Kryptonian society is stagnant, inflexible, and in decline. It has relied on tradition and repetition for centuries, so even facing its demise it seems unlikely to change. Jor-El says, "I warned you." but they are so set in their ways they didn't take measures to adapt then and so they still react no differently now.
In Man Of Steel, there is evidence to suggest the Council did know it was sentencing Zod to a de facto death sentence.
- First we take Zod's lines in the immediate scene: "You won't kill us yourself! You wouldn't sully your hands! But you'll damn us to a black hole for eternity! Jor-El was right. You're a pack of fools, every last one of you."
So, clearly, at least Zod understood the import of what they were about to do to him and his fellow insurgents. Zod believed that he was potentially going to be killed by the coming events and gives their motive for doing so- to foolishly keep their hands clean of the death sentence. Alternatively, Zod believed that he would never escape the Phantom Zone and thus be damned to it for an eternity.
Zod's indictment also suggests that it is just a formality, something of little practical import, but which they foolishly adopt at their end of days. Such behavior is not totally irrational. There are many examples of real world fatalism and maintenance of tradition, merely for appearances and inertia, rather than purpose or utility. One example that springs to mind is the band continuing to play during the sinking of the RMS Titanic.
- Second, consider Jor-El's lines just before Zod's coup: "Everybody here is already dead. Give me control of the Codex. I will ensure the survival of our race. There is still hope. I have held that hope in my hands."
Consider how radical what Jor-El was proposing and was about to reveal. The codices or codexes are the core of Kryptonian society and reproduction. Jor-El has just gone to the planet's governing authority and asked for the Codex under their jurisdiction (imagine going to Congress and asking for control over "The Library", implicitly, "The Library of Congress", not the sole library within the nation). Moreover, he is about to reveal the fact of Kal-El, something he didn't hide from Zod, the hope that he held in his hands.
It is implied that natural birth is aberrant or, at least, heresy (although we don't know the level to which doctrine or religion orders Kryptonian society)... it may be outlawed, or it may simply be completely anti-social but not explicitly outlawed. The fact that Jor-El was about to reveal it, suggested he had enough proofs that he believed that raising it would actually be persuasive to them. In fact, by the time we join the conversation, the Council's words seem to defer to Jor-El's predictions, "What would you have us do, El?"
The Council says it rhetorically (and Jor-El answers rhetorically), unhappily accepting their fate, but more signaling the futility of any action in the face of proofs he must have established to illicit such a comment.
- Third, consider Lara's position during Zod's sentencing and her lack of incarceration or penalty afterwards.
Subsequent to the suppression of Zod's attempted rebellion, Lara would still be an accomplice to Jor-El's potential crimes: a natural birth (if indeed outlawed), the theft of the Codex, and transport of both beyond Krypton's ability to retrieve. As the spouse of the victim to one of Zod's crimes, it could be argued she was at sentencing merely to confront the accused and convicted, but given that she appears to be free in her own home during Krypton's demise, she does not appear to be charged or imprisoned herself.
Most likely, because Jor-El was right. Had he been able to finish his explanation to the Council, they were likely to have been persuaded... at least enough that when Lara completes his explanation for her husband, they do not punish her for her part in the preservation of the Codex.
In law and justice, there is the doctrine or defense of necessity... a common example is if I steal a rope that doesn't belong to me in order to save another's life, the crime of stealing the rope is absolved because it would be a greater harm to see an innocent die. Jor-El's plan kept the Codex out of Zod's hands and arguably ensures the survival of their race... if the Council sees it that way, Lara's involvement is easily forgiven.
Seeing that way suggests that the Council knows Krypton is doomed as opposed to believing their Codex was shot into space and that their society would have to go on without it henceforth.
Having established the Council understood the futility of their actions, why did the continue to sentence Zod? To preserve their sense of justice and because they lack the ability to act otherwise.
Part of it is the equal and consistent dispensation of justice, irrespective of its actual ability to be carried out. For example, in the United States, we routinely sentence convicts to prison terms that would be impossible for them to serve out within their lifespan. Nonetheless, the quantity of years and number of convictions and whether the sentences are run concurrently or consecutively are all intended to indicate the severity and blameworthiness of the crime for which they are convicted. Thus the Council is saying, as its last sentencing act, "Your crimes were this bad." to Zod, to society, and for the record, so long as it may last. Incidentally, there's the possibility that the record may outlast Krypton itself. Clearly they possess ansible technology (that is Faster Than Light communications... the distress beacon from Earth reached Zod's ship and allowed him to travel there in days compared to decades), so for all we know, Krypton's affairs may be recorded off-site somewhere despite the planet's demise.
Kryptonian society is stagnant, inflexible, and in decline. It has relied on tradition and repetition for centuries, so even facing its demise it seems unlikely to change. Jor-El says that he had warned them before ("I warned you."), but they are so set in their ways they didn't take measures to adapt then and so they still react no differently now.