9911796707
TMI Blog2006 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant sections applicable to the facts of this case. 3. The appellant is an assessee under the Income Tax Act and is being assessed as such. The dispute in this case relates to assessment year 1989-90 which correspond to previous year ending on 31.03.1989 i.e. 1.04.1988 to 31.03.1989. 4. It is not in dispute that assessee during the period in question i.e. between 1.04.1988 to 31.03.1989 accepted the amounts in excess of Rs.10,000/- (now Rs.20,000/-) in cash by way of loan /deposit and repaid in cash thereby committed breaches of Section 269-SS and Section 269-T of the Act. The details of amount accepted Sin cash and repaid in cash are as follows :- Amount accepted in cash Amount repaid in cash. 1 Anil Kumar Samarathmal Rs.40,000/- -- 2 Babulal Girdharilal Rs.21,000/- -- 3. S.M. Maheshwari Rs.25,000/- _ 4. Bhupendra Kumar Lodha Rs.21,000/- -- 5. Madanlal Jain Rs.20,000/- Rs.20,000/- 6. Kanakmal Jain Rs.20,000/- Rs.20,000/- 7. Shantilal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-D and Section 271-E of the Act could be imposed on the assessee for the reason that the breach / default under Section 269-SS and 269-T were committed by the assessee during the period 1.04.1988 to 31.03.1989, when Section 271-D and Section 271-E ibid were not in force. According to learned counsel, the proper provision in force relating to imposition of penalty at the relevant time i.e. the time when default / breach was committed, were Section 276-DD and Section 276-E ibid though omitted from the Act w.e.f. 1.04.1989. It was, therefore, argued that the only provision under which the action could be taken against the assessee for the alleged violation of Section 269-SS and Section 269 T were Section 276DD and Section 276E which were in force on the date of alleged breach / violation committed by the assessee and that too by filing a complaint before competent Magistrate prior to 1-4-89. Learned counsel contended that since on the date of alleged violation / breach, Section 271-D and Section 271-E were not on the Statute Book, and hence no action for imposition of any penalty under these two sections could be taken against the assessee by the competent authority (Joint Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more : Provided….. (a) ---- (b) ---- (c) ---- (d) ---- (e) ---- Provided further :- ----- 6 (ii) Section 269T.- (1) --- --- --- --- --- --- --- (2) No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if - (a) the amount of the loan or deposit together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or cooperative bank or, as the case may be, the other company or co-operative society or the firm, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 276E whereas after 1.04.1989 they are dealt with under section 271D and Section 271E of the Act for initiation of penal actions against the assessee. It is also clear that Section 276DD and Section 276E provided punishment of imprisonment for a term which may extend to two years and also fine equal to the amount of such loan or deposit, whereas, Section 271D and Section 271E now provides for imposition of penalty equal to the sum of the amount of loan / deposit so taken or accepted. The power to impose this penalty now vest with Joint Commissioner by virtue of Sub Section (2) of Section 271-D and Section 271-E. In other words, if earlier i.e. upto 1.04.1989 the breaches of Section 269SS and Section 269T attracted prosecution i.e. imprisonment and fine, to be imposed by the courts, the same is now replaced by penalty in terms of money and that too by Joint Commissioner after 1.04.1989. 13. What is the true interpretation of these 4 penalty Sections fell for consideration before the Supreme Court in the case of General Finance Company and others vs. Assistant Commissioner of Income Tax 257 ITR 338. In this case, assessee accepted in cash certain deposits of more than Rs.10,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid decisions. In the Income-tax Act, section 276DD stood omitted from the Act but not repealed and hence, a prosecution could not have been launched or continued by invoking section 6 of the General Clauses Act after its omission. Hence, we allow this appeal, set aside the order of the High Court and quash the proceedings for prosecution." 14. Mere perusal of law laid down by Supreme Court in the case of General Finance Co.[2002] 257 ITR 338 would show that their Lordships quashed the prosecution though filed prior to 1.04.1989 in respect of breaches committed in the year 1985 by the assessee inter alia on the ground that after 1.04.1989 proceedings for prosecution can not continue against the Assessee. In other words, it is the view of the Supreme Court that since Section 276DD was omitted w.e.f. 1.04.1989 without there being any saving clause, it will amount to omission and not repeal. In these circumstances, the rigour contained in Section 6 of General Clauses Act would not apply so as to save even those proceedings legally initiated prior to 1.04.1989 under Section 276DD ibid . As a consequence, such proceedings have to be quashed being not maintainable for adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relevant in determining the quantum. The order of the Income Tax Officer or Assistant Commissioner only quantifies penalty already incurred. The law to be applied is that in force at the date when default which attracts penalty is committed. The assessee filed his return for assessment year 1966-67 on 4 th July, 1966. In that return he did not disclose income from truck business. On 20 th February, 1969 he filed a revised return in which income from truck business was shown. On the finding that while filing return in 1966 the assessee concealed his income he was held liable to penalty under section 271(1) (C). The Department applied the law amended by Finance Act of 1968 in determining the quantum of penalty. Held, that the quantum was to be determined by the law applicable in 1966; that the revised return not being under section 139(5) had to be ignored and that the amendment of 1968 not being retrospective was not applicable." 17. Keeping in view the law laid down by Supreme Court in aforementioned cases, when we apply the principles laid down therein to the facts involved in this case then it is noticed that breaches of Section 269SS and 269T were committed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose Sections against the assessee by the Department. In other words, Section 271-D/S.271-E ibid could be invoked by the department only in respect of those breaches committed by any assessee after 1.04.1989 but not in relation to breaches if committed prior to 1.04.1989. Indeed, this legal position is clear from mere reading of the three decisions quoted supra. 20. As taken note of supra, here is a case where if the prosecution had been filed prior to 1-4-1989 against the appellant (Assessee) under Section 276DD, the same would have been held bad in law in the light of law laid down by Supreme Court in General Finance case supra. Like wise no penal action under Section 271D could be taken against the Assessee because the law laid down in Onkar Sarvan supra, clearly holds that Section 271D has no application in such case, as the same was not in force on the date of breach. 21. Accordingly and in view of foregoing discussion, we are of the considered opinion that initiation and imposition of penalty proceedings by the Joint Commissioner under section 271-D and Section 271E of the Act, by issuance of notice on 7.02.1994 against the assessee for the alleged breaches of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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