2001 (3) TMI 75 - HC - Income Tax

Summary

Issues:
1. Prosecution under sections 276DD/278B of the Income-tax Act for contravention of section 269SS.
2. Maintainability of the complaint post omission of section 276DD from the Act.
3. Applicability of beneficial legislation and subsequent quashing of proceedings.

Issue 1: Prosecution under sections 276DD/278B of the Income-tax Act for contravention of section 269SS:
The petitioner filed a complaint against the respondents for contravening section 269SS by accepting cash deposits exceeding Rs. 10,000 without account payee cheques. The respondents were discharged by the Judicial Magistrate and Additional Sessions judge based on a Madras High Court decision and the omission of section 276DD by the Direct Tax Laws (Amendment) Act, 1987. The petitioner argued that the respondents should be prosecuted under section 276DD.

Issue 2: Maintainability of the complaint post omission of section 276DD from the Act:
The respondents contended that since section 276DD was deleted with effect from April 1, 1989, the complaint lodged on April 6, 1989, was not maintainable. The petitioner argued that the offence occurred before the deletion of section 276DD and, therefore, the prosecution should proceed. The Madhya Pradesh High Court and Andhra Pradesh High Court decisions supported the respondents' contention, emphasizing the application of beneficial legislation to mitigate the rigour of the law.

Issue 3: Applicability of beneficial legislation and subsequent quashing of proceedings:
The Madhya Pradesh High Court and Andhra Pradesh High Court decisions highlighted the importance of beneficial legislation in mitigating legal rigour. The decisions emphasized that post facto laws should be applied to benefit the assessee. Consequently, the High Courts quashed the proceedings in similar cases, supporting the respondents' argument. The court found no grounds for interference under section 482 of the Criminal Procedure Code and dismissed the petition, allowing income-tax authorities to proceed with imposing penalties if necessary.

In conclusion, the judgment focused on the maintainability of the complaint post omission of section 276DD, considering the application of beneficial legislation and previous court decisions. The court upheld the dismissal of the petition, allowing income-tax authorities to pursue penalties in accordance with the law.