Omission of penal offence provision bars post-amendment prosecution for failure to deduct tax at source.

The amendment to section 276B of the Income-tax Act, 1961 from 1 April 1989 was treated as an omission of the offence of failure to deduct tax at source, not as a repeal attracting section 6 of the General Clauses Act, 1897. The court reasoned that section 6 applies to repeal, whereas an omitted penal provision does not continue to support proceedings unless a saving clause preserves them. As the prosecution was instituted after the omission took effect and no saving provision applied, the prosecution could not be maintained and the discharge order rejection was liable to be set aside.

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Issues: Whether the amendment to section 276B of the Income-tax Act, 1961 with effect from 1 April 1989 amounted to an omission rather than a repeal, and whether section 6 of the General Clauses Act, 1897 saved the prosecution launched after that date for failure to deduct tax at source.

Analysis: The post-amendment text of section 276B removed failure to deduct tax from the category of offences and substituted a different penal regime. The reasoning adopted the distinction between repeal and omission, holding that section 6 of the General Clauses Act, 1897 applies to repeal and not to omission. Once the provision creating the offence stood omitted, all actions under the omitted part had to stop at the stage where the omission found them. As the prosecution was launched after the omission had taken effect, and no saving provision preserved proceedings under the omitted offence, the prosecution could not be maintained.

Conclusion: The prosecution was not maintainable and the order rejecting discharge was liable to be set aside.

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