Omission of penal provision without saving clause bars pending prosecutions and leaves acquittals undisturbed.

Prosecutions under section 276DD of the Income-tax Act could not continue after that penal provision was omitted by the 1987 amendment with effect from 1 April 1989, because no saving clause preserved pending proceedings. The court held that the vicarious liability provision could not by itself sustain prosecution once the substantive offence had been removed from the statute book. The omission therefore extinguished the pending prosecutions, and the trial court's acquittals were properly maintained. The appeals also failed on the facts, but the decisive ground was the absence of any surviving offence after omission.

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Issues: Whether prosecutions launched under section 276DD of the Income-tax Act, 1961 could continue after the omission of that penal provision by the amendment Act of 1987 with effect from 1 April 1989, and whether the acquittals recorded by the trial court deserved to be interfered with.

Analysis: The penal provision under which the respondents were prosecuted had been omitted without any saving clause protecting pending proceedings. The enabling provision dealing with vicarious liability did not itself create the offence and could not sustain prosecution once the substantive penal provision had gone out of the statute book. The omission therefore extinguished the pending prosecutions, and the acquittal recorded by the trial court was supported on that short ground. Independently, no merit was found in the appeals on the facts as well.

Conclusion: The prosecutions were not maintainable after the omission of section 276DD, and the acquittals were correctly maintained. The appeals were liable to fail.

Ratio Decidendi: When a penal provision is omitted without a saving clause, pending prosecutions based on that provision cannot continue, and an enabling provision creating vicarious liability cannot survive in the absence of the substantive offence.

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