must be specifically pleaded — applied to a member sought to be made liable under section 278C(2) for consent/connivance/neglect.
Standard Chartered Bank v. Directorate of Enforcement (2005) 4 SCC 530 (SC)
Court/Year Supreme Court (Constitution Bench), 2005.
Holding Entity-and-individual prosecution principles; supports prosecuting the HUF (through its karta) alongside culpable members.