TaxTMI 
TaxTMI 
2006 (4) TMI 52
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....ates to assessment year 1989-90 which correspond to previous year ending on 31.03.1989 i.e. 1.04.1988 to 31.03.1989. 4. It is not in dispute that assessee during the period in question i.e. between 1.04.1988 to 31.03.1989 accepted the amounts in excess of Rs.10,000/- (now Rs.20,000/-) in cash by way of loan /deposit and repaid in cash thereby committed breaches of Section 269-SS and Section 269-T of the Act. The details of amount accepted Sin cash and repaid in cash are as follows :- Amount accepted in cash Amount repaid in cash. 1 Anil Kumar Samarathmal Rs.40,000/- -- 2 Babulal Girdharilal Rs.21,000/- -- 3. S.M. Maheshwari Rs.25,000/- _ 4. Bhupendra Kumar Lodha Rs.21,000/- -- 5. Madanlal Jain Rs.20,000/- Rs.20,000/- 6. Kanakmal Jain Rs.20,000/- Rs.20,000/- 7. Shantilal Jain Rs.20,000/- Rs.20,000/- 8. Anil Jain Rs.20,000/- Rs.20,000/- 9. Suryakant Jain Rs.20,000/- Rs.20,000/- 10. Sagarmal Jain Rs.20,000/- Rs.20,000/- Total Rs 2,27,000/- Rs.1,20,000/- 5. Since the aforesaid acceptance and its repayment were in b....
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.... i.e. the time when default / breach was committed, were Section 276-DD and Section 276-E ibid though omitted from the Act w.e.f. 1.04.1989. It was, therefore, argued that the only provision under which the action could be taken against the assessee for the alleged violation of Section 269-SS and Section 269 T were Section 276DD and Section 276E which were in force on the date of alleged breach / violation committed by the assessee and that too by filing a complaint before competent Magistrate prior to 1-4-89. Learned counsel contended that since on the date of alleged violation / breach, Section 271-D and Section 271-E were not on the Statute Book, and hence no action for imposition of any penalty under these two sections could be taken against the assessee by the competent authority (Joint Commissioner) after 1-4-89 as has actually been done in this case. He also contended that Section 271-D and Section 271-E were not retrospective in operation and hence breaches committed prior to their enactment i.e. (1.04.1989) would not be covered by these Sections. Placing reliance on the decisions reported in AIR 1970 SC 494 Royala Corporation (P) Ltd. vs. Director of Enforcement, AIR....
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....se (b), is twenty thousand rupees or more : Provided….. (a) ---- (b) ---- (c) ---- (d) ---- (e) ---- Provided further :- ----- 6 (ii) Section 269T.- (1) --- --- --- --- --- --- --- (2) No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if - (a) the amount of the loan or deposit together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or cooperative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees or more : Provided -------- Provided further ------ (i) --- (ii) --- (iii) --- (iv) --- (v) --- (iii) Section 276 DD.- If a person tak....
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....tion 271E now provides for imposition of penalty equal to the sum of the amount of loan / deposit so taken or accepted. The power to impose this penalty now vest with Joint Commissioner by virtue of Sub Section (2) of Section 271-D and Section 271-E. In other words, if earlier i.e. upto 1.04.1989 the breaches of Section 269SS and Section 269T attracted prosecution i.e. imprisonment and fine, to be imposed by the courts, the same is now replaced by penalty in terms of money and that too by Joint Commissioner after 1.04.1989. 13. What is the true interpretation of these 4 penalty Sections fell for consideration before the Supreme Court in the case of General Finance Company and others vs. Assistant Commissioner of Income Tax 257 ITR 338. In this case, assessee accepted in cash certain deposits of more than Rs.10,000/- on different dates in 1985 contrary to the provisions of Section 269SS of the Act. A complaint of offence under Section 276DD was therefore, filed by the Income Tax Department against the assessee in the court of Chief Judicial Magistrate on 31.03.1989. The assessee felt aggrieved of the filing of complaint sought for its quashing by filing a petition under Section 4....
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....of law laid down by Supreme Court in the case of General Finance Co.[2002] 257 ITR 338 would show that their Lordships quashed the prosecution though filed prior to 1.04.1989 in respect of breaches committed in the year 1985 by the assessee inter alia on the ground that after 1.04.1989 proceedings for prosecution can not continue against the Assessee. In other words, it is the view of the Supreme Court that since Section 276DD was omitted w.e.f. 1.04.1989 without there being any saving clause, it will amount to omission and not repeal. In these circumstances, the rigour contained in Section 6 of General Clauses Act would not apply so as to save even those proceedings legally initiated prior to 1.04.1989 under Section 276DD ibid. As a consequence, such proceedings have to be quashed being not maintainable for adjudication on merits by the Magistrates on and after 1-4-89. 15. We may also take note of two cases of Supreme court reported in 226 ITR 442 (SC) BM Sharma vs. CIT and 195 ITR I (Onkar Saran and Sons vs. CIT). In these two cases, question arose before the Supreme Court as to which law of penalty would be applicable to a case when assessee commits a default under the ....
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....n that return he did not disclose income from truck business. On 20^th February, 1969 he filed a revised return in which income from truck business was shown. On the finding that while filing return in 1966 the assessee concealed his income he was held liable to penalty under section 271(1) (C). The Department applied the law amended by Finance Act of 1968 in determining the quantum of penalty. Held, that the quantum was to be determined by the law applicable in 1966; that the revised return not being under section 139(5) had to be ignored and that the amendment of 1968 not being retrospective was not applicable." 17. Keeping in view the law laid down by Supreme Court in aforementioned cases, when we apply the principles laid down therein to the facts involved in this case then it is noticed that breaches of Section 269SS and 269T were committed by the assessee during the period 1.4.1988 to 31.03.1989 i.e. prior to 1.04.1989, whereas, the A.O. i.e. Joint Commissioner initiated the penalty proceedings under Section 271-D and Section 271-E on 7.02.1994 i.e. after 1.04.1989. In other words, no prosecution under section 276DD was filed in the court of magistrate against the....