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CASE NO.:

Appeal (crl.) 442 of 1994

PETITIONER:

M/S GENERAL FINANCE CO. & ANR.

Vs.

RESPONDENT:

ASSISTANT COMMISSIONER OF INCOME TAX, PUNJAB

DATE OF JUDGMENT: 04/09/2002

BENCH:

S. RAJENDRA BABU & P. VENKATARAMA REDDI

JUDGMENT:

J U D G M E N T

RAJENDRA BABU, J. :

The appellants before us received deposits from Amar Singh, Gurdev

Singh and Hardev Singh on different dates in the year 1985 and this fact was

disclosed in the Income Tax Return filed for the assessment year 1986-87. The

Income Tax Department initiated prosecution against the appellants for offences

arising from non-compliance with Section 269SS of the Income Tax Act, 1961

(hereinafter referred to as 'the Act'). Section 269SS of the Act provides that 'no

person shall take or accept from any other person any loan or deposit otherwise

than by an account-payee cheque or account-payee bank draft which exceeds

Rs. 10 thousand' (now, 20 thousand). Punishment for non-compliance with

provisions of Section 269SS is provided under Section 276DD of the Act. In

addition, penalty is leviable under Section 271D of the Act. Section 276DD has

been omitted from the Act by the Direct Tax Law (Amendment) Act, 1987 with

effect from 1.4.1989. A complaint under Section 276DD of the Act was filed in

the court of Chief Judicial Magistrate, Sangrur on 31.3.1989.

The appellants sought for quashing of the proceedings for prosecution

under Section 276DD of the Act by filing a petition under Section 482 of the Code

of Criminal Procedure and Article 227 of the Constitution. The High Court held

that the provisions of the Act under which the appellants had been prosecuted

were in force during the accounting year relevant to the assessment year 1986-

87 and they stood omitted from the statute book only from 1.4.1989. The High

Court, therefore, took the view that the prosecution was justified and dismissed

the writ petition. Hence, this appeal by special leave.

The contention put forth on behalf of the appellants is that the offence, if at

all, had been committed in the year 1985 prosecution could not be continued nor

could the punishment be imposed under Section 276DD of the Act after it was

omitted on and from 1.4.1989. Section of the General Clauses Act cannot also

be applied to save the action now taken.

Shri S.Ganesh, learned senior counsel for the respondent, contended that

Section 276DD of the Act is omitted with effect from 1.4.1989 and hence for the

offence committed prior to that date the provision could be enforced. He further

emphasized that complaint had been filed prior to omission of Section 276DD of

the Act on 1.4.1989. Since the effect of Section 6 of the General Clauses Act is

to prevent obliteration of a statute in spite of its repeal and to keep intact the

rights acquired and liabilities incurred during its operation and permit continuance

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or institution of any legal proceedings or recourse to any remedy available before

the repeal for enforcement of the same, it is contended that the offences

committed during the continuance of a statute can be prosecuted and punished

even after its repeal, perhaps we would have agreed with this submission of the

learned counsel, but for the two decisions by the Constitution Benches in Messrs

Rayala Corporation (P) Ltd. and M.R. Pratap vs. Director of Enforcement,

New Delhi, 1969 (2) SCC 412, and Kolhapur Canesugar Works Ltd. and

Anr. vs. Union of India & Ors., 2000 (2) SCC 536, where there are

observations to the effect that an 'omission' of a provision is different from a

'repeal' and Section 6 of the General Clauses Act applies to a repealed law and

not to omission. However, Shri Ganesh submitted that those observations made

by this Court Messrs Rayala Corporation (P) Ltd. and Kolhapur Canesugar

Works Ltd. cases need reconsideration, for an 'omission' of a provision results in

abrogation or obliteration of that provision in the same way as it happens in a

'repeal'; that in the said two cases this Court was concerned with a rule which

was neither a Central Act or a regulation as defined under the General Clauses

Act and it was, therefore, held that 'omission' or 'repeal' of a rule by another rule

could not attract Section 6 of the General Clauses Act and the proceedings

initiated under an omitted rule cannot continue unless the new rule contains a

saving clause to that effect.

He further elaborated that nowhere in either of the judgments any

argument to the effect that 'omission' would not amount to 'repeal' has been

raised and hence there was no occasion for this Court to consider the difference

between 'omission' and 'repeal' of an enactment; that the observation that

'omission' being different from 'repeal' has abruptly been made without preceded

by a discussion or reference to authoritative text books; that no reason or

rationale could be found to discern a distinction between 'repeal' and 'omission';

that the reason for this approach is obvious; that when this Court held that a rule

is not an Act or Regulation, further examination of the same whether it would

apply to an omission did not really arise for consideration; that observations in

that regard only escaped inadvertently and not after consideration; that

'Omission' of a provision results in abrogation or obliteration of the omitted

provision in the same way as it would have happened in the case of 'repeal'; that

a conclusion of law not raised or not preceded by consideration attracts the rule

of sub-silentio; that any declaration or conclusion arrived at without application of

mind preceded without reason cannot be deemed to be declaration of law or

authority of a general nature binding as a precedent; that the principle that

Section 6 of the General Clauses Act is not attracted to "omissions" but only to

"repeals" is not a declaration of law made for general application. He referred to

Sutherland's Statutory Construction, 3rd Edn., Vol.I, at p.477 and Francis

Bennion's Statutory Construction (2nd Edn.) at page 201 in explaining the

meaning of 'repeal'.

He further submitted that the use of any particular form of expression is

not necessary to bring about a repeal; that it is a matter of legislative practice to

provide by enacting an amendment that an existing provision shall be omitted;

that such omission has the effect of repeal of the existing provision; that such a

law may also provide for the introduction of a new provision. He explained that

viewed from that angle, there may be no real distinction between 'repeal' or

'omission'; that what is required is that the words used show an intention to

abrogate the Act or provision in question. Legislature adopts different forms for

the same; that the usual form is to use the words 'is hereby repealed' and

thereafter enumerate the Acts sought to be repealed or put them in a schedule;

that sometimes the words 'shall cease to have effect' are used; that when the

object of repeal affects only a part of the Act, the words 'shall be omitted' are

used; that this aspect has been dealt with by Halsbury, 4th Edn., Vol. 44, at page

604, footnote 4; that 'omission' and 'repeal' have identical effect in operation of

statutes.

He adverted to Section 6-A of the General Clauses Act in which it is stated

that if any Act repeals any enactment making textual amendment in the Act by

express omission, insertion or substitution of any matter, then, unless different

intention appears, the repeal shall not affect the continuance of such amendment

made by an enactment so repealed and in operation at the time of such repeal;

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that the use of the words 'repeals by express omission, insertion or substitution'

will cover different aspects of repeal; that this is a further legislative indication

that 'omission' also amounts to a 'repeal' of an enactment.

Though we find the submissions of the learned counsel to be forceful, we

are constrained to follow the two decisions of the Constitution Benches of this

Court in Messrs Rayala Corporation (P) Ltd. case (supra) and Kolhapur

Canesugar Works Ltd. case (supra). This view has held the field for over three

decades and reiterated even as late as two years ago. Non-compliance with

Section 269SS of the Act attracted prosecution as well as penalty. Omission of

the provision regarding prosecution will not affect the levy of penalty. The

advantage arising out of application of the ratio of the two decisions resulting in

prosecution in cases of non-compliance with Section 269SS of the Act is only

transitional affecting a few cases arising prior to 1.4.1989. Such cases may be

few and far between. Hence we find this is not an appropriate case for reference

to the larger Bench.

Net result of this discussion is that the view taken by the High Court is not

consistent with what has been stated by this Court in the two decisions aforesaid

and the principle underlying Section 6 of the General Clauses Act as saving the

right to initiate proceedings for liabilities incurred during the currency of the Act

will not apply to omission of a provision in an Act but only to repeal, omission

being different from repeal as held in the aforesaid decisions. In the Income Tax

Act, Section 276DD stood omitted from the Act but not repealed and hence, a

prosecution could not have been launched or continued by invoking Section 6 of

the General Clauses Act after its omission.

Hence, we allow this appeal, set aside the order of the High Court and

quash the proceedings for prosecution.