1968 (2) TMI 21 - HC - Income Tax

IT Act 1922 - IT Act 1961 - Whether persons filing returns before and after commencement of new Act was justifiable classification

Issues Involved:
1. Competency of prosecution under Section 177, Indian Penal Code (IPC).
2. Competency of prosecution under Section 52 of the Income-tax Act, 1922.
3. Validity of Section 277 of the Income-tax Act, 1961, under the Constitution of India.
4. Validity of sanction given by the Inspecting Assistant Commissioner of Income-tax.

Issue-wise Detailed Analysis:

1. Competency of Prosecution under Section 177, IPC:

The petitioner contended that the prosecution under Section 177, IPC, was not maintainable as it was impliedly repealed by Section 52 of the Income-tax Act, 1922. The court noted that Section 177, IPC, and Section 52 of the Income-tax Act, 1922, although similar, have different scopes. Section 177, IPC, is broader, covering any false information furnished to a public servant, while Section 52 is specific to false verifications in income tax matters. The court held that both provisions could coexist as they address different aspects of false information. The court emphasized that implied repeal is not favored unless the provisions are wholly incompatible or lead to absurd consequences. The court concluded that Section 52 of the Income-tax Act, 1922, did not repeal Section 177, IPC, and thus, prosecution under Section 177, IPC, was competent.

2. Competency of Prosecution under Section 52 of the Income-tax Act, 1922:

The petitioner argued that the prosecution under Section 52 of the Income-tax Act, 1922, was not maintainable as the Act was repealed by the Income-tax Act, 1961, and the repealing Act did not save such prosecutions. The court referred to Section 6 of the General Clauses Act, which preserves the right to prosecute for offences committed under a repealed statute unless a contrary intention appears. The court also analyzed Section 297(2)(a) of the Income-tax Act, 1961, which allows proceedings for assessment to continue as if the new Act had not been passed. The court interpreted "proceedings for the assessment" to include prosecutions for false verifications. Therefore, the court held that the prosecution under Section 52 of the Income-tax Act, 1922, was competent and sustainable in law.

3. Validity of Section 277 of the Income-tax Act, 1961, under the Constitution of India:

The petitioner contended that Section 277 of the Income-tax Act, 1961, was ultra vires and violated Article 14 of the Constitution, which guarantees equality before the law. The court found no merit in this argument, stating that the classification between those who filed returns before and after the commencement of the new Act was justifiable. The court noted that the new Act substantially reproduced the relevant provisions of the old Act, and thus, the points raised in the first three complaints applied to this issue as well. The court concluded that Section 277 of the Income-tax Act, 1961, was valid and did not violate Article 14 of the Constitution.

4. Validity of Sanction Given by the Inspecting Assistant Commissioner of Income-tax:

The petitioner argued that the sanction given by the Inspecting Assistant Commissioner for prosecution under Section 52 of the Income-tax Act, 1922, was invalid. The court noted that under Section 53(1) of the old Act, the Inspecting Assistant Commissioner was competent to institute prosecution. The court also referred to the principle laid down in Commissioner of Income-tax v. Bhikaji Dadabhai, which stated that the procedure under the old Act should be followed if prosecution is launched under it. Therefore, the court held that the sanction given by the Inspecting Assistant Commissioner was valid.

Conclusion:

The court dismissed all the petitions, holding that the prosecution under Section 177, IPC, and Section 52 of the Income-tax Act, 1922, was competent. The court also upheld the validity of Section 277 of the Income-tax Act, 1961, and the sanction given by the Inspecting Assistant Commissioner of Income-tax. The petitions were dismissed.

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