TaxTMI 
TaxTMI 
1991 (7) TMI 26
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....ed Nos. 1 and 2 under section 276B of the Income-tax Act, 1961, for failure to deduct income-tax at source from the interest paid to the creditors under section 194A of the Income-tax Act, 1961, during the financial year ended on March 31, 1983. The allegations in it are briefly as follows : The Commissioner of Income-tax has authorised under section 279(1) of the Income-tax Act, 1961, the preferring of this complaint for the offences under section 276B of the Income-tax Act, 1961, read with section 278B of the Income-tax Act, 1961. The first accused is a registered firm of which the second accused is the managing partner. He is the person responsible for the conduct of the business of the first accused firm which paid Rs. 50,784.95 t....
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....ment of the Act, which came into force on April 1, 1989, failure to deduct income-tax at the time of payment of interest is not made an offence punishable under the new section 276B but it is made liable for penalty by the Deputy Commissioner of Incometax under section 271C. He would further contend that after the amendment, which came into force on April 1, 1989, failure to deduct income-tax at the time of payment of interest is not liable to be punished by Magistrate and a substantive sentence cannot be imposed and only penalty by the Deputy Commissioner can be imposed and thus there is a change of the authority regarding infliction of penalty and there is change with regard to the mode of punishment. He would further contend that when th....
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....Act, 1989. In its place, section 271D became applicable. As per section 271D, if a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. The Deputy Commissioner of Income-tax is the authority to impose penalty. In the above backdrop, the contention that was put forth before justice Arunachalam was that section 271D, at it stands now, imposes only penalty for violation of section 269SS and prosecution for such violation has been done away with and the authority to impose penalty will be the Deputy Commissioner of Income-tax and, therefore, after the introduction of section 271D, prose....
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.... rather absurd consequences. Even if such contravention is proved by evidence, the petitioners would not be liable at all either under the provisions of the Act which were applicable at the time of launching the prosecution or under the new provisions which came into effect on April 1, 1989. In view of the above, I do not accept the contention put forward by learned counsel for the petitioners. I am clear that the prosecution initiated against the petitioners can definitely survive. From the insertion of the new sections, while omitting the earlier sections referred to above in the Income-tax Act, it is not possible to gather any intention that the Legislature desired that prosecutions which were permissible under section 276DD of the Act a....