2000 (9) TMI 14 - HC - Income Tax

Summary

Issues Involved:
Violation of section 269SS of the Income-tax Act, 1961 by accepting cash loans during the assessment year 1987-88. Legal challenge under section 482 of the Code of Criminal Procedure, 1973 to set aside/quash the order passed by the Additional Chief Metropolitan Magistrate, Delhi in Criminal Complaint No. 5164 of 1989.

Detailed Analysis:

1. Violation of Section 269SS:
The petitioner, a medical practitioner and income-tax assessee, received cash loans during the assessment year 1987-88 from individuals, which were found to be violative of section 269SS of the Income-tax Act, 1961. The Income-tax Officer filed a complaint under section 276DD against the petitioner for contravention of section 269SS by accepting cash loans exceeding the prescribed limits.

2. Legal Challenge under Section 482 of CrPC:
The petitioner approached the High Court under section 482 of the Code of Criminal Procedure, seeking to set aside/quash the order passed by the Additional Chief Metropolitan Magistrate in the criminal complaint. The petitioner contended that no charge could have been legally framed against him and that he had not committed any offence. Additionally, the petitioner argued that the provisions of sections 269SS and 276DD could not be attracted due to a deliberate suppression of facts by the Income-tax Officer regarding the repayment of a portion of the loan.

3. Judicial Precedents and Legal Interpretation:
The petitioner's counsel relied on the judgment in Salwan Construction Co. v. Union of India, which dealt with the implications of legislative amendments on criminal complaints under the Income-tax Act. The court in that case clarified the legislative intent behind amendments and their retrospective applicability. Furthermore, reference was made to the Constitution Bench judgment of the Supreme Court in Rayala Corporation (P.) Ltd. v. Director of Enforcement, emphasizing the importance of legal principles in quashing complaints.

4. Court Decision and Disposition:
After considering the arguments and precedents cited, the High Court, following the rationale in Salwan Construction Co.'s case, quashed the criminal complaint against the petitioner. The court held that the complaint was not maintainable in light of legislative changes and the retrospective effect of statutory provisions. Consequently, all proceedings stemming from the criminal complaint, including the order passed by the Additional Chief Metropolitan Magistrate, were set aside. The petition was allowed, and the matter was disposed of in favor of the petitioner.