IMPORTANT POINT
In the Income Tax Act, 1961 Section 276DD prescribing punishment for violation of Section 269SS stood omitted from the Act but not repealed and hence a prosecution could not have been launched or continued by invoking Section 6 of the General Clauses Act, 1897 (which applies to repeal and not to omission) after its omission for offence committed before omission.

JUDGMENT

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.

2. 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.

3. 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.

4. 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 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 initia