9911796707
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Issues:
1. Quashment of proceedings under sections 276B and 278B of the Income-tax Act, 1961. 2. Interpretation of the provisions of section 194A of the Income-tax Act. 3. Retroactive application of the Explanation to sub-section (1) of section 194A. Analysis: The judgment pertains to multiple petitions filed under section 482 of the Code of Criminal Procedure seeking the quashment of proceedings initiated by income-tax authorities for offenses under sections 276B and 278B of the Income-tax Act. The accused-petitioners were alleged to have deliberately shown interest payments to different payees in the "interest payable" account instead of crediting them to the respective payee's accounts to avoid tax deduction. The primary contention was whether the insertion of the Explanation to section 194A in 1987 created a new penal offense or merely clarified existing provisions. The petitioners argued that prior to the 1987 amendment, there was no provision deeming the crediting of interest to any account as payment to the payee. They relied on precedents emphasizing strict interpretation of penal provisions and contended that the operation of the Explanation should be prospective, not retrospective. Conversely, the respondent asserted that the Explanation merely clarified existing law and that the petitioners' actions constituted a deliberate attempt to circumvent tax obligations. The court emphasized the strict construction of fiscal laws and examined the constitutional protection under Article 20, ensuring no conviction for acts not offenses at the time. The court concluded that the petitioners' alleged violations occurred before the insertion of the Explanation in 1987, rendering them not liable for offenses under sections 276B and 278B. The court analyzed the unamended provisions of section 194A, highlighting that penal consequences arise only if tax is not deducted at the time of crediting or payment to the payee. The court further scrutinized the amended section 194A, noting that the Explanation filled a loophole to prevent tax avoidance. The court concluded that the Explanation created a new penal liability, making it prospective in nature. Consequently, the court deemed the continuation of proceedings an abuse of the criminal court process and ordered their quashment. In summary, the judgment clarifies the interpretation of section 194A of the Income-tax Act, emphasizing the prospective application of the Explanation inserted in 1987. It underscores the importance of strict interpretation of fiscal laws and constitutional safeguards against retrospective penal liabilities, ultimately leading to the quashment of proceedings against the petitioners.
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