Tiwari Kanahaiyalal Etc. v. the Commissioner of Income Tax, Delhi

Judgment

TIWARI KANAHAIYALAL ETC. THE COMMISSIONER OF INCOME TAX, DELHI March 13, •I 975 [A. ALAGIRISWAMI AND N. L. UNTWALIA, JJ.] i11co111e-tax Act ( 11 of 1922), ss. 28 w1d 52, Income-tax Act (43 of 1%1), ss. 271, /77 and 297 ancl Gmera/ C/(111.\<'s Act (10 of 1897) s. 6 (c)-False dec/aratio11 filed by assessee under 1922 Act-Penalty imposed under 1961 Act- Prmecution for false declaration under s. 52 of 1922 Act-ft valid. Sec lion 297 (2) (f) of the Indian Income-tax Act, 1961, provides that notwithstanding the repeal of the Income-tax Act, 1922, any proceeding for the imposition of a penalty in respect of any assessment completed before April 1, 1962, may be initiated 'as if the 1961 Act had not been passed; and Clause (g) provides that any proceeding for the imposition of a penalty in respect of any assessment for the year ending March 3 l, 1962, or any earlier year, which was completed 011 01 after April 1, 1962 may be initiated under the 1961 Act.

Section 28(4) of the 1922 Act provides that no prosecution for an offence against the 1922 Act shall be instituted in respect of the same facts on which a penalty has been imposed undCJ the section. The appellant, filed returns under s. 22(2), Income-tax Act, 1922, the last of the returns being for the assessment year 1959-60. In 1964, he filed revised returns for the same assessment years showing a larger income. The income-tax was ~1ssessed under the 1961 Act on the revised returns and penalty proceedings were instituted and penalty was levied.under s. 271 of the 1961 Act. The respondent, thereafter, filed complaints for offences under s. 277 of the 1961 Act. By way of abundant caution he alsc filed complaints on the same facts for offences under s. 52 of the f922 Act. The trial court held that the launching of prosecution was illegal in view of s. 28 ( 4) of th~ 1922-Act and Art. 20 ( l) of the Constitution. The High Court, in appeal~ held that since no penalty was imposed under 6.

28 of the 1922 Act, s. 28 ( 4) was not a bar to the institution of proserntion nor \\'as it hit by Art. 20(1), and directed the trial court to proceed with the trial. Dismissing the appeal to this Court, HELD : (l) All the assessments although they related to the years .::arlier than the year ending on March 31. J 962, and were completed after the coming into force of the 1961-Act. (April, 1962). Hence the proceeding for the imposition of penalty had to be and was initiated under the 1961 Act under s. 297(g). Therefore, s. 28(4) of the 1922 Act cannot be a bar as no penalty was imp.1sed under s. 28o1and there is no provision similar to s. 28(4) in the 1961 Ad. [5>30 A-Bl Jain Bros & Others v. The U11io11 of llldia & others [1970] 3 S.C.R. 253. followed. (2) Article 20(1) docs not help the appetlant. lt is not a post facto legi~lation that is being pressed against him. Section 28 ( 4) did not obliterate the commissivn of the offence or convert the offence into an innocent act.

Under the section, the imposition of penalty merely barred the prosecution. But in the present case, the penalty having been imposed under s. 271 of the 1961 Act the launching of prosecution became permissible and was not hit by Art. 20(1). [931 DJ Rao Shir Balrndur Singh and a11otlicr v. Tile State of Vi11clllya Prade>il {1953] S.C.R. 1188. followed. (3) (a) On the facts alleged, '.f true. the appellant would be guilty of an offence under s. 52 of the 1922-Act. Section 297(1) of the 1961-Act repealed the 1922- Act. Jn s. 297(2) there is no saving for launching a prosecution under s. 52 of the 1922-Act. But since no intentinn different frnm that in s. 6 of the General Clauses Act, 1897, appears ins. 297(2) of the 1961-Act, the criminal liability incurred under s. ~2 of the 1922 Act remains unaffected under s. 6(c) of the General f1975J 3 s.c.R. Clauses Act. The prosecution c'an only be for tlie offence under s. 52 of the 1922-Act ands. 277 of the 1961 Act, which corresponds to s.

52 of the 1922-Act, cannot be invoked, [93 J G-H] c b) The ;ippcllant would also be entitled lo rely on the second part of Art. 20 (I ) that he should nol be subjected to a penalty ::;realer than that which might have been inflicted under the Jaw in force at the time of the commission of the offence. Is. 52 of the 1922 Act), because, s. 277 of the 1961-Act, corresponding to s. 52 of the 1922 Ac:t, provides a greater punishment. [931 E-F] · CR!:V!INAL APPELLATE JuRrsorcnoN : Criminal Appeal No. 28- 39 of 1971. Appeals by Special Leave from the Judgment and Order d,}ted the J 8th August, 1970 of the Rajasthan High Court in SB. Criminal Revision Nos. 102-113 of 1968. M. M. Tewari, and S. M. Jain, for the appellant. T. A. Ra111achandran, .~. P. Nayar, and R. N. Sachthey, for the rcpondent. The Judg~ent of the Court was delivered by L:o;TWALL\, J. These are 12 appeals filed by the appellant on grant of special leave by this Court from the common judgment o.f the Rajasthan High Court allowing 12 Criminal appeals filed by the respondent in accordance with section 417(3) of the Code of Criminal Procedure, 1898.

The appellant as partner ol' his partnership firm filed 12 Income Tax Returns for various assessment years-the last one being assessment year 1959-1960. The Returns were filed by the appellant between 26-3- l 95g and 16-10-1961 ;n accordance with section 22(2) of the Income Tax Act, 1922-ncreinafter referred to ~s th.: 1922 Act. The said act was repealed and replaced by the Income Tax Act, 1961-hereinafter called .the 1961 Act. The 1961 Act came into force on or from 1-4-1962. During the course of #le assessment proceedings when account books were produced for examination by the Income-tax Officer, Special Investigation Circle- 'B'. Jaipur, he suspected their genuineness or correctness. In May, 1963 the appellants premises were searched and a number of other books of account and documents were seized.

Thereupon the appellant filed revised Returns on 1-3-1964 in respect of all the 12 periods. fn the revised Returns the total income shown was far greater than what was shown in the earlier Returns. Income-tax was assessed after the filing ·of the revised Returns in respect of all the periods in accordance with the 1961 Act. Penalty proceedings were foitiated and penalfy was levied in respect of each Return under section 271(1) (c)(iii) of the 1961 Act. The respondent filed 12 complaints against the appellant alleging commission of offence by him under section 277 of the 1961 Act. Since the respondent was not quite sure of the legal jJOSition, as a matter of abundant precaution 12 more complaints were filed on the same facts to make out commission of offence by the appell~nt under section 52 of the 1922 Act. The (ity Magistrate, Jaipur 111 whose court all the 24 complaints were filed ordered TIWARI K. L. v. c.r.r.

(Untwalia, !.) the tagging of the 12 complaints filed later ·under section 52. of the 1922 Act with the complaints filed earlier under section 277 of the 1961 Act. To all intents and purposes therefore the numerically 24 complaints became 12 complaints for trial of the appellant under section 277 of the 1961 Act or section 52 of the 1922 .i<;.t as the case may be. After the commencement of the trial the appellant in each case filed a petition before the City Magistrate that the launching of the prosecution against him was bad and void in view of the provisions of section 28(4) of the 1922 Act read with Article 20(1) of the Constitution of India. The Magistrate felt ,persuaded to accept the stand taken on behalf of the appellant and held that he could not be prosecuted after imposition of penalty under the taxing statute and acquitted tho appellant in all the cases.

The High Court has held that since no penalty was impose~ on the petitioner or his firm under section 28 of the 1922 Act, section 28(4) was not a bar to the institution of the prosecution nor was it hit by Article 20(1). The High Court did not express any view whether the offence, if any, committed by the appellant fell under section 277 of the 1961 Act or section 52 of the 1'922 Act. The appeals were allowed and the Magistrate was directed to proceed with the trials in accordance with the law. Hence these appeals. The only question falling for our determination in these appeals js whether institution of the prosecution against the appellant for the alleged commission of offences by him under either the 1961 or the 1922 Act was bad in law !lS being violative of section 28(4) of the 1922 Act or Article 20(1). Section 297(1) of .the 1961 Act repealed the 1922 Act.

Certain savings were provided in sub-section (2) some of which even without those express 12rovisions would have been covered by section 6 of the General Clauses Act, 1897. But for the sake of precision and certainty those provisions were made. Some of the clauses (a) to (m) in sub-section (2) of section 297 are such that a different intention appears from them and they over-ride or supplement the provisions contained in section 6 of the General Clauses Act. Section 297 (2) provides "Notwithstanding the repeal of the Indian Incomr-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act),- (f) any proceed'ing for the imposition of a penalty in respect of any assessment completed before the 1st jay of April, 1962, may be initiated and any such penalty may be imposed as if this Act had not been passed;

(g) any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March, 1962, or any earlier vear, which is completed on or after the 1st day of April, 1962, may be initiated and any such penalty may be imposed under this Act." 13-564SupCI/75 SlJPREME ( JURT RF.PORTS [19751 3 s.c.R. All the 12 assessments altlrough they related to the years earlier than the year ending on the 31st day of March, 1962 were ?ompleted a~ter coming into force of the 1961 Act. Hence a proceedmg for the imposition of p1~nalty in respect of any one of those years had to be and was initiated under the 1961 Act in accordance with clause (g). Clause (f) did not come into play and no penalty was imposed under section 28 of the 1922 Act. That being so, as rightly pointed out by the High Court, section 28(4) was not a .bar to the launching of the prosecution as no such provision is to be found either in secfoJn 271 or in any othe1~ section of the 1961 Act.

Section 28(4) says "No prosecution for an offence against this Act shall be instituted in respect of the same facts on which a penalty has been imposed under this section." The said provision is not available to the appellant to bar the institution or the prosecution for an offence against either of the two Acts when a penalty has been imposed not under section 28(1) of the 1922 Act but under section 271(1) of the 1961 Act. Grover, J delivering the judgment on behalf of the Constitution Bench of this Court in the case of Jain Bros & others v. The Union of India others( 1) has pointed out at page 2'63 : "It is obvious that for the imposition of penalty it is not the assessment year or the date of the filing of the return which is important but it is the satisfaction of the income tax authorities· that a default has been committed by the assessee which would attract the provisions relating to penalty.

What-· ever the stage at which the satisfaction is reached, the scheme of ss.274(1) and 275 of the Act of 1961 is that the order imposing penalty must be made after the ·completion of the assessment. The crucial date, therefore, for purposes of penalty is the date of such completion." At page 264 says the learned Judge further : "Both ss. 271(1) and 297(2)(g) have to be read together and in hanpony and so read the only conclusion possible is that for the imposition of a penalty in respect of any assessmentfor the year ending on March 31, 1962 or any earlier year which is complete_d after first day of April 1962 the proceedings have to be initiated and the penalty imposed in accordance with the provisions of s.271 of the Act of 1961." Even clause (1) of Article 20 of the Constitution does not help the appellant. It is not a pas~ facto legislation which is being gressed into· service against him.

As pointed out by a Constitution Bench of this Court in Rao Shiv Bahadur Singh and another v. The State of Vin~hya Pradesh(2 ) at page 1198: "This article in its broad import B.as been enai:ted to prohibit convictions and sentences under ex post facto laws. The principle underlying such prohibition has been elaborately (1} (1970] (3) S.C.R. 253. (2) (1953] S.C.R. 1188. TIWARI K. L. v. c.r.r. (Untwalia, !.) discussed and pointed out in th:: very_ learned judgment of Justice Willes in the well known case of Phz'!lips v. Eyre- (1870) 6 Q.B.D. I, at 23 and 25 and also by the Supreme Court of U.S.A. in Calder v. Bull-3 Dallas 386; I Law. Edition 64~ at 649. In the English case it is explained that ex post jdt~o laws are laws which voided and punished what had been lawful when done. There can be no doubt as to the paramount importance of the principle that such ex post facto laws, which retrospectively create offences and punish them are bad as being highly inequitable and unjust."

Article 20(1) also prohibits_ the subjecting 'Of any person to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence. On the facts alleged against the appellant, if found to be true, at the time he made the false statements in the declarations he did commit an offence under section 52 of the 1922 Act. Sub-section (4) o~ section 28 did not obliterate the factum of the commission of the offence and did not transmute the offence into an innocent act because of the imposition of penalty under section 28. Such imposition merely barred the prosecution for the trial and conviction of the commission ·of the offence. The penalty having been imposed under section 271 of the 1961 Act the launching of the prosecution became permissible and was not hit by Article 20(1) on the Constitufron.

We are inclined to think that the offence, if any, committed by the appellant was under section 52 of the 1922 Act as the allegedly false statements in declarations were made at a time when the said Act was in force.• No false statement in any declaration seems to have been made under the 1961 Act to form the basis of a charge against the appellant 11der section Z77 of that Act. The punishment provided in tliis .;ection is greater than the one engrafted in section 52 of the 1922 Act. To that extent only the appellant would be entitled to press into service the second part of clause (1) of Article 20 of the Constltution which says that no. _person shall: "be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence." It is advisable to discuss and dispose of a new point which arose during the hearing of these appeals.

Sub-section (1) of section 297 of the 1961 Act repealed the 1922 Act including section 52. In sub-section (2) no saving seems to have been provid_ed for the launching of the prosecution u_nder the repealed section 52 of the 1922 Act. It does not seem correct to take recourse to clause (h) of Sec- . tion 297(2) tQ make the offences come under section 277 of the 1961 Act as was endeavoured to be done by the respcindent in the first 12 comP,!aint petitions. But thea from no clause under sub-section (2). a different intention appears in this regard from what has been said in section 6 of. the General elauses Act. On the facts alleged the criminal liability incurred µnder sectfun 52 of the 1922 Act re- ~ains, unaffected under clause (c) of section 6 of the General Clauses l19751 3 s.c.R. Act. In the case of T. S. Baliah v. T. S. Rangachari(l) Ramaswami, J. delivering the judgment of this Court has said at page /1 :

"The principle of this section is that unless a different intention appears in the repealing Act, any legal proceeding can be instituted and continued in respect of any matter pending under the repealed Act as if that Act was in; force at the time of repeal. In other words, whenever there is a repeal of an enactment the consequences laid d'Own in s.6 of the General Clauses Act will follow unless, as the section itself says, a different intention appears in the repealing statute. In the case of a simple repeal there is· scarcely aqy room for expression of a contrary opinion. But when the repeal is followed by fresh legislation 'On the same subject the Court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether . they indicate a ~!f'l'erent intention. The question is n'Ot whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them.

Section 6 of the General Clauses Act therefore will be applicable unless the new legislation manifests an intention incompatible with or contrary to the provisions of the ' section. Such incompatibility would have to be ascertained from a consideration of all the relevant _provisions of the new statute and the mere absence of a saving clause is by itself not material." In the result all the appeals fail and are dismissed. V.P.S. Appeals dismissed. (1) [1969] (3) S.C.R. 65.