1997 (1) TMI 21 - HC - Income Tax

Summary

Issues Involved:
The legality and constitutionality of penalties imposed under sections 269SS and 269T of the Income Tax Act, 1961.

Judgment Details:

Challenge to Vires of Sections 269SS and 269T:
- Petitioners challenged penalties under sections 269SS and 269T, arguing they are unconstitutional based on a Madras High Court judgment.
- Madras High Court held that penalizing only the "borrower" and not the "lender" under section 269SS is discriminatory and violates Article 14 of the Constitution.
- Petitioners argued that penalizing only the borrower leads to multiple jeopardy and lacks retrospective application.

Validity of Sections 269SS and 269T:
- Division Bench of Gujarat High Court upheld the constitutionality of section 269SS, stating borrowers and lenders are not similarly situated in tax evasion.
- High Court found the classification in the Act rational and not discriminatory, agreeing with the decisions of Madras and Gujarat High Courts.

Mens Rea and Double Jeopardy:
- Absence of mens rea and the argument of double jeopardy are factors for Departmental authorities to consider, not affecting the constitutional validity of the sections.

Retrospective Application and Multiple Penalties:
- The question of retrospective penalties and multiple penalties is left for Departmental authorities to decide, not within the scope of the Court's judgment.

Conclusion:
- Court dismissed the writ applications, upholding the constitutionality of sections 269SS and 269T, based on the decisions of Madras and Gujarat High Courts.
- Found no arbitrariness or discrimination in the provisions, stating that each penalty prescribed is for a different violation, not constituting double jeopardy.