Income Tax Officer vs Sakthi Finance Ltd. and Others

V. Bakthavatsalu J.

All these appeals are preferred by the Income Tax Officer, Coimbatore, against the order of acquittal passed by the learned Judicial Magistrate

No. I, Coimbatore. The first accused is Sakthi Finance Limited, represented by N.K. Pai. The second accused is the chief executive and president

of the company and the third accused is the general manager. But, in the cases relating to C.A. Nos. 279 of 1990 to C.A. No. 288 of 1990, the

company and the second accused, N.K. Pat, alone are impleaded as accused.

The complaint relating to C.A. No. 249 of 1990 and connected cases are filed u/s 276E read with Section 278B of the Income Tax Act, 1961.

The complaint relating to cases C.A. Nos. 279 of 1990 to C.A. No. 288 of 1990 are filed u/s 276DD read with Section 276B of the Income Tax

Act.

It is the case of the appellant/complainant that the first accused violated Section 269T by repayment of loan otherwise than by an account payee

cheque and that they violated Section 269SS by accepting deposits of Rs. 10,000 otherwise than by an account payee cheque. The names of the

drawees and dates of cheque and the amount involved in the cheque which relates to C.A. Nos. 249 of 1990 to C.A. No. 267 of 1990 and C.A.

No. 269 of 1990 to C.A No. 277 of 1990 are shown in the table below :

TABLE I

Appeal number Name of the drawee Date of cheque Amount (Rs.)

C. A. No. 249 of 1990 Kumari 13-10-87 42,404

C. A. No. 250 of 1990 Veda 15-10-87 31,687

C. A. No. 251 of 1990 Murali 15-10-87 26,406

C. A. No. 252 of 1990 Francis 15-10-87 42,482

C. A. No. 253 of 1990 Peter 13-10-87 26,610

C. A No. 254 of 1990 Aruna 15-10-87 47,740

C. A. No. 255 of 1990 Mathu 15-10-87 26,406

C. A No. 256 of 1990 A. Doss 13-10-87 26,610

C. A No. 256 of 1990 A. Doss 13-10-87 42,420

C. A. No. 257 of 1990 Michael 13-10-87 42,420

Michael 13-10-87 26,610

C. A. No. 258 of 1990 Valli 13-10-87 33,774

C. A. No. 259ofl990 Balu 15-10-87 31,838

C. A. No. 260 of 1990 Victoria 15-1087 26,415

C. A. No. 261 of 1990 Rapeeta 13-10-87 26.396

C. A. No. 262 of 1990 Paul 15-10-87 26.629

C. A. No. 263 of 1990 Fathima 13-10-87 26,396

C. A. No. 264 of 1990 Pauline 15-10-87 40,136

C. A. No. 265 of 1990 Pauline 15-10-87 40,136

C. A. No. 266 of 1990 Ramu 15-10-87 42,451

C. A. No. 267 of 1990 Lazar 13-10-87 29,552

C. A. No. 269 of 1990 Stephen 13-10-87 42,451

C. A. No. 270 of 1990 Arul 16-10-87 42,492

C. A. No. 271 of 1990 John 15-10-87 26,629

42,451

C. A. No. 272 of 1990 Sahul 15-10-87 28,518

C. A. No. 273 of 1990 A. James 13-10-87 26,386

� 13-10-87 42,404

� 13-10-87 27,674

� 13-10-87 26,386

C. A. No. 274 of 1990 Uma 13-10-87 47,758

C. A. No. 275 of 1990 Joseph 15-10-87 26,629

� 15-10-87 42,451

C. A. No. 276 Of 1990 Mary 15-10-87 45,451

C. A. No. 277 of 1990 Baskar 15-10-87 42,451

� 15-10-87 42,451

The names of the depositors, the amounts received in cash and dates of receipt of cash which relate to C.A. Nos. 279 of 1990 to C.A. No.

288 of 1990, are given in the table below :

TABLE II

Appeal number Name of the depositors Date of receipt of cash Amount Rs. (in cash)

C. A. No. 279 of 1990 Nanambal 19-5-85 10,000

C. A. No. 280 of 1990 Mahadeven 18-11-85 10,000

2-12-85 10,000

C. A. No. 281 of 1990 Balu 10-2-86 10,000

C.A.No. 282 of 1990 Balasubramaniam 17-9-85 50,000

C. A. No. 283 of 1990 Santhanalakshmi 6-3-86 10,000

C. A. No. 284 of 1990 Ganesan 13-9-85 25,000

C. A. No. 285 of 1990 Saraswathi 13-9-85 25,000

C.A. No. 286 of 1990 Lokanaidu 8-2-86 8-2-86

C. A. No. 287 of 1990 Valasala Menon 3-1-86 10,000

C.A. No. 288 of 1990 Sethumadhavan 23-1-86 15,000

The case of the complainant in the first batch of appeals is that when the residential premises of one James, Michael and others were searched, it

was noticed that the first accused issued by way of repayment of loans to the drawees noted in the column under cheques and that as it is in

violation of Section 269T, after issuing summons and conducting enquiry, the complaint is filed.

It is the case of the complainant in the second batch of appeals is that when the residential premises of one James were searched, it was noticed

that the accused accepted deposits of Rs. 10,000 or more otherwise than under account payee cheques and that, therefore, they are liable to be

punished u/s 276DD of the Income Tax Act.

On the side of the complainant, two witnesses were examined and on behalf of the accused N.K. Pai has been examined as D.W. 1.

It is not disputed by the accused that they issued crossed cheques and that they received cash from the depositors noted in the above columns.

The trial court on a consideration of the materials has held that accused Nos. 1 to 3, in the cases covered under C.A. No. 249 and connected

cases, violated the provisions of the Income Tax Act, i.e., Section 269T. But the trial court acquitted the accused on the ground that Section 276E

penal provision was deleted with effect from April 1, 1989, and that, therefore, the court is not empowered to punish the accused. For coming to

such a conclusion, the trial court relied upon a decision reported in Rayala Corporation (P.) Ltd. v. Director of Enforcement, AIR 1970 SC 494.

In the cases covered under C.A. Nos. 279 to 288 of 1990 the trial court has give a finding that the second accused joined the first accused

company only on September 14, 1987, and that, therefore, no liability can be fastened on the second accused for the offence occurred prior to

September 14, 1987. The trial court has also acquitted the accused in the above cases on the ground that the penal provision was not in force with

effect from April 1, 1989. The trial court delivered the judgment in all the cases on July 31, 1989. Aggrieved by the said order of acquittal, the

Income Tax Department have come forward with these appeals.

It is contended by learned counsel for the appellant, Thiru Sivanandan, that all the complaints were instituted on September 12, 1988, i.e.,

before the coming into force of the new provision and that for the offences committed during the existence of the penal provision, the repeal or

omission of Section 276E or Section 276DD would not affect the proceedings and that Section 6 and 6(e) of the General Clauses Act would

apply to all these cases. It is, further, contended that the trial court has not properly applied the principle laid down by the Supreme Court in

Rayala Corporation (P.) Ltd. v. Director of Enforcement, AIR 1970 SC 494. Learned counsel for the appellant contended that the omission of the

penal ""provision"" with effect from April 1, 1989, will not affect the pending cases.

Repelling the above contentions, learned senior counsel for the respondent, Thiru M. Ravindran, contended that in cases of omission, Section 6

of the General Clauses Act will not apply, since there is no saving clause in the amended provision and that the penal provision is omitted without

any condition and that, therefore, the principles laid down by the Supreme Court in Rayala Corporation (P.) Ltd. v. Director of Enforcement, AIR

1970 SC 494, would squarely apply to these cases and that, therefore, the accused cannot be punished for the offence under a particular provision

which was omitted.

Before proceeding further to give a finding on the crucial points involved in these cases, it would be relevant to extract the provisions of the

Income Tax Act. Section 269SS of the Act states that after June 30, 1984, 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, if the amount is Rs. 10,000 or more. The amount of Rs. 10,000

is enhanced to Rs. 20,000 with effect from April 1, 1989. Section 276DD of the Act provides penalty for violation of Section 269SS. As per the

above provision, the person who accepts or takes the amount in contravention of Section 269SS shall be punishable with imprisonment for a term

which may extend to two years and shall also be liable to pay fine equal to the amount of such loan or deposit. The above provision, i.e., Section

276DD, was omitted with effect from April 1, 1989, under the Direct Tax Laws (Amend, ment) Act, 1987. Criminal Appeals Nos. 279 to 288 of

1990, are covered by the above provisions.

Section 269T of the Act states thus :

No company (including a banking company), co-operative society or firm shall repay to any person any deposit otherwise than by an account

payee cheque or account payee bank draft where the amount of the deposit, or where the amount of the deposit is to be repaid together with any

interest, the aggregate of the amount of the deposit and such interest, is ten thousand rupees or more.

Section 276E of the Act provides penalty for violation of Section 269T of the Act. As per the above section, if a person repays any deposits,

otherwise than in accordance with the provisions of Section 269T of the Act, he shall be punishable with imprisonment for a term which may

extend to two years and shall also be liable to pay fine equal to the amount of such deposit. The above provision, i.e., Section 276E, is also

omitted with effect from April 1, 1989, as per the Direct Tax Laws (Amendment) Act, 1987. In the place of the above omitted sections, new

provisions are inserted now. As per the new provision, Section 271D of the Act, which came into effect from April 1, 1989, the person who

accepts, takes any loan or deposit in contravention of Section 269SS of the Act, shall be liable to pay, by way of penalty, a sum equivalent to the

amount of the loan or deposit. No punishment is provided under this new section. Similarly, for contravention of Section 269T of the Act, a new

provision is inserted u/s 271E of the Act. As per the above section, the person who contravenes Section 269T shall be liable to pay, by way of

penalty, a sum equivalent to the amount of the deposit so repaid. Sub-section (2) to the above section empowers only the Deputy Commissioner

to impose penalty. Relying upon the above provisions, learned counsel for the respondents contended that the provision which imposes punishment

has been completely omitted and that, therefore, the accused cannot be convicted under the old provisions. As already stated, the trial court relies

upon a decision reported in Rayala Corporation (P.) Ltd. v. Director of Enforcement, AIR 1970 SC 494, for acquitting the accused.

Now the question that arises for consideration is, whether the proceedings pending before the trial court under the old provisions would be

affected by the omission of those sections with effect from April 1, 1989. For proper appreciation of the rival contentions, it would be useful to

refer to Section 6 of the General Clauses Act. Section 6 of the Act reads thus:

Where this Act or any Central Act or regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to

be made, then, unless a different intention appears, the repeal shall not--. . .

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment

as aforesaid.

Learned counsel for the appellant contended that the decision reported in Rayala Corporation (P.) Ltd. v. Director of Enforcement, AIR 1970

SC 494, would not apply to the facts of this case. I see there is considerable force in the above contention of the appellant.

It is seen from the facts of the case reported in the above decision that the complaint was filed on March 17, 1968, under sections 4(1), 5(1)

(e) and 9 of the Foreign Exchange Regulation Act and Rule 132A(2) of the Defence of India Rules, which was punishable under Rule 132A(4) of

the Rules. It is seen that Rule 132A(4) was omitted with effect from March 30, 1965. It is seen that the complaint was filed on March 17, 1968,

after Rule 132A(4) of the Defence of India Rules was omitted. Relying upon the above facts, the apex court has held thus (page 502) :

The argument of Mr. Sen was that, even if there was a contravention of Rule 132A(2) by the accused when that rule was in force, the act of

contravention cannot be held to be a ''thing done or omitted to be done under that rule'', so that, after that rule has been omitted, no prosecution in

respect of that contravention can be instituted. He conceded the possibility that, if a prosecution had already been started while Rule 132A was in

force, that prosecution might have been competently continued. Once the rule was omitted altogether, no new proceeding by way of prosecution

could be initiated even though it might be in respect of an offence committed earlier during the period that the rule was in force. We are inclined to

agree with the submission of Mr. Sen that the language contained in Clause 2 of the Defence of India (Amendment) Rules, 1965, can only afford

protection to action already taken while the rule was in force, but cannot justify initiation of a new proceeding which will not be a thing done or

omitted to be done under the rule but a new act of initiating a proceeding after the rule had ceased to exist. On this interpretation, the complaint

made for the offence under Rule 132A(4) of the D.I. Rules, after April 1, 1965, when the rule was omitted, has to be held invalid.

In this case, the complaint was filed long before the omission of the sections with effect from April 1, 1989. On the facts of the above case, the

apex court has held that the complaint made for the offence under Rule 132A(4) after April 1, 1965, when the rule was omitted has to be held

invalid. As the provision, which relates to the complaints filed in these appeals, was omitted after institution of the complaint, the above reported

decision of the apex court will not apply to the facts of this case. Therefore, I am unable to accept the contention of the accused that the decision

of the apex court reported in Rayala Corporation (P.) Ltd. v. Director of Enforcement, AIR 1970 SC 494, would apply to the facts of this case.

Another decision relied on by the accused reported in State of Punjab v. Mohar Singh Pratap Singh, AIR 1955 SC 84, also will not apply to

this case. It is seen from the facts of the above case that the Ordinance was promulgated on March 3, 1948, and the said Ordinance was repealed

by Act 12 of 48 re-enacting all the provisions of the repealed Ordinance. In the above case, prosecution was launched on May 13, 1950. It is held

in the above decision that the prosecution was started against the accused u/s 7 of the Act and not under the corresponding provisions of the

Ordinance and that the offence was committed at the time when the Act was not in force and that, therefore, it is held that no man could be

prosecuted or punished under a law which came into existence subsequent to the commission of the offence (underlining is mine). All that is held in

the above decision is that Section 6 of the General Clauses Act has no application when a statute, which is of a temporary nature automatically

expires by efflux of time, and that the Ordinance in the present case was a temporary statute, but, it is admitted that the period during which it was

to continue had not expired when the repealed Act was passed. Regarding the applicability of Section 6 of the General Clauses Act, the apex

court has held thus (page 88) :

Whenever there is a repeal of an enactment, the consequences laid down in Section 6 of the General Clauses Act will follow unless, as the section

itself says, a different intention appears. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. Bill when the

repeal is followed by fresh legislation on the same subject we would undoubtedly have to look to the provisions of the new Act, but only for the

purpose of determining whether they indicate a different intention"".

The apex court has also emphatically observed that Section 6 of the General Clauses Act cannot be ruled out when there is repeal of an

enactment followed by a fresh legislation. Hence, I hold that the above reported decision will not strengthen the contention of the respondents.

Learned counsel for the respondents relies upon a Full Bench judgment of the Punjab High Court reported in National Planners Ltd. Vs.

Contributories etc., . The question that arose for reference in the above case is as follows (page 204 of 28 Comp Cas and headnote of AIR 1958

Punj) :

It is open to a District Judge in whose court a winding-up proceeding was pending before the Act of 1956 came into force to retain the said

proceeding in his court and to pass judgment thereon in accordance with the provisions of the Act of 1913.

In the above decision, it is, further held thus (page 200 of 28 Comp Cas and headnote of AIR 1958 Punj) :

It is well-settled rule of common law that when an action is brought under a statute which is afterwards repealed, the court loses jurisdiction of the

suit pending under the repealed Act and is unable to deliver judgment thereon. The effect of repealing a statute is to obliterate it as completely from

the records of the Parliament, as if it had never been passed by the Parliament ; and it must be considered as a law that never existed, except for

the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law.

It is, further, seen from the above decision that the effect of repealing a statute would not affect actions which were commenced, prosecuted

and concluded while it was an existing law. In another decision relied on by the respondents'' counsel reported in Patiram Jain and Others Vs.

Union of India (UOI) and Others, , it is held thus (headnote) :

Sections 276DD and 276E of the Income Tax Act, 1961, were deleted with effect from April 1, 1989, without any saving clause. Since sections

276DD and 276E of the Income Tax Act were deleted without any saving clause no prosecution could be launched for the offences under those

sections after the same were deleted and nothing was contained in the Act that the prosecution could continue for the past act of any party.

It is seen from the facts of the above case that the show-cause notice was issued on February 14, 1991, to the firm for launching prosecution

under Sections 276DD and 276E of the Income Tax Act and again another show-cause notice was issued on March 11, 1991, for launching

prosecution under sections 276DD and 276E of the Income Tax Act, 1961. Relying upon the above facts, the court has held that after deletion of

the above two sections, the prosecution against the petitioner could not be launched on February 18, 1992. The court has categorically held that

there was no saving clause after omission of these two sections from the Income Tax Act and that an incident which occurred prior to the omission

could not be the basis for prosecution thereafter. The court has also relied upon a decision reported in Rayala Corporation''s case, AIR 1970 SC

494, wherein it is held that prosecution launched on March 17, 1968, after Rule 132A(2) was omitted by the Defence of India (Amendment)

Rules, 1965, is illegal. It is thus apparent that the facts of the above case are clearly distinguishable from the facts of this case, since all the

complaints were instituted and trial commenced before April 1, 1989. The above reported decisions relied on by learned counsel for the

respondents would not strengthen his case in any way.

It is clear from the catena of decisions that when a particular section is repealed or omitted, the proceedings already instituted and commenced

would not be affected by omission or repeal unless a different intention appears.

Learned counsel for the appellant has invited my attention to a judgment of this court reported in C.A. Baloo and another Vs. Union of India

and others, . It is clearly held in the above decision that mere use of the word ""omit"" instead of ""repeal"" by the Legislature cannot be taken to show

its intention to exclude the application of Section 6. The facts of the above case will show that the accused filed an application u/s 482 of the

Criminal Procedure Code, to quash the proceedings. The learned judge after referring to the decisions including Rayala Corporation''s case, AIR

1970 SC 494, has held thus (headnote of 197 ITR) :

The principle enacted in Section 6 that, unless a contrary intention appears, the repeal of an Act would not affect any right, privilege, obligation or

liability acquired, accrued or incurred under any enactment so repealed, would apply to a repeal of one of the sections of the Income Tax Act,

1961. With effect from April 1, 1989, Section 271D of the Income Tax Act, 1961, had been introduced while omitting Section 276DD with effect

from the same date. Section 271D, as it stands now, imposes only a penalty for violation of Section 269SS and prosecution for such violation had

been done away with. From the insertion of the new section while omitting the earlier section, it is not possible to gather a contrary intention that

the Legislature desired that prosecutions which were permissible u/s 276DD of the Act and already initiated before the insertion of the new section,

were to be erased or obliterated.

It is seen from the facts of the above case that cases were instituted in the year 1985 by the Income Tax Department. The court has held that

prosecutions were initiated in the year 1985 when Section 276DD was in force. New Section 271D came into force with effect from April 1,

1989. Therefore, the court has held that the petitioners will not be liable to pay penalty u/s 271D of the Act, since it was introduced only on April

1, 1989, and that prior to that date, when that law was not in the statute book, they cannot be proceeded against and that if a prosecution also

cannot be launched under the then existing Section 276DD of the Act, the resultant position would be that there can be neither a prosecution nor a

penalty proceeding against these petitioners and that this certainly could not have been the intention of the Legislature. I am in respectful agreement

with the above view taken by a learned single judge of this court. Therefore, it cannot be contended by any stretch of imagination that since penal

provision was omitted with effect from April 1, 1989, the proceedings instituted and trial commenced before the said date are taken away by the

omission of the said section. I hold that the repeal or omission shall not affect the previous operation of the section so repealed. I also agree with

the view taken by the learned single judge that repealing the provision is the same as omitting it.

Learned counsel for the appellant relies upon a decision reported in Amrit Lal and Company and Others Vs. Income Tax Officer, . It is held in

the above decision that Section 276DD was omitted with effect from April 1, 1989, but the contravention was alleged to have been made by the

petitioner in the year 1988 and that prima facie it was open to the Income Tax Officer to launch prosecution in respect of the acts or omissions

committed during the period the provisions of the repealed or unamended sections were operative. It is seen that the complaint in the above case

was filed after March 15, 1990. The question whether the complaint filed after April 1, 1989, for the alleged offence under the omitted provision

cannot be decided in these cases. The question that arose for consideration in these appeals is whether the accused can be punished in pending

proceeding initiated prior to April 1, 1989, for offence u/s 276DD or 276E after April 1, 1989, when the above provisions were omitted.

The decision relied on by the appellant''s counsel reported in Kazi Lhendup Dorji v. Central Bureau of Investigation [1994] SCC 873 relates

to interpretation of Section 21 of the General Clauses Act. In the above decision, it is held thus :

Section 21 of the General Clauses Act does not confer a power to issue an order having retrospective operation. Even proceeding on the basis

that Section 21 of the General Clauses Act is applicable to an order passed u/s 6 of the Act, an order revoking an order giving consent u/s 6 of the

Act can have only prospective operation and would not affect matters in which action has been initiated prior to the issuance of the order of

revocation. The impugned notification withdrawing the consent has to be construed in this light. If thus construed it would mean that investigation

which was commenced by the CBI prior to withdrawal of consent under the notification had to be completed and report submitted u/s 173 of the

Criminal Procedure Code, and it was not affected by the withdrawal of the consent.

In GENERAL FINANCE CO. AND ANOTHER Vs. ASSISTANT COMMISSIONER OF Income Tax., , the Punjab and Haryana High

Court has held that prima facie it was open to the Assistant Commissioner of Income Tax to launch prosecution in respect of acts or omissions

committed during the period the provisions of the repealed sections were operative.

In Isher Dass Vs. State of Haryana, which is a case arising under the Essential Commodities Act, it was contended that the control order

passed was for a short period and the prosecution could not be continued after the expiry of the period. But the apex court has held that the

offence committed has to be tried in spite of the expiry of the period and that mere expiry of the period does not make any difference. On a careful

perusal of the judgment, I have no hesitation in holding that the omission of the penal provisions with effect from April 1, 1989, will not affect the

pending proceedings which were instituted when the omitted provisions were operative.

It is no doubt true that the penal provision provides punishment for contravention of the rules. But, in the amended provision, no imprisonment

is provided. On the other hand, only a levy of penalty equal to the amount of deposit is provided. As already stated, the original sections 269SS

and 269T arc not in the statute book now. In the above circumstances, it cannot be said that the amended provision would express a different

intention. On the date of launching prosecution, no proceedings can be instituted u/s 271D, the new provision. Therefore, I hold that Section 6 of

the General Clauses Act will clearly apply to this case and, 1 hold that the findings of the trial court, that the court is not empowered to punish the

accused u/s 276E of the Act or Section 276DD of the Act, cannot be sustained. I hold that the trial court has committed error in acquitting the

accused by relying upon the judgment of the Supreme Court in Rayala Corporation''s case, AIR 1970 SC 494.

The trial court acquitted the accused who were involved in C.A. Nos. 279 to 288 of 1990, on other grounds also. The complaints relating to

the above cases were filed only against the company and N.K. Pai. The second accused has been examined as D.W. 1. He has stated in his

evidence that he joined the first accused company on September 14, 1987. He has also filed exhibit D-5 joining report dated September 14,

1987. The said fact has not been denied by the complainant in cross-examination. In the sworn statement given by D.W. 1 before the Income Tax

Officer, he has stated that his father, S.N. Pai, was looking after the affairs of the company prior to his appointment. P.W. 2 has admitted in cross-

examination that D.W. 1 joined the first accused company on September 14, 1987. It is seen from the complaint that the complaint is filed against

the first accused represented by N. K. Pai, who is also impleaded as second accused. Relying upon the above facts the trial court has held that no

liability can be fastened on the second accused, since he joined the first accused only on September 14, 1987. As P.W. 1 himself has admitted that

the second accused joined the company on September 14, 1987, I fail to understand as to how he is liable to answer the claim of the complainant

for the receipt of amount in cash in the year 1985-86. It is, thus, seen that on the date of receipt of the cash from the depositors noted in table No.

2, D.W. 1, the second accused, was not in charge of the affairs of the first accused company. It is, thus, clear that the first accused is not

represented by the officer who was representing the affairs of the company on the date of receipt of the cash amounts. Therefore, the trial court

has rightly acquitted the accused on the above ground. Even though the finding of the trial court that the accused have to be acquitted, since the

penal provision was omitted with effect from April 1, 1989, is vitiated, the acquittal of the accused on other grounds has to be upheld. Therefore, I

hold that these appeals, i.e., C.A. Nos. 279 to 288 of 1990, have to be dismissed.

It is, thus, seen from the above discussion that the order of the trial court that the court is not empowered to impose punishment since the penal

provision was omitted is vitiated by grave infirmity. But in the cases covered under C.A. No. 249 and batch table II, the accused cannot be

convicted for violation of the above provision, since the other aspect of the case was not considered by the trial court. The chief manager of the

first accused company gave a statement to the Income Tax Officer stating that at the request of James, cheques were crossed and endorsements

were made as company and that since James is a heavy investor, he was accommodated. The second accused has stated in the statement exhibit

P-5 that a circular was issued on April 6, 1985, to all the officers of the company regarding the mode of taking or accepting deposits. The second

accused, as D.W. 1, has stated in his evidence that whenever a customer comes and wants to make a deposit with them, they would ask him to fill

up the prescribed application form and he pays the amount in cheque or draft. They issue him a temporary receipt of the amount and it is only after

getting payment realised in the company''s account, they would issue the deposit receipt and that in the case of the customers who are elderly, sick

and illiterate they use to send their staff along with them to the bank to help them to get necessary pay orders. Regarding repayment of deposits, he

has stated that till July 1987, repayment of deposits were made by the head office at Coimbatore and that after July, 1987, the company issued a

circular authorising branch offices to make repayment and that Nagarajan, a qualified chartered accountant was solely responsible for all the

accounts during the period of transaction. The accused have offered some explanation before the Income Tax Officer and also in evidence as to

why account payee cheque was not given. Though the trial court has discussed the above evidence it has not given any finding that the explanation

offered by the accused was not acceptable. Even though, in paragraph 18 of the judgment, the trial court has observed that the depositors and

James were not examined as witnesses, the trial court has held that the accused contravened Section 269T of the Act.

The accused who contravenes Section 276DD or Section 276E of the Act cannot be convicted if he proves that there was reasonable cause

for such failure. Section 278AA came into force with effect from September 10, 1986. The crossed cheques which are the subject-matter of C.A.

Nos. 249 to 267 of 1990 and 269 of 1990 to 277 of 1990 relate to the year 1987. But the above Section 276DD and Section 276E are omitted

with effect from April 1, 1989. It is, thus, clear that till April 1, 1989, Section 276DD and Section 276E of the Act were in the statute book. If that

is so, the accused cannot be convicted if he proves that there was reasonable cause for such failure. By virtue of Section 278AA, which was in

force at the time of the institution of the complaint, the accused has got a right to establish that there was reasonable cause for failure. The above

aspect of the case was not considered by the trial court. It is not the case of the prosecution that Income Tax was evaded and proper returns were

not furnished by the accused. P.W. 2 has also admitted that the amounts, the subject-matter of the crossed cheques, are entered in the account

books of the first accused. As already stated, even though the accused have let in evidence to prove that there was reasonable cause for not

issuing crossed cheque, the trial court has not given any finding on the above aspect. Therefore, the accused cannot be convicted for violation of

Section 276E or Section 276DD of the Act.

Now, the question is whether it is desirable to remit the matter to the trial court for fresh disposal or cases covered under table I. As already

stated, the amount involved in all these cheques were already brought in the account books of the company. The offence alleged against the

respondents is a technical offence. The occurrence is said to have taken place in the year 1987. It is not stated that the accused evaded Income

Tax. In the above circumstances, it is neither prudent nor desirable to remit the case to the trial court after a lapse of 13 years. For the reasons

stated above. I hold that though the order of acquittal passed by the trial court in C.A. No. 249 batch cannot be sustained, the matter cannot be

remitted to the trial court for fresh disposal for considering the other aspects of the case after a lapse of 13 years. As the proceedings against the

accused are pending from the year 1987, and as the penal provision was subsequently deleted from the statute book, I feel it is not just and proper

to remit the matter to the trial court for fresh disposal.

From the facts discussed above, the following findings are given :

The omission of sections 276DD and 276E of the Act with effect from April 1, 1989, will not affect the proceedings already initiated by the

Income Tax Department.

It is open to the court to impose punishment on the accused notwithstanding the fact that the penal provision was deleted before the date of the

judgment.

The order of acquittal passed by the trial court in cases which are the subject-matter of C.A. Nos. 279 to C.A. No. 288 of 1990 have to be

upheld.

The finding of the trial court, in cases relating to C.A. No. 249 batch (Table I) that the court is not empowered to impose punishment since the

penal provision is deleted is set aside. As the trial court has not given finding on other aspects of the case and as it is not desirable to remit the

matter to the trial court for fresh disposal after a lapse of 13 years, no further directions are given for remitting the cases.

For the reasons stated above, all the criminal appeals are disposed of accordingly.