Omission of penal provision in section 276DD not cured by Section 6 of the General Clauses Act

The SC allowed the appeal, set aside the HC order and quashed prosecution proceedings under section 276DD, holding that omission of the provision cannot be cured by section 6 of the General Clauses Act. The court reaffirmed its prior Constitution Bench rulings that omission differs from repeal, so section 6 does not revive a prosecutory provision once omitted; penalties for non-compliance with section 269SS may still stand. Any transitional applicability benefiting prosecutions before April 1, 1989 is limited and not sufficient to warrant a larger bench reference.

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Issues:
Prosecution under section 276DD of the Income-tax Act for non-compliance with section 269SS - Applicability of section 6 of the General Clauses Act to save the action post-omission.

Analysis:
The case involved the appellants receiving deposits in 1985, disclosed in the income-tax return for the assessment year 1986-87, leading to prosecution under section 276DD of the Income-tax Act for non-compliance with section 269SS. The appellants sought quashing of the proceedings, arguing that since section 276DD was omitted from the Act from April 1, 1989, prosecution could not continue post-omission. The High Court upheld the prosecution, stating that the provisions were in force during the relevant accounting year. The appellants contended that section 6 of the General Clauses Act could not save the action taken post-omission.

The respondent argued that section 276DD could be enforced for offences committed before its omission, emphasizing that the complaint was filed before the omission. The respondent highlighted that section 6 of the General Clauses Act aims to maintain rights and liabilities acquired during the operation of a statute, allowing prosecution even after repeal. However, the appellants referenced cases where it was held that "omission" is distinct from "repeal," and section 6 does not apply to omission. The respondent argued for reconsideration of these precedents, asserting that omission effectively results in repeal, and legislative intent is crucial in determining the effect of omission.

While the respondent's arguments seemed compelling, the court adhered to previous decisions holding that omission is different from repeal. Non-compliance with section 269SS attracted prosecution and penalty; however, the omission of the provision regarding prosecution did not affect the penalty levy. The court clarified that the principle of section 6 of the General Clauses Act applies to repeal, not omission. As section 276DD was omitted, not repealed, prosecution post-omission was not permissible under section 6. Consequently, the court allowed the appeal, setting aside the High Court's order and quashing the prosecution proceedings.

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