Omission of penal provision barred prosecution; beneficial amendment and no saving clause protected assessees from criminal proceedings.

Prosecution for the alleged offence under section 276DD could not be sustained because the provision had been omitted before sanction and complaint were issued. Section 6 of the General Clauses Act was treated as saving prosecutions on repeal, but not where a penal provision is merely omitted without a saving clause preserving liability. The amended regime was viewed as beneficial because the conduct was no longer criminal and was dealt with only by monetary penalty. On that basis, retroactive criminal liability was rejected and the assessees were held entitled to the benefit of the amended law; the proceedings were quashed.

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Issues: Whether prosecution for an offence under section 276DD of the Income-tax Act, 1961 could be sustained when the provision stood omitted before sanction was accorded and the complaint was filed, and whether the assessees were entitled to the benefit of the amended law.

Analysis: The offence alleged had been committed when section 276DD was in force, but the sanction for prosecution and the complaint were both initiated after the provision had been omitted. The governing principle applied was that section 6 of the General Clauses Act, 1897 saves prosecutions on repeal, but not where the provision is merely omitted and no saving clause preserves the liability. The amendment was treated as beneficial, because the default was no longer made a crime and only a monetary penalty remained. The decision also relied on the prohibition against retroactive criminal liability and the rule of beneficial construction, under which the assessees were entitled to the advantage of the amended regime.

Conclusion: The prosecution was not maintainable after omission of the penal provision, and the proceedings were quashed in favour of the assessees.

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