1990 (9) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Violation of Section 269SS of the Income-tax Act, 1961.
2. Applicability of Section 271D and repeal of Section 276DD.
3. Continuation of pending prosecutions after the repeal of Section 276DD.
4. Interpretation of Section 6 of the General Clauses Act.

Detailed Analysis:

1. Violation of Section 269SS of the Income-tax Act, 1961:
The respondent initiated prosecutions against the petitioners, alleging that they received various deposits in cash, as evidenced by cash book entries, which contravened the provisions of Section 269SS of the Income-tax Act, 1961. This section mandates that no person shall take or accept any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the amount exceeds a specified limit.

2. Applicability of Section 271D and repeal of Section 276DD:
The petitioners contended that with the introduction of Section 271D, effective from April 1, 1989, which imposes only a penalty for violation of Section 269SS, and the simultaneous repeal of Section 276DD, which provided for prosecution, prosecutions for such violations are no longer maintainable. They argued that the absence of a saving clause to sustain pending prosecutions under the repealed Section 276DD implies that such prosecutions should be dismissed.

3. Continuation of pending prosecutions after the repeal of Section 276DD:
The respondent countered that the omission of Section 276DD and the introduction of Section 271D do not obliterate pending prosecutions. They argued that Sections 6 and 6A of the General Clauses Act save the pending prosecutions, as there is no discernible intention from the Legislature to erase or obliterate prosecutions initiated under the old section. The court agreed with this view, stating that accepting the petitioners' argument would result in neither a prosecution nor a penalty proceeding against the petitioners, which could not have been the Legislature's intention.

4. Interpretation of Section 6 of the General Clauses Act:
The court referred to several precedents, including the Supreme Court's judgment in T. Barai v. Henry Ah Hoe, which discussed the implications of repealing an enactment and the applicability of Section 6 of the General Clauses Act. The court observed that whenever there is a repeal followed by fresh legislation on the same subject, the court must look to the provisions of the new Act to determine if they indicate a different intention. The absence of a saving clause does not necessarily imply that pending prosecutions are to be dismissed. The court also referred to other judgments, such as State of Punjab v. Mohar Singh Pratap Singh and Rayala Corporation (P) Ltd. v. Director of Enforcement, to substantiate that the repeal of an enactment does not affect pending prosecutions unless a contrary intention is evident.

Conclusion:
The court concluded that the petitions lacked merit and dismissed them. It held that the prosecutions initiated under Section 276DD of the Income-tax Act, 1961, before its repeal, are maintainable despite the introduction of Section 271D. The court emphasized that the legislative intention was not to obliterate pending prosecutions and that Section 6 of the General Clauses Act applies, thereby saving the pending prosecutions.