- (1.) CRIMINAL Miscellaneous Nos. 6954-M, 6956-M, 6958-M and 6960-M, all of the year 1984, shall be disposed of by this order as these involve the same legal and factual controversy. In all these petitions filed under Section 482 of the Code of Criminal Procedure, 1973, the accused-petitioners seek the quashment of the proceedings instituted by the income-tax authorities for offences under Sections 276b and 278b of the Income-tax Act, 1961, pertaining to the returns filed for 1977-78, 1978-79, 1979-80 and 1980-81, by deliberately showing the payment of interest to different payees in the interest payable account instead of crediting it to the respective payee's accounts for avoiding the lapse of non-deduction of tax on the interest payable.
(2.) A brief resume of facts relevant for the disposal of the petition is that the concerned Income-tax Officer, Yamunanagar, filed a complaint against the petitioner which is a private limited company, besides Shri S. L. Dosaj, former managing director, K. R. Malhotra, former general manager, R. P. Sikka, S. K. Mahajan, directors, and K. L. Sehgal, former secretary of the company, alleging that, for the relevant assessment years, the interest pay-able to the depositors on specific amounts was shown by the company under the head of account "interest payable", although the company being aware of the depositors and particulars of the payees should have credited the amount to the accounts of the payees. Thus, it is maintained that the company and its officials have violated the provisions of Section 194a of the Income-tax Act read with Rule 30 framed under the said Act according to which 10 per cent. of the amount paid had to be deposited with the Revenue as advance income-tax and, after deducting this amount of income-tax, the interest ought to be, credited in favour of the payee. Thus it was maintained that the petitioners have committed offences punishable under Sections 276b and 278b of the Income-tax Act.
(3.) IN all these petitions, the petitioners seek the quashment of the respective complaints and the proceedings resulting therefrom, inter alia, on the ground that, before the amendment of Section 194a, vide Finance Act, 1987, which came into force on June 1, 1987, there was no provision like the present Explanation to Sub-section (1) of this section making the crediting of any interest to any account, whether called "interest" payable account" or "suspense account", would amount to crediting the interest payable to the depositor and thus the petitioners have not committed any offence. Mr. H. L. Sibal, learned senior advocate, further elaborated this point contending that this Explanation has created a penal offence by filling up the lacuna in the existing provisions of Section 194a of the Income-tax Act and that its operation would be prospective and not retrospective as the provisions of law at the time of commission of the offence had to be seen in order to ascertain whether the petitioners had committed any offence. He also relied upon the explanatory notes on the provisions relating to direct taxes while introducing the Finance Act, 1987 (see [1987] 168 ITR (St) 87 ). Mr. Sibal also relied upon the decisions of the apex court in CIT v. T. V. Sundaram Iyengar and Sons P. Ltd. [1975] 101 ITR 764 ; AIR 1976 SC 255 and Goodyear India Ltd. v. State of Haryana [1991] 188 ITR 402 ; AIR 1990 SC 781, in support of the proposition that the penal provisions of the statute should be strictly interpreted. Reliance has also been placed on the decision of the Supreme Court in G. P. Nayyar v. State (Delhi Admn.), AIR 1979 SC 602 ; [1979] Cr. LJ 587, in support of the proposition that a penal offence cannot be created with retrospective effect.;