SAKTHI AND CO Vs. INCOME-TAX OFFICER (HQRS)

JUDGEMENT

(1.) The accused Nos. 1 and 2 in E. O. C. C. Nos. 247 to 257 of 1988 on the file of the Additional Chief Metropolitan Magistrate (H. C. I.), Egmore, Madras, have filed these petitions under section 482, Criminal Procedure Code, praying to call for the records in the aforesaid cases and quash the same.

(2.) In E. O. C. C. No. 247 of 1988, the respondent has filed the complaint against the petitioners arraying them as accused Nos. 1 and 2 under section 276B of the Income-tax Act, 1961, for failure to deduct income-tax at source from the interest paid to the creditors under section 194A of the Income-tax Act, 1961, during the financial year ended on March 31, 1983. The allegations in it are briefly as follows :

(3.) Mr. Ramasami K., learned counsel appearing for the respondent, straightaway took me to the ruling rendered by my learned brother Justice Arunachalam in Criminal Miscellaneous Petition No. 7552 of 1985 and batch of cases (C. A. Baloo v. Union of India [1992] 197 ITR 545 (Mad)), where an identical contention was raised by the accused in those cases and such a contention did not find acceptance by Justice Arunachalam. In that batch of cases, on the allegations made in the complaint that the accused were liable to be punished under the old section 276DD which provided for punishment for failure to comply with the provisions of section 269SS, complaints were field. The section was deleted by virtue of the Amendment Act, 1989. In its place, section 271D became applicable. As per section 271D, if a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. The Deputy Commissioner of Income-tax is the authority to impose penalty. In the above backdrop, the contention that was put forth before Justice Arunachalam was that section 271D, as it stands now, imposes only penalty for violation of section 269SS and prosecution for such violation has been done away with and the authority to impose penalty will be the Deputy Commissioner of Income-tax and, therefore, after the introduction of section 271D, prosecution can no longer be maintained especially when the earlier section 276DD had merely been repealed without any saving clause to sustain the pending prosecutions. In that batch of cases also, Mr. K. Ramasami had appeared for the respondent and he had put forth the contention that, after April 1, 1989, prosecution for violation of section 269SS may not be available put pending prosecutions cannot be deemed to have been obliterated and that sections 6 and 6A of the General Clauses Act would save pending prosecutions. The learned judge has pointed out that acceptance of the arguments of learned counsel for the petitioner would result in a rare and strange position and the petitioners will not be liable to pay any penalty under section 271D and, prior to that date, when that law was not in the statute book, they cannot be proceeded be proceeded against. The learned judge has laid down as follows (at page 548) :