Bhagwati Prasad, J. - (1.) THESE two writ petitions involve identical questions and, therefore, they are being decided by this common judgment.
(2.) THE petitioners are aggrieved by the penalty imposed on them in terms of Sections 269SS and 269T of the Income-tax Act, 1961. Against the assessment orders, the petitioners have preferred regular appeals and in those appeals stay was not granted to the petitioners by the appellate authority. THE petitioners came up before this court after rejection of such applications on the grounds that the penalty which was sought to be stayed, is illegal and Sections 269SS and 269T of the Income-tax Act, 1961, are ultra vires the Constitution and, therefore, no demand could have been issued against the petitioners. The basic argument of learned counsel for the petitioners for challenging the vires of Sections 269SS and 269T of the Income-tax Act (hereinafter referred to as "the Act"), is based on a judgment of the Madras High Court in the matter of Kumari A. B. Shanthi alias Vennira Adai Nirmala v. Assistant Director of Inspection, Investigation [1992] 197 ITR 330. According to learned counsel for the petitioners, Section 269SS of the Act makes the "borrower" of a sum more than Rs. 20,000 now and Rs. 10,000 earlier, an offender. Learned counsel has placed reliance on the reasoning given in the aforesaid Madras High Court decision whereby the learned single judge of that court has held that there is no difference between a "borrower" and a "lender" as far as culpability is concerned and since the lender has been left out of the purview of Section 269SS and the borrower alone has been covered within the ambit of said section of the Act, the inclusion of the borrower alone is not rational. The learned single judge of the Madras High Court held that a transaction of loan cannot exist without a lender and a borrower, They form an integral part of a single transaction of loan. Once the transaction of loan incorporated "borrower" and "lender", leaving a lender without a penalty the said provision is discriminatory and, therefore, the learned single judge of the Madras High Court was of the view that the section is hit by the rigour of Article 14 of the Constitution. Learned counsel for the petitioners urged that the impugned orders are bad, being violative of Article 14 of the Constitution of India. When "lender" is left out and only "borrower" is punished then the provisions are per se discriminatory. If the "borrower" can show wrong entries then the "lender" can also invest his undisclosed income. In this fashion both are liable to be punished but Sections 269SS and 269T of the Act merely holds the "borrower" liable. Another argument of learned counsel for the petitioners is that the act of the respondents has the effect of putting the petitioner in multiple jeopardy. His income under Section 68 of the Act is enhanced by adding the entries of such transaction. After this, under Sections 271D and 271E of the Act, penalty is imposed as the petitioner is held guilty of transaction under Sections 269SS and 269T, respectively. Multiple penalisation for the same offence is hit by the principles of double jeopardy. It is further argued that the penalties have been imposed on protective basis. It has been offered that if the petitioner agrees for addition of such income under Section 68 of the Income-tax Act then the penalties can be waived. That kind of order cannot sustain the penalty. Another contention of learned counsel for the petitioners is that the statute has not been made retrospective. One of the assessments in question is of the year 1989-90, the relevant year being 1988-89. As per Board Circular No. 551 (see [1990] 183 ITR (St.) 7) dated January 23, 1990, the provisions of Sections 271D and 271E of the Income-tax Act are applicable for transactions entered into after April 1, 1989, and in terms of Circular No. 522 (see [1988] 173 ITR (St.) 44), dated August 18, 1988, Sections 269SS and 269T will also apply after April 1, 1989. Thus, these provisions could not be made applicable for the assessment year 1989-90.
(3.) IT is further argued that there was no mens rea and the punishment was very harsh, more particularly when due to business losses the business has been closed and the entire assets of the firm have been sold out. The breach can be said to be a technical or venial breach. The decision of the Madras High Court which declared Section 269SS of the Act as violative of Article 14 of the Constitution, was delivered on April 21, 1992. A Division Bench of the same High Court in a judgment delivered in the case of K. R. M. V. Ponnuswamy Nadar Sons (Firm) v. Union of India [1992] 196 ITR 431, decided on September 11, 1989, has considered the same question and while adjudging the vires of Section 269SS of the Act, upheld the constitutional validity of this section. A Division Bench of the Madras High Court having upheld the constitutional validity of Section 269SS of the Act, it was not open to the learned single judge of the same court to have considered the question all over again and strike down the section, In this regard we draw strength from a Supreme Court pronouncement in the case of D. K. Yadav v. J, M. A. Industries Ltd. [1993] 83 FJR 271 ; [1993] 3 SCC 259 wherein it has been held that once an authoritative law is laid down after considering all the relevant provisions and the previous precedents, it is no longer open to recanvass the same on new grounds or reasons that may be put forth in its support unless the court deemed appropriate to refer it to a larger Bench in the larger public interest to advance the cause of justice. Every new discovery or argumentative novelty cannot undo or compel reconsideration of a binding precedent. It does not lose its authority "merely" because it was badly argued, inadequately considered and fallaciously reasoned. In this view of the matter, learned counsel for the appellant cannot draw benefit from the judgment of the learned single judge of the Madras High Court in Kumari A. B. Shanthi's case [1992] 197 ITR 330. Learned counsel for the respondents have drawn our attention to a news item, reported in [1993] 204 ITR (St) 1, wherein it has been reported that Supreme Court on July 26, 1993, has stayed the operation of the judgment of the Madras High Court in Kumari A. B. Shanthi's case [1992] 197 ITR 330 upon which reliance has been placed by learned counsel for the writ petitioner. Learned counsel for the respondent-Department has placed reliance on a case decided by the Gujarat High Court in Sukhdev Rathi v. Union of India [1995] 211 ITR 157 and urged that not only the Madras High Court but a Division Bench of the Gujarat High Court also upheld the constitutional validity of Section 269SS of the Act. The Division Bench of the Gujarat High Court in the aforesaid case has held that though it is true that a transaction of loan or deposit involves two persons--a borrower and a lender--and both can be said to be similarly situated so far as the transaction of borrowing or deposit is concerned, when it comes to evasion of tax, it cannot be said that they are similarly situated. A borrower by adopting the device of giving a false explanation or making false entries or by obtaining confirmatory letters is found evading payment of tax. Therefore, a borrower and lender cannot be presumed to be similarly situated as far as imposition of penalty is concerned. The Division Bench of the Gujarat High Court thus, also upheld the constitutional validity of Section 269SS of the Act. On the strength of the aforesaid decision it has been urged on behalf of the respondent-Department that the writ petition is meritless. ;