1995 (10) TMI 39 - HC - Income Tax

Summary

Issues:
1. Quashing of criminal proceedings under section 276DD of the Income-tax Act, 1961.
2. Retroactive application of penal sections.
3. Interpretation of section 6 of the General Clauses Act, 1897.
4. Benefit of beneficial legislation to mitigate the rigour of the law.

Analysis:
The judgment pertains to a petition under section 482 of the Criminal Procedure Code seeking the quashing of criminal proceedings under section 276DD of the Income-tax Act, 1961. The petitioners were accused of accepting deposits in violation of section 269SS of the Act. The central issue revolved around the retroactive application of penal sections due to subsequent amendments. The petitioners argued that prosecution could not be initiated after the omission of sections 276DD and 279. Conversely, the respondent contended that section 6 of the General Clauses Act protected the prosecution.

The court analyzed the applicability of section 6 of the General Clauses Act and referred to the Supreme Court decisions in Rayala Corporation (P.) Ltd. v. Director of Enforcement and T. Barai v. Henry Ah Hoe. The court highlighted that section 6 only applies to repeals and not omissions. It emphasized that retroactive criminal legislation is prohibited, and the accused should benefit from reduced punishment under beneficial legislation. The court cited the principle of beneficial construction to mitigate the rigour of the law.

Ultimately, the court held in favor of the petitioners, quashing the proceedings against them. It concluded that the amendment in question was intended to benefit the assessee and mitigate the rigour of the law by providing for a penalty instead of criminalizing the default. Therefore, the petitioners were entitled to the benefit of the amendment, and the criminal proceedings were quashed.

In summary, the judgment addressed the issues of quashing criminal proceedings, retroactive application of penal sections, interpretation of the General Clauses Act, and the application of beneficial legislation to mitigate the rigour of the law. The court's decision favored the petitioners, emphasizing the importance of protecting individuals from retroactive criminal legislation and ensuring the application of beneficial laws to provide relief to the accused.