LexM/S. GENERAL FINANCE CO. AND ANR. versus ASSISTANT COMMISSIONER OF INCOME TAX, PUNJAB
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A MIS. GENERAL FINANCE CO. AND ANR. v. ASSISTANT COMMISSIONER OF INCOME TAX, PUNJAB SEPTEMBER 4, 2002 B 1 [S. RAJENDRA BABU AND P. YENKATARAMA REDD!, JJ.) Income Tax Act, !961-Section 276 DD-Prosecutiqn under-After omission of the provision by Direct Tax Law (Amendment) Act, 1987-Validity C of-Held, not valid-Prosecution can not be launched or continued even by invoking General Clauses Act since the provision stood omitted from the Act, and not repealed-General Clauses Act, 1897-Section 6. General Clauses Act, I 897-Section 6-App/icability of-Held, will not apply to omission of a provision in an Act, but only to repeal, omission being D different from repeal. E The appellants were prosecuted u/s 276DD oflncome Tax Act,,1961 in March, 1989 for non-compliance of the provisions under Section 269SS of the Act, in respect of assessment year 1986-87. Appellants approached the High Court under Section 482 Cr.P.C. and Article 227 of the Constitution of India, for quashing the proceedings on the ground that Section 269SS was omitted from the Act by Direct Tax I Law (Amendment) Act, 1987. High Court held that the prosecution was justified, as Section 276 DD was in force during the relevant assessment p year and they were omitted only w.e.f. 1.4.1989. In appeal to this Court appellants contended that prosecution could not have continued u/s 276 DD of the Act after its omission and that section 6 of General Clauses Act also could not be applied to save the act of prosecution. G H Allowing the appeal, the Court HELD: 1. The view taken by the High Court is not consistent with the principle underlying Section 6 of the General Clauses Act, 1897 as saving the right to initiate proceedings for li~bilities incurred during the currency of the Act will not apply to omission of a provision in an Act 106 GENERAL FINANCE CO.> ASSIST. COM MR. OF INCOME TAX [RAJENDRA BABU. J.J ) 07 but only to repeal, omission being different from repeal. In the Income A Tax Act, 1961 Section 27600 stood omitted from the Act but not repealed and hence, a prosecution could not have been launched or continued by invoking Section 6 of the General Clauses Act after its omission. 1110-G-H; 111-AI 2. Non-compliance with Section 269 SS of Income Tax Act attracted B prosecution as well as penalty. Omission of the provision regarding prosecution will not affect the levy of penalty. The advantage arising out of application of the ratio in Rayala Corporation and Kolhapur Canesugar resulting in prosecution in cases of non-compliance with Section 269SS of the Act is only transitional affecting a few cases arising prior to 1.4.1989. C Such cases may be few and far between. Hence this is not an appropriate case for reference to the larger Bench. 1110-E-F] Mis. Rayala Co1poration (P) Ltd. and M.R. Pratap v. Director of Enforcement, New Delhi, 119691 2 SCC 412 and Kolhap11r Canes11gar Works D ltd. and Anr. v. Union of India and Ors., 12000] 2 SCC 536, followed. CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 442 of 1994. From the Judgment and Order dated 6.5.1994 of the Punjab and Haryana E High Court in Crl. M.No. 8708-M of 1992 . • Harbans Lal and Ashok Mahajan, for the Appellant. S. Ganesh, K.C. Kaushik and B.V. Bairam Das for the Respondent. F The Judgment of the Court was delivered by RAJENDRA BABU, J. The appellants before us received deposits from Amar Singh, Gurdev Singh and Hardev Singh on different dates in the year 1985 and this fact was ,disclosed in the Income Tax Return filed for the G assessment year 1986-87. The Income Tax Depanment initiated prosecution against the appellants for offences arising from non-compliance with Section 269SS of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Section 269SS of the Act provides that 'no person shall take or accept from any other person any loan or deposit otherwise than by an account-payee cheque or account-payee bank draft which exceed.v Rs. 10 thousand' (now, H 108 SUPREME COURT REPORTS [2002] SUPP. 2 S.C.R. A 20 thousand). Punishment for non-compliance with provisions of Section 269SS is provided under Section 276DD of the Act. In addition, penalty is leviable under Section 271 D of the Act. Section 276DD has been omitted from the Act by the Direct Tax Law (Amendment) Act, 1987 with effect from 1.4.1989. A complaint under Section 276DD of the Act was filed in the B court of Chief Judicial Magistrate, Sangrur on 31.3
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