Assistant Commissioner of Income-tax Vs. Jawahar Mills Ltd. and ors.

Decided On : Mar-10-1998

Court : Chennai

Notice (8): Undefined index: topics [APP/View/Case/meta.ctp, line 36]
Code Context


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		'Judgement' => array(
			'id' => '821360',
			'acts' => 'Income-tax Act, 1961 - Sections 269SS, 271D and 276DD',
			'appealno' => 'Criminal Appeal Nos. 647 to 653 of 1990',
			'appellant' => 'Assistant Commissioner of Income-tax',
			'authreffered' => '',
			'casename' => 'Assistant Commissioner of Income-tax Vs. Jawahar Mills Ltd. and ors.',
			'casenote' => 'Direct Taxation - deposits - Sections 269SS, 271D and 276DD of Income Tax Act, 1961 - respondent company engaged in running of spinning mill - Section 269SS prescribes mode of acceptance of any deposit or loan by assessee - respondent accepted cash of certain amount of Rs. 10000 in violation of provisions of Section 269SS - acquitted by Trial Court - appeal - Order of Trial Court not to be interfered unless Trial Court wholly unreasonable or erroneous - appellant failed to prove ingredient of offence alleged in Section 276DD - failed to give reasons for accepting cash not true - failed to prove that respondent without reasonable cause or excuse accepted cash - decision of Trial Court upheld.


 - ',
			'caseanalysis' => null,
			'casesref' => 'Awadhesh v. State of M. P.;',
			'citingcases' => '',
			'counselplain' => 'K. Ramasamy, Special Public Prosecutor',
			'counseldef' => 'Gopinath, Adv.',
			'court' => 'Chennai',
			'court_type' => 'HC',
			'decidedon' => '1998-03-10',
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			'judge' => 'V. Bakthavatsalu, J.',
			'judgement' => '<p style="text-align: justify;">V. Bakthavatsalu, J. </p><p style="text-align: justify;">Criminal Appeal No. 647 of 1990 :</p><p style="text-align: justify;">1. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, Salem, against the order of acquittal passed in F.O.C.C. No. 341 of 1989. The case of the complainant is that the first accused is a private limited company engaged in running a spinning mill in the name and the style of 'Jawahar Mills Limited'. The second, third and fourth accused are the principal officers of the first accused who are responsible for the conduct of the business. The provisions of Section 269SS of the Income-tax Act, 1961, prescribed the mode of acceptance of any deposit or loan by the income-tax assessee. The above provision has come into force with effect from April 1, 1984. On scrutiny of the books of account of the first accused company for the year March 31, 1985, it was noticed that the first accused accepted the deposit of Rs. 10,000 or more violating the provisions of Section 269SS of the Act. In the case of Vaiya-puri, an amount of Rs. 30,000 was received in cash on January 8, 1985.</p><p style="text-align: justify;">2. The complainant issued summons to the accused to produce books of account on March 16, 1988. In response to his summons, the second accused had appeared before the complainant with the relevant books of account. The second accused has admitted the default under Section 276DD and pleaded his ignorance of the provision and represented the same as unintentional. A show-cause notice under Section 278AA was also issued to the accused. The first accused company has violated Section 269SS by acceptance of loans and deposits otherwise than by account payee cheque or bank draft. The first accused has committed an offence punishable under Section 276DD. The second, third and fourth accused being the executives of the first accused who were in charge and responsible for the conduct of the business have committed an offence punishable under Section 276DD read with Section 278B of the Income-tax Act.</p><p style="text-align: justify;">3. The complainant was examined as P. W. 1 who is an authorised representative of the Income-tax Appellate Tribunal, Chennai. When P.W. 1 perused the account produced by the accused. It is revealed that a sum of Rs. 30,000 was received by the accused. Exhibit P-1 is the fixed deposit register, exhibit P-2 is the corresponding entry in the cash register. Exhibit P-3 is the corresponding entry in the ledger. Exhibit P-4 is the order of sanction for launching prosecution against the accused. Exhibits P-5 to P-7 are the statements given by the accused in the enquiry. After enquiry the Income-tax Officer also issued a show-cause notice exhibit P-8 under Section 2(35). Exhibit P-9 is another notice issued to the accused. Exhibit P-10 is the reply given by the accused.</p><p style="text-align: justify;">4. When the incriminating circumstances appearing against the accused were explained to them under Section 313 of the Criminal Procedure Code, the accused denied the evidence. On consideration of oral and documentary evidence, the trial court acquitted the accused holding that the accused are not guilty under Section 276DD of the Act.</p><p style="text-align: justify;">Criminal Appeal No. 648 of 1990: </p><p style="text-align: justify;">5. The appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F. O. C. C. No. 342 of 1989. The above complaint is filed in respect of an amount of Rs. 10,000 received by the respondent in cash on November 26, 1984. Except the above fact, all other allegations in the complaint are similar to the complaint filed in the case relating to Criminal Appeal No. 647 of 1990. The complainant has also marked exhibits P-1 to P-10. The accused denied the evidence of P.W. 1 in the Section 313 examination.</p><p style="text-align: justify;">Criminal Appeal No. 649 of 1990:</p><p style="text-align: justify;">6. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F.O.C.C. No. 343 of 1989. The complaint is filed in respect of the receipt of Rs. 14,000 in cash by the accused on October 15, 1984. The other averments in the complaint are similar to the complaint filed in the other cases. P.W. 1 the complainant has marked exhibits P-l to P-10. The accused is examined under Section 313 of the Criminal Procedure Code and he denied the evidence of P.W. 1.</p><p style="text-align: justify;">Criminal Appeal No. 650 of 1990:</p><p style="text-align: justify;">7. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 344 of 1989. The complaint in the above ease was filed in respect of an amount of Rs. 20,000 received in cash by the accused on January 10, 1985. The other grounds in the complaint are similar to the complaint filed in the other case. P. W. 1, the complainant has marked exhibits P-l to P-10. The incriminating materials available in the evidence of P. W. 1 were explained to the accused and the accused denied the same.</p><p style="text-align: justify;">Criminal Appeal No. 651 of 1990:</p><p style="text-align: justify;">8. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 345 of 1989. The complaint was filed in respect of Rs. 10,000 received by the accused by cash on October 17, 1984. The other averments in the complaint are similar to the complaint filed in Criminal Appeal No. 647 of 1990. In this case also P. W. 1 was examined and documents exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 652 of 1990:</p><p style="text-align: justify;">9. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. O. C. C. No. 346 of 1989. The above complaint was filed in respect of an amount of Rs. 30,000 received by the accused by cash on October 16, 1984. In this case also P. W. 1 was examined and document exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined by the court under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 653 of 1990:</p><p style="text-align: justify;">10. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 347 of 1989. The above complaint was filed in respect of Rs. 10,000 received by the accused by cash on August 24, 1984. In this case also P. W. 1 was examined and documents exhibits P-1 to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">11. All the above complaints were filed against the same accused/respondents. The case of the complainant in all the above cases is that the accused received the amount in cash in violation of Section 269SS of the Income-tax Act, and that the accused ought to have received the amount only by way of account payee cheque or bank draft.</p><p style="text-align: justify;">12. The trial court on consideration of oral and documentary evidence has held that the accused have obtained affidavits from their customers, for remitting the amount in cash, and that those affidavits were not produced by the complainant in court and the burden is upon the complainant to prove that the explanation offered by the accused is not acceptable and that as the complainant failed to produce the affidavits the benefit of doubt has to be given to the accused.</p><p style="text-align: justify;">13. In all the appeals preferred by the complainant, the common contentions raised are as follows :</p><p style="text-align: justify;">The learned magistrate has not even whispered a word on the documentary evidence let in by the prosecution. The trial court has not appreciated and analysed the evidence of the prosecution found in exhibits P-l to P-10. The trial court has acquitted the accused solely on the ground that the prosecution has not produced the affidavit sworn by the person who deposited the amount with the respondents. The affidavit of the depositor is the document of the respondents and if there is any reasonable cause for receiving the amount, otherwise than by account payee cheque or bank draft, it is the duty of the respondents to file a copy of the affidavit before the court. It is the duty of the respondents to establish before the trial court that they have such reasonable cause or excuse for accepting the amount in cash. The trial court has completely misconstrued the provisions of Sections 278AA and 278E of the Income-tax Act. The trial court has wrongly held that the prosecution should prove that the respondents had no reasonable cause or excuse. The trial court has power to call for the production of the affidavit either from the prosecution or from the respondents under Section 165 of the Indian Evidence Act. The trial court failed to see that the complaint was instituted well before the omission of the penal Section 276DD of the Income-tax Act, and in view of the provisions of Section 6 of the General Clauses Act, it is the duty of the trial court to try the case as if the penal provision has not been omitted. The judgment of the learned judicial magistrate is contrary to law. Learned counsel for the respondents advanced arguments in all the appeals. As all the appeals involve common questions of fact and law, this common judgment is delivered.</p><p style="text-align: justify;">14. The point for determination in all the appeals is, whether the accused are liable to be punished for alleged violation of Section 269SS of the Income-tax Act.</p><p style="text-align: justify;">15. The first accused is a private limited company running a spinning mill in Salem. It is not in dispute that accused Nos. 2 to 4 are managing director, whole time director and sales director of the first accused company. The complainant/appellant, the Income-tax Department has filed these complaints against the accused under Sections 269SS, 276DD read with Section 278B of the Income-tax Act. It is alleged by the complainant in all these cases that the accused accepted certain deposits of Rs. 10,000 or more in contravention of, Section 269SS of the Act. Criminal Appeal No. 647 of 1990, is filed against the order passed in C. C. No. 341 of 1989. It is stated that the accused received a sum of Rs. 50,000 in cash on January 8, 1985 ; Criminal Appeal No. 648 of 1990 relates to payment of Rs. 10,000 in cash dated November 26, 1984 ; Criminal Appeal No. 649 of 1990 relates to the receipt of Rs. 14,000 in cash on October 15, 1984 ; Criminal Appeal No. 650 of 1990 relates to the deposit of Rs. 20,000 dated January 10, 1985 ; Criminal Appeal No. 651 of 1990 relates to the deposit of Rs. 10,000 in cash dated October 17, 1984 ; Criminal Appeal No. 652 of 1990 relates to the deposit of Rs. 30,000 dated October 16, 1984, and Criminal Appeal No. 653 of 1990 relates to the deposit of Rs. 10,000 dated August 24, 1984.</p><p style="text-align: justify;">16. Section 269SS came into force with effect from April 1, 1984. Section 269SS states thus ;</p><p style="text-align: justify;">'No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), 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.'</p><p style="text-align: justify;">17. Subsequently, the above section was amended. As per the above amendment the word 'Rs. 10,000' is substituted by 'Rs. 20,000' or more.</p><p style="text-align: justify;">18. It is not disputed by the accused that they received the amount mentioned in the complaint in cash. It is only alleged by the accused in exhibit P-8 the letter sent by them to the Income-tax Officer that the deposits were accepted from ex-employees who had deposited their money with them in cash, since they have assured that they have no bank account of their own. With regard to the deposit of amounts in cash from persons who had bank accounts, the accused have stated that the amount was received in cash for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittance to the bank to reduce the overdraft. But the complainant-Department not satisfied with the above explanation has launched prosecution against the accused.</p><p style="text-align: justify;">19. P.W.-1, the Assistant Commissioner of Income-tax, has stated that he verified the accounts of the first accused company and that exhibit P-1 is the deposit register and that exhibit P-2 is the entries in cash register, exhibit P-4 is the authorisation given by the Department to launch the prosecution. Exhibits P-5 to P-7 are the statements given by the accused. The Income-tax Department also issued a show-cause notice to the accused under exhibit P-9. The reply given by the accused is marked as exhibit P-10. It is stated in exhibit P-10 that due to the prevalent tight money conditions at that time, it was very difficult to mobilise deposits and that too at the lowest rate of 15 per cent. and that they have no other alternative, except accepting the above deposits to meet their working capital requirements. In the statement recorded in the enquiry, the accused have stated that at the time of accepting the deposits they did not know the provisions of the Act and that, therefore, they accepted it. It is admitted that the accused have also submitted affidavits of persons from whom they received cash to the Department. P.W-1 has admitted that the said affidavits are in their file. The trial court has held that the complainant failed to produce the affidavit and that the complainant failed to show that the averments contained in the affidavit will not amount to a valid explanation and that, therefore, the accused are not guilty of Section 269SS.</p><p style="text-align: justify;">20. Learned counsel for the appellants, Thiru Ramasamy, contended that the trial court failed to advert to various aspects of the case and that when once the amount was received in cash, the offence is made out and that it is for the accused to prove that they have reasonable cause to receive the amount in cash and that the burden is not upon the complainant to establish the same. On the other hand, learned counsel for the accused, Thiru Gopinath, contended that the complainant ought to have produced the affidavits of the depositors from whom the accused received cash and that it is for the complainant to prove that the accused without reasonable cause or excuse accepted deposits in contravention of Section 269SS.</p><p style="text-align: justify;">21. For proper appreciation of the rival contentions of the parties it would be useful to refer to the relevant provisions of the Income-tax Act. As already stated, Section 269SS came into force with effect from April 1, 1984. Section 276DD is the penal provision for violation of Section 269SS. As per the above section, if a person without reasonable cause or excuse, takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be punishable with imprisonment for a term which may extend to two years and also be liable to a fine equal to the amount of such loan or deposit. But the above Section 276DD was omitted with effect from April 1, 1989. New Section 271D came into force with effect from April 1, 1989, Under the above provisions, the person who contravenes Section 269SS shall be liable to pay a sum equal to the amount of the loan or deposit as penalty. The punishment of imprisonment for a term which may extend to two years is omitted in the above new section. In all these cases, the offence is said to have been committed before the deletion of Section 276DD. As the old Section 276DD was in force when the proceedings were initiated, the complaint filed under old Section 276DD is maintainable. The question whether the accused is guilty of the offences for violation of Section 269SS has to be decided only with reference to old Section 276DD and not new Section 271D.</p><p style="text-align: justify;">22. Learned counsel for the appellant relies upon a decision in C. A Baloo v. Union of India : [1992]197ITR545(Mad) . It is stated in the above decision that the principle enacted in Section 6 of the General Clauses Act that unless a contrary intention appears, the repeal of an Act would not affect any right, privilege, obligation or liability accrued under any enactment so repealed, would apply to repeal of one of the sections of the Income-tax Act, 1961, It is also held in the above decision that with effect from April 1, 1989, Section 271D had been introduced while omitting Section 276DD with effect from the same date and that it is not possible to gather a contrary intention that the Legislature desired that prosecutions which are permissible under Section 276DD of the Act and already initiated before the insertion of the new section were to be erased or obliterated. It is thus clear from the above decision that the repeal of Section 276DD after the proceedings were initiated by the Department will not take away the rights of the Department to prove the case against the accused as per old Section 276DD.</p><p style="text-align: justify;">23. It is contended by learned counsel for the respondents/accused that the complainant should prove that the accused without reasonable cause or excuse have contravened Section 269SS. But learned counsel for the complainant contends that it is for the accused to prove that they had reasonable cause for accepting the amount in cash. Both parties rely upon certain decisions on this aspect.</p><p style="text-align: justify;">24. Learned counsel for the appellant relies upon a decision in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The facts of the above case will show that the assessee filed the wealth-tax returns belatedly and that though he applied for extension of time, the returns were filed after the expiry of the periods of extension. It is also held that the assessee was conscious of the fact that the wealth-tax returns should be filed within the time stipulated under Section 14(1) of the Act. Relying upon the above facts, the Division Bench has held thus (headnote) :</p><p style="text-align: justify;">'It was not for the Department to establish that the assessee was guilty of contumacious conduct and acted in conscious disregard of his obligation. It was for the assessee to plead and prove that the delay in filing the returns was due to reasonable cause. Such reasonable cause was not pleaded.'</p><p style="text-align: justify;">25. The Division Bench also relied upon a decision of the Supreme Court reported in CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) .</p><p style="text-align: justify;">26. In CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) , the Supreme Court in a case arising under Section 271(1)(a) of the Act has held thus (headnote):</p><p style="text-align: justify;">'There is nothing in Section 271(1)(a) of the Income-tax Act, 1961, which requires that mens rea has to be established by the Department before penalty can be levied under that section for delay in filing the return. It is for the assessee, should he file a belated return, to show 'reasonable cause' for the delay.'</p><p style="text-align: justify;">27. Section 271(1)(a) of the Act imposes penalty for failure to furnish returns and comply with the notice and concealment of income. Section 271(l)(a) reads 'has without reasonable cause failed to furnish'. Clause (b) reads 'has without reasonable cause failed to comply with the notice'. As per amended Section 276C which came into effect from October 1, 1975, if a person wilfully attempts to evade any tax, penalty or interest, he shall without prejudice to any penalty that may be imposable on him under any other provision of the Act be punishable . . . with rigorous imprisonment which shall not be less than six months but which may extend to seven years. In the above decision, the Supreme Court has held that Section 271(1)(a) provides that penalty may be imposed if the Income-tax Officer is satisfied that any person has, without reasonable cause, failed to furnish the return of total income and that it is clear that iff the above case, what is intended is a civil obligation while in the latter that is, Section 276C what is imposed is a criminal sentence. The court has further held that there can be no dispute that having regard to the provisions of Section 276C which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. It is also held in the above decision that reasonable cause is an ingredient of the offence for which the punishment is provided and the taxing authority has prima facie to prove the absence of reasonable cause in the sense that has been explained above. The distinction between Sections 276C and 271(1)(a) has been communicated in the above decision. The above decision is referred to in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The case reported in CWTv. P. Nainakhan : [1996]221ITR805(Mad) , relates to non-filing of wealth-tax returns within the time stipulated under Section 14(1) of the Wealth-tax Act. Section 18(1)(a) of the Wealth-tax Act imposes penalty for failure to furnish wealth-tax returns. Under the above provisions, a sum equal to two per cent. of the assessed tax for every month shall be imposed as penalty. Therefore, it is held in the above decisions that in such cases, mens rea is not essential.</p><p style="text-align: justify;">28. Learned counsel for the respondent/accused relies upon a decision reported in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO : [1986]158ITR496(Delhi) . The liability of the assessee under Section 201(1) of the Act and Section 276B of the Act are elaborately discussed in the above decision. Section 276B imposes punishment of imprisonment on a person who without reasonable cause or excuse fails to deduct the tax. But under Section 201 read with Section 221 no imprisonment is provided, but only penalty equivalent to a certain percentage of the amount has to be imposed. Bearing in mind the language employed in the above two provisions, the court has held thus (headnote) :</p><p style="text-align: justify;">'The standard of proof and explanation and onus of proof to be discharged by the assessee in penalty proceedings under Section 201(1) is much higher and heavy. In a criminal prosecution for an offence under Section 276B, however, the dictates of law merely demand the requirement of reasonable cause, i.e., what appeals ex facie to reason, which is made more milder.'</p><p style="text-align: justify;">29. Learned counsel for the respondent also relies upon a decision of the Patna High Court reported in ITO v. Taunts Equipment (P.) Ltd. : [1979]118ITR982(Patna) . It is seen from the facts of the above case that the Income-tax Department filed a complaint under Section 276B. As already stated, the above section reads 'if a person without reasonable cause or excuse'. Section 276DD also reads 'if a person without reasonable cause or excuse'. While interpreting the above words, the Patna High Court has held that the prosecution must prove that there was no reasonable cause or excuse for not filing the returns. The relevant observations of the Patna High Court are extracted below (headnote) :</p><p style="text-align: justify;">'The words 'fails without reasonable cause or excuse' occurring in Section 276 (now Section 272A(2)) of the Income-tax Act, 1961, show that mens rea is an ingredient before punishing the defaulter. It must be shown that the default was deliberate and conscious. It is not enough for the Department to show that the payment or return was not made or filed in time. It has to go further and prove that it was without reasonable cause or excuse. Unless the prosecution proves by evidence that there was no reasonable cause or excuse for not filing the return or depositing the money within the prescribed time, no offence can be said to have been committed.'</p><p style="text-align: justify;">30. In the above decision, the decision of the Supreme Court reported in CIT v. Anwar Ali : [1970]76ITR696(SC) is referred to. In the above decision, it is held thus (headnote) :</p><p style="text-align: justify;">'Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars.'</p><p style="text-align: justify;">31. It is thus clear from the above decisions that it is for the prosecution to prove that the accused without reasonable cause or excuse failed to receive the amount by way of cheque. The Patna High Court has further held that the words 'fails without reasonable cause or excuse' will show that mens rea is an ingredient to be proved by the Department before punishing the defaulter. It is thus seen that the application of mens rea would depend upon the language used in a particular provision and the nature of penalty. It is no doubt true that mens rea is not a necessary ingredient to prove when the person who contravenes the provisions of the Act is imposed with only penalty by way of amount. But, if a particular provision imposes imprisonment for a specific term on the assessee it is for the prosecution to prove mens rea. Bearing the principles of law laid down in the above decisions in mind the case on hand has to be decided.</p><p style="text-align: justify;">32. It is pointed out by learned counsel for the respondent that the words 'without reasonable cause or excuse' are absent in the complaint. In paragraph 5 of the complaint, it is only stated that the first accused accepted deposits violating Section 269SS. It is alleged in paragraph 6 that the Department issued summons to the accused requiring them to produce books of account and that in the enquiry, the accused admitted the default under Section 276DD and pleaded ignorance of the provisions. It is significant to note that the Department recorded the statement of the accused in the form of questions and answers. The above statements are marked as exhibits P-5 to P-7. In the above statements, the accused have stated that they are not aware of the new provisions and that they needed cash urgently to meet the day-to-day expenses and that some of the depositors had no bank accounts. In the letter exhibit P-8 addressed to the Department, the accused have stated that cash received from the depositors who had bank accounts were taken for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittances to the bank and that as cash was urgently required for their immediate needs which cannot wait till the cheques are collected by the bank, the deposits were accepted from the parties, who had bank accounts. It is thus, clear that the accused gave an explanation for accepting deposits in cash, in the above enquiry proceedings. It is also admitted by P.W. 1 that the accused produced affidavits of persons from whom they received cash of more than Rs. 10,000 and that the affidavits are in their file. The explanation given by the accused during the enquiry proceedings and also the affidavits of depositors produced by the accused were in the file of the complainant. But, unfortunately the complainant has not even stated in the complaint that the explanation and reasons given by the accused for receiving the deposits in cash are not true and that the accused without any reasonable excuse received the cash. The complainant ought to have given reasons in the complaint as to why the explanation given by the accused is not valid in law. It is no doubt true that the ignorance of law is not an excuse for committing the offence. But the other reasons given by the accused for accepting the cash could have been considered by the Department before launching the prosecution. As already stated, mere acceptance of cash from the depositors is not an offence. The complainant must further allege and prove that the accused accepted the loan or deposit without reasonable cause or excuse. The circumstances under which the accused accepted the cash could be proved only by producing the affidavits sworn by the depositors. But, learned counsel for the appellant contended that the burden is upon the accused to prove that they have reasonable cause to accept the deposits. As already stated, when a particular provision imposes imprisonment, the prosecution must prove the ingredients of the offence. Section 276DD clearly states that only if a person without reasonable cause or excuse accepts the loan or deposit he is liable to be punished. That being the position of law, I am unable to subscribe to the contention of learned counsel for the appellant that the burden is upon the accused to prove that they have valid reasons to accept the deposits in cash.</p><p style="text-align: justify;">33. Section 278AA came into force with effect from September 10, 1986. The section reads thus :</p><p style="text-align: justify;">'278AA. Punishment not to be imposed in certain cases.--Notwithstanding anything contained in the provisions of Section 276A, Section 276AB or Section 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.'</p><p style="text-align: justify;">34. But with effect from April 1, 1989, Section 276DD is omitted in the above section. However, it is clear that even in the new provision which was in force on September 10, 1986, no person can be punished under Section 276DD if he proves that there was reasonable cause for such failure. But the words 'if he proves' is absent in the original Section 276DD. After amendment of Section 278AA, the burden lies upon the accused to prove that there was reasonable cause for such failure. But the accused are alleged to have contravened Section 269SS while old Section 276DD was in force. Hence, the prosecution has to aver and prove that the accused contravened the rule without reasonable cause or excuse, (vide Greatway (P.) Ltd. v. Asst. CIT [1993] 199 ITR 591 .</p><p style="text-align: justify;">35. The complainant could have produced the affidavits sworn by the depositors, produced by the accused to the Department in the trial court and shown that the explanation given by the accused for accepting the deposits in cash is not true. The trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits and prove the charge levelled against the accused. Now, learned counsel for the appellant contended that the accused could have produced the copies of affidavits or requested the court to send for the affidavits under known process of law. I am unable to accept the above contention of the appellant. The complainant is in possession of the affidavits produced by the accused. The law is well settled that the party who is in custody of the best evidence must produce the same before the court and in such cases he cannot invoke the abstract doctrine of burden of proof. Therefore, it has to be held that the complainant who is in possession of the best evidence failed to produce it before the trial court and invite the court to give a finding on the question whether the explanation trotted out by the accused is true or not. From the facts discussed above, it has to be held that mere contravention of Section 269SS is not an offence unless and until it is proved that the accused have no reasonable cause or excuse to accept the loan or deposits in cash. I hold that the complainant failed to aver and prove that the accused without reasonable cause or excuse accepted the deposits in cash. In the absence of an allegation in the complaint that the accused without reasonable cause or excuse accepted the deposits in cash, the accused cannot be said to have committed an offence under Section 276DD.</p><p style="text-align: justify;">36. Learned counsel for the respondent further contended that when the offence under the Act is committed by the company, every person who at the time when the offence was committed was in charge and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence, and shall be liable to be proceeded against and punished accordingly. It is contended by learned counsel for the respondent that it is not specifically alleged in the complaint as to who is the principal officer responsible for the day-to-day affairs of the company and that in the absence of the necessary averments to bring the company within the ambit of Section 278B the complaint is not maintainable. In support of the same, the accused also relies upon certain decisions. In State of Karnataka v. Pratap Chand : 1981CriLJ595 , it is held that where a partnership firm was charged for the offences under Section 18 of the Drugs and Cosmetics Act, the partner of the firm who was in over all control of the day-to-day business of the firm would alone be liable to be convicted.</p><p style="text-align: justify;">37. In a decision in Sham Sunder v. State of Haryana : 1989CriLJ2201 , it is held thus (headnote of AIR) :</p><p style="text-align: justify;">'More often, it is common that some of the partners of a firm may not even be knowing of what is going on day-to-day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection (1) of Section 10 that the offence was committed without their knowledge. The obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution has established that the requisite condition mentioned in Sub-section (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. Thus where the documents produced by the prosecution do not indicate even remotely that all the partners were doing the business of the firm and that there was no other evidence on record on this aspect, it could not be said that when the offence was committed all the partners were conducting the business of the firm. Therefore, they would not be liable for conviction.'</p><p style="text-align: justify;">38. In Greatway (P.) Ltd. v. Asst CIT it is held that when the complaint is silent as to whether any person had been appointed as the principal officer of the petitioner-company and in the absence of such an appointment, a director or the managing director of the company could not be prosecuted. It is alleged in the complaint that the first accused is the company and accused Nos. 2 to 4 are the principal officers of the first accused who are responsible for the conduct of the business of the first accused company. In paragraph 8 of the complaint, it is stated that accused Nos. 2 to 4 being the executives of the first accused at the material time who were in charge of and responsible for the conduct of the business have committed the offence. P.W.-1 was not cross-examined on this aspect by the accused. Further, in the statements given by the accused, exhibits P-5 to P-8, they did not state that they or any of them, were not responsible for the day-to-day administration of the company. It is significant to note that all the accused have given one and the same statement. In the above circumstances, I am not inclined to accept the contention now raised by the respondent counsel that the complaint has to fail as ingredients of Section 278B are not made out. I hold that the contention raised by the respondent counsel on the above aspect has to be rejected.</p><p style="text-align: justify;">39. Learned counsel for the respondent also relies upon two decisions and contends that the appellate court should not normally interfere with the order of acquittal passed by the trial court. Ramesh Babulal Doshi v. State of Gujarat : 1996CriLJ2867 ; Awadhesh v. State of M. P., : 1988CriLJ1154 . It is no doubt true that the order of acquittal passed by the trial court would not normally be interfered with in the appeal, unless the view taken by the trial court is wholly unreasonable or erroneous. In the instant case, though the trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits the trial court did not advert to the other aspects of the case. It is open to the appellate court to give findings on all the points involved in the case, even though the same was not considered by the trial court. In any event, the reasons given by the trial court for acquitting the accused cannot be said to be unsustainable. For the above reasons, I hold that the order of acquittal passed by the trial court is not liable to be set aside. The complainant failed to prove the ingredients of the offence alleged in Section 276DD of the old Act. The complainant also failed to aver and prove that the reasons given by the accused for accepting the amount in cash is not true. Further the complainant failed to produce the affidavits sworn by the depositors to prove that the accused without reasonable cause or excuse accepted the amount in cash. For the above reasons, I hold that the contention raised by learned counsel for the appellant in these appeals cannot be accepted and as such, I hold that the order of acquittal passed by the trial court has to be confirmed.</p><p style="text-align: justify;">C. A. No. 647 of 1990:</p><p style="text-align: justify;">40. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A No. 648 of 1990:</p><p style="text-align: justify;">41. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 649 of 1990:</p><p style="text-align: justify;">42. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 650 of 1990:</p><p style="text-align: justify;">43. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 651 of 1990:</p><p style="text-align: justify;">44. In the result the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 652 of 1990:</p><p style="text-align: justify;">45. In the result the criminal appeal is dismissed. The order of acquittal is confirmed. </p><p style="text-align: justify;">C. A. No. 653 of 1990:</p><p style="text-align: justify;">46. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p>',
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			'pubs' => '[2000]242ITR89(Mad)',
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			'respondent' => 'Jawahar Mills Ltd. and ors.',
			'sub' => 'Direct Taxation',
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$title_for_layout = 'Assistant Commissioner of Income tax Vs. Jawahar Mills Ltd. and ors. Semantic Analysis'
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		(int) 42 => 'Section 276C',
		(int) 43 => 'Section 276C',
		(int) 44 => 'Section 276C',
		(int) 45 => 'Section 14(1',
		(int) 46 => 'Section 201(1',
		(int) 47 => 'Section 276B of the Act',
		(int) 48 => 'Section 201',
		(int) 49 => 'Section 221',
		(int) 50 => 'Section 201(1',
		(int) 51 => 'Section 276B',
		(int) 52 => 'Section 276B.',
		(int) 53 => 'Section 276',
		(int) 54 => 'Section 272A(2',
		(int) 55 => 'Section 276DD',
		(int) 56 => 'P-5',
		(int) 57 => 'Section 276A',
		(int) 58 => 'Section 276B',
		(int) 59 => 'Section 276DD',
		(int) 60 => 'Section 276DD.36',
		(int) 61 => 'Section 278B',
		(int) 62 => 'Section 18',
		(int) 63 => 'Section 10',
		(int) 64 => 'P-5',
		(int) 65 => 'Section 278B',
		(int) 66 => 'Section 276DD'
	),
	'PERSON' => array(
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		(int) 1 => 'P. W. 1',
		(int) 2 => 'Exhibit P-1',
		(int) 3 => 'Exhibit P-3',
		(int) 4 => 'Exhibit P-9',
		(int) 5 => 'Exhibit P-10',
		(int) 6 => 'P. W. 1',
		(int) 7 => 'P. W. 1',
		(int) 8 => 'P. W. 1',
		(int) 9 => 'P. W. 1',
		(int) 10 => 'P. W. 1',
		(int) 11 => 'P. W. 1',
		(int) 12 => 'P. W. 1',
		(int) 13 => 'P. W. 1',
		(int) 14 => 'Nos',
		(int) 15 => 'Thiru Gopinath',
		(int) 16 => 'P. Nainakhan',
		(int) 17 => 'I. M. Patel',
		(int) 18 => 'I. M. Patel',
		(int) 19 => 'P. Nainakhan',
		(int) 20 => 'P. Nainakhan',
		(int) 21 => 'P. P. Suri',
		(int) 22 => 'Anwar Ali',
		(int) 23 => 'Haryana',
		(int) 24 => 'Nos',
		(int) 25 => 'Nos',
		(int) 26 => 'Doshi v. State'
	),
	'ORG' => array(
		(int) 0 => 'J. Criminal Appeal No',
		(int) 1 => 'Appellate Tribunal',
		(int) 2 => 'Chennai',
		(int) 3 => 'P.W. 1',
		(int) 4 => 'Criminal Appeal No',
		(int) 5 => 'P-l',
		(int) 6 => 'P.W. 1.Criminal Appeal No',
		(int) 7 => 'P-l',
		(int) 8 => 'Criminal Appeal No',
		(int) 9 => 'P-l',
		(int) 10 => 'P-l',
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		(int) 14 => 'Criminal Appeal No',
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		(int) 21 => 'Department',
		(int) 22 => 'Thiru Ramasamy',
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		(int) 36 => 'Sequoia Construction Co. P. Ltd.',
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		(int) 38 => 'the Patna High Court',
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		(int) 58 => 'AIR',
		(int) 59 => 'Greatway',
		(int) 60 => 'Asst CIT',
		(int) 61 => 'Awadhesh'
	),
	'CARDINAL' => array(
		(int) 0 => '647',
		(int) 1 => '341',
		(int) 2 => '10,000',
		(int) 3 => '30,000',
		(int) 4 => '1985.2',
		(int) 5 => '30,000',
		(int) 6 => '648',
		(int) 7 => '5',
		(int) 8 => '342',
		(int) 9 => '10,000',
		(int) 10 => '647',
		(int) 11 => '649',
		(int) 12 => '1990:6',
		(int) 13 => '343',
		(int) 14 => '14,000',
		(int) 15 => '1',
		(int) 16 => '650',
		(int) 17 => '1990:7',
		(int) 18 => '344',
		(int) 19 => '20,000',
		(int) 20 => '651',
		(int) 21 => '1990:8',
		(int) 22 => '345',
		(int) 23 => '10,000',
		(int) 24 => '647',
		(int) 25 => '652',
		(int) 26 => '346',
		(int) 27 => '30,000',
		(int) 28 => '653',
		(int) 29 => '1990:10',
		(int) 30 => '347',
		(int) 31 => '10,000',
		(int) 32 => '278E',
		(int) 33 => '2 to 4',
		(int) 34 => '10,000',
		(int) 35 => '647',
		(int) 36 => '341',
		(int) 37 => '50,000',
		(int) 38 => '648',
		(int) 39 => '10,000',
		(int) 40 => '649',
		(int) 41 => '14,000',
		(int) 42 => '650',
		(int) 43 => '20,000',
		(int) 44 => '651',
		(int) 45 => '10,000',
		(int) 46 => '652',
		(int) 47 => '30,000',
		(int) 48 => '653',
		(int) 49 => '10,000',
		(int) 50 => '1984.16',
		(int) 51 => '10,000',
		(int) 52 => '10,000',
		(int) 53 => '20,000',
		(int) 54 => '1992]197ITR545(Mad',
		(int) 55 => 'one',
		(int) 56 => '1996]221ITR805(Mad',
		(int) 57 => '1992]196ITR297(SC',
		(int) 58 => '1992]196ITR297(SC',
		(int) 59 => '1996]221ITR805(Mad',
		(int) 60 => '1996]221ITR805(Mad',
		(int) 61 => '1986]158ITR496(Delhi',
		(int) 62 => 'two',
		(int) 63 => '1979]118ITR982(Patna',
		(int) 64 => '5',
		(int) 65 => '6',
		(int) 66 => '10,000',
		(int) 67 => '199',
		(int) 68 => '1981CriLJ595',
		(int) 69 => '1',
		(int) 70 => '1',
		(int) 71 => '2 to 4',
		(int) 72 => '8',
		(int) 73 => '2 to 4',
		(int) 74 => 'two',
		(int) 75 => '1996CriLJ2867',
		(int) 76 => '1988CriLJ1154',
		(int) 77 => '647',
		(int) 78 => '1990:40',
		(int) 79 => '648',
		(int) 80 => '649',
		(int) 81 => '1990:42',
		(int) 82 => '650',
		(int) 83 => '1990:43',
		(int) 84 => '651',
		(int) 85 => '1990:44',
		(int) 86 => '652',
		(int) 87 => '1990:45',
		(int) 88 => '653',
		(int) 89 => '1990:46'
	),
	'DATE' => array(
		(int) 0 => '1990',
		(int) 1 => '1989',
		(int) 2 => '1961',
		(int) 3 => 'April 1, 1984',
		(int) 4 => 'the year March 31, 1985',
		(int) 5 => 'January 8',
		(int) 6 => 'March 16, 1988',
		(int) 7 => '1990',
		(int) 8 => '1989',
		(int) 9 => 'November 26, 1984',
		(int) 10 => '1990',
		(int) 11 => '1989',
		(int) 12 => 'October 15, 1984',
		(int) 13 => '1989',
		(int) 14 => 'January 10, 1985',
		(int) 15 => '1989',
		(int) 16 => 'October 17, 1984',
		(int) 17 => '1990',
		(int) 18 => '1989',
		(int) 19 => 'October 16, 1984',
		(int) 20 => '1989',
		(int) 21 => 'August 24, 1984',
		(int) 22 => '1990',
		(int) 23 => '1989',
		(int) 24 => 'January 8, 1985',
		(int) 25 => '1990',
		(int) 26 => 'November 26, 1984',
		(int) 27 => '1990',
		(int) 28 => 'October 15, 1984',
		(int) 29 => '1990',
		(int) 30 => 'January 10, 1985',
		(int) 31 => '1990',
		(int) 32 => 'October 17, 1984',
		(int) 33 => '1990',
		(int) 34 => 'October 16, 1984',
		(int) 35 => '1990',
		(int) 36 => 'August 24',
		(int) 37 => 'April 1, 1984',
		(int) 38 => 'the 30th day of June, 1984',
		(int) 39 => 'April 1, 1984',
		(int) 40 => 'two years',
		(int) 41 => 'April 1, 1989',
		(int) 42 => 'April 1, 1989',
		(int) 43 => 'two years',
		(int) 44 => '1961',
		(int) 45 => 'April 1, 1989',
		(int) 46 => ''25',
		(int) 47 => '1961',
		(int) 48 => ''27',
		(int) 49 => 'October 1, 1975',
		(int) 50 => 'less than six months',
		(int) 51 => 'seven years',
		(int) 52 => ''29',
		(int) 53 => '1961',
		(int) 54 => ''30',
		(int) 55 => '1970]76ITR696(SC',
		(int) 56 => ''31',
		(int) 57 => 'September 10, 1986',
		(int) 58 => ''34',
		(int) 59 => 'April 1, 1989',
		(int) 60 => 'September 10, 1986',
		(int) 61 => '1993'
	),
	'GPE' => array(
		(int) 0 => 'Salem',
		(int) 1 => 'F.O.C.C.',
		(int) 2 => 'Vaiya',
		(int) 3 => 'Act.3',
		(int) 4 => 'F. O. C. C.',
		(int) 5 => 'F.O.C.C.',
		(int) 6 => 'F. O. C. C.',
		(int) 7 => 'Salem',
		(int) 8 => 'cash.33',
		(int) 9 => 'Karnataka v. Pratap Chand',
		(int) 10 => 'Sham Sunder',
		(int) 11 => 'Gujarat'
	),
	'ORDINAL' => array(
		(int) 0 => 'first',
		(int) 1 => 'second',
		(int) 2 => 'third',
		(int) 3 => 'fourth',
		(int) 4 => 'first',
		(int) 5 => 'first',
		(int) 6 => 'first',
		(int) 7 => 'second',
		(int) 8 => 'second',
		(int) 9 => 'first',
		(int) 10 => 'first',
		(int) 11 => 'second',
		(int) 12 => 'third',
		(int) 13 => 'fourth',
		(int) 14 => 'first',
		(int) 15 => 'first',
		(int) 16 => 'first',
		(int) 17 => 'first',
		(int) 18 => 'first',
		(int) 19 => 'first',
		(int) 20 => 'first',
		(int) 21 => 'first',
		(int) 22 => 'first'
	),
	'PRODUCT' => array(
		(int) 0 => 'Section 278AA',
		(int) 1 => 'Section 269SS',
		(int) 2 => 'P-10',
		(int) 3 => 'P.W. 1',
		(int) 4 => 'P-10',
		(int) 5 => 'P-10',
		(int) 6 => 'P-10',
		(int) 7 => 'P-10',
		(int) 8 => 'P-10',
		(int) 9 => 'P-10',
		(int) 10 => '276DD',
		(int) 11 => 'P-10',
		(int) 12 => 'P-10',
		(int) 13 => 'Section 276DD',
		(int) 14 => 'Section 269SS',
		(int) 15 => 'Section 269SS',
		(int) 16 => 'Section 276DD',
		(int) 17 => 'Section 276DD',
		(int) 18 => 'Section 269SS',
		(int) 19 => 'Section 276DD',
		(int) 20 => 'Section 276DD',
		(int) 21 => 'Section 276DD',
		(int) 22 => 'Section 269SS',
		(int) 23 => 'P.W. 1',
		(int) 24 => 'Section 278AA',
		(int) 25 => '278AA',
		(int) 26 => 'Section 276DD',
		(int) 27 => 'Section 276DD',
		(int) 28 => 'Section 278AA',
		(int) 29 => 'Section 269SS',
		(int) 30 => 'Section 276DD',
		(int) 31 => 'Section 269SS'
	),
	'NORP' => array(
		(int) 0 => 'P-1',
		(int) 1 => 'P-1',
		(int) 2 => 'P-1'
	),
	'MONEY' => array(
		(int) 0 => '15 per cent',
		(int) 1 => 'two per cent'
	),
	'WORK_OF_ART' => array(
		(int) 0 => 'C. A Baloo v. Union of India'
	),
	'FAC' => array(
		(int) 0 => 'Sections 276C'
	),
	'LOC' => array(
		(int) 0 => 'P-8'
	)
)
$desc = array(
	'Judgement' => array(
		'id' => '821360',
		'acts' => 'Income-tax Act, 1961 - Sections 269SS, 271D and 276DD',
		'appealno' => 'Criminal Appeal Nos. 647 to 653 of 1990',
		'appellant' => 'Assistant Commissioner of Income-tax',
		'authreffered' => '',
		'casename' => 'Assistant Commissioner of Income-tax Vs. Jawahar Mills Ltd. and ors.',
		'casenote' => 'Direct Taxation - deposits - Sections 269SS, 271D and 276DD of Income Tax Act, 1961 - respondent company engaged in running of spinning mill - Section 269SS prescribes mode of acceptance of any deposit or loan by assessee - respondent accepted cash of certain amount of Rs. 10000 in violation of provisions of Section 269SS - acquitted by Trial Court - appeal - Order of Trial Court not to be interfered unless Trial Court wholly unreasonable or erroneous - appellant failed to prove ingredient of offence alleged in Section 276DD - failed to give reasons for accepting cash not true - failed to prove that respondent without reasonable cause or excuse accepted cash - decision of Trial Court upheld.


 - ',
		'caseanalysis' => null,
		'casesref' => 'Awadhesh v. State of M. P.;',
		'citingcases' => '',
		'counselplain' => 'K. Ramasamy, Special Public Prosecutor',
		'counseldef' => 'Gopinath, Adv.',
		'court' => 'Chennai',
		'court_type' => 'HC',
		'decidedon' => '1998-03-10',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'V. Bakthavatsalu, J.',
		'judgement' => '<p style="text-align: justify;">V. Bakthavatsalu, J. </p><p style="text-align: justify;">Criminal Appeal No. 647 of 1990 :</p><p style="text-align: justify;">1. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, Salem, against the order of acquittal passed in F.O.C.C. No. 341 of 1989. The case of the complainant is that the first accused is a private limited company engaged in running a spinning mill in the name and the style of 'Jawahar Mills Limited'. The second, third and fourth accused are the principal officers of the first accused who are responsible for the conduct of the business. The provisions of Section 269SS of the Income-tax Act, 1961, prescribed the mode of acceptance of any deposit or loan by the income-tax assessee. The above provision has come into force with effect from April 1, 1984. On scrutiny of the books of account of the first accused company for the year March 31, 1985, it was noticed that the first accused accepted the deposit of Rs. 10,000 or more violating the provisions of Section 269SS of the Act. In the case of Vaiya-puri, an amount of Rs. 30,000 was received in cash on January 8, 1985.</p><p style="text-align: justify;">2. The complainant issued summons to the accused to produce books of account on March 16, 1988. In response to his summons, the second accused had appeared before the complainant with the relevant books of account. The second accused has admitted the default under Section 276DD and pleaded his ignorance of the provision and represented the same as unintentional. A show-cause notice under Section 278AA was also issued to the accused. The first accused company has violated Section 269SS by acceptance of loans and deposits otherwise than by account payee cheque or bank draft. The first accused has committed an offence punishable under Section 276DD. The second, third and fourth accused being the executives of the first accused who were in charge and responsible for the conduct of the business have committed an offence punishable under Section 276DD read with Section 278B of the Income-tax Act.</p><p style="text-align: justify;">3. The complainant was examined as P. W. 1 who is an authorised representative of the Income-tax Appellate Tribunal, Chennai. When P.W. 1 perused the account produced by the accused. It is revealed that a sum of Rs. 30,000 was received by the accused. Exhibit P-1 is the fixed deposit register, exhibit P-2 is the corresponding entry in the cash register. Exhibit P-3 is the corresponding entry in the ledger. Exhibit P-4 is the order of sanction for launching prosecution against the accused. Exhibits P-5 to P-7 are the statements given by the accused in the enquiry. After enquiry the Income-tax Officer also issued a show-cause notice exhibit P-8 under Section 2(35). Exhibit P-9 is another notice issued to the accused. Exhibit P-10 is the reply given by the accused.</p><p style="text-align: justify;">4. When the incriminating circumstances appearing against the accused were explained to them under Section 313 of the Criminal Procedure Code, the accused denied the evidence. On consideration of oral and documentary evidence, the trial court acquitted the accused holding that the accused are not guilty under Section 276DD of the Act.</p><p style="text-align: justify;">Criminal Appeal No. 648 of 1990: </p><p style="text-align: justify;">5. The appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F. O. C. C. No. 342 of 1989. The above complaint is filed in respect of an amount of Rs. 10,000 received by the respondent in cash on November 26, 1984. Except the above fact, all other allegations in the complaint are similar to the complaint filed in the case relating to Criminal Appeal No. 647 of 1990. The complainant has also marked exhibits P-1 to P-10. The accused denied the evidence of P.W. 1 in the Section 313 examination.</p><p style="text-align: justify;">Criminal Appeal No. 649 of 1990:</p><p style="text-align: justify;">6. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F.O.C.C. No. 343 of 1989. The complaint is filed in respect of the receipt of Rs. 14,000 in cash by the accused on October 15, 1984. The other averments in the complaint are similar to the complaint filed in the other cases. P.W. 1 the complainant has marked exhibits P-l to P-10. The accused is examined under Section 313 of the Criminal Procedure Code and he denied the evidence of P.W. 1.</p><p style="text-align: justify;">Criminal Appeal No. 650 of 1990:</p><p style="text-align: justify;">7. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 344 of 1989. The complaint in the above ease was filed in respect of an amount of Rs. 20,000 received in cash by the accused on January 10, 1985. The other grounds in the complaint are similar to the complaint filed in the other case. P. W. 1, the complainant has marked exhibits P-l to P-10. The incriminating materials available in the evidence of P. W. 1 were explained to the accused and the accused denied the same.</p><p style="text-align: justify;">Criminal Appeal No. 651 of 1990:</p><p style="text-align: justify;">8. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 345 of 1989. The complaint was filed in respect of Rs. 10,000 received by the accused by cash on October 17, 1984. The other averments in the complaint are similar to the complaint filed in Criminal Appeal No. 647 of 1990. In this case also P. W. 1 was examined and documents exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 652 of 1990:</p><p style="text-align: justify;">9. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. O. C. C. No. 346 of 1989. The above complaint was filed in respect of an amount of Rs. 30,000 received by the accused by cash on October 16, 1984. In this case also P. W. 1 was examined and document exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined by the court under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 653 of 1990:</p><p style="text-align: justify;">10. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 347 of 1989. The above complaint was filed in respect of Rs. 10,000 received by the accused by cash on August 24, 1984. In this case also P. W. 1 was examined and documents exhibits P-1 to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">11. All the above complaints were filed against the same accused/respondents. The case of the complainant in all the above cases is that the accused received the amount in cash in violation of Section 269SS of the Income-tax Act, and that the accused ought to have received the amount only by way of account payee cheque or bank draft.</p><p style="text-align: justify;">12. The trial court on consideration of oral and documentary evidence has held that the accused have obtained affidavits from their customers, for remitting the amount in cash, and that those affidavits were not produced by the complainant in court and the burden is upon the complainant to prove that the explanation offered by the accused is not acceptable and that as the complainant failed to produce the affidavits the benefit of doubt has to be given to the accused.</p><p style="text-align: justify;">13. In all the appeals preferred by the complainant, the common contentions raised are as follows :</p><p style="text-align: justify;">The learned magistrate has not even whispered a word on the documentary evidence let in by the prosecution. The trial court has not appreciated and analysed the evidence of the prosecution found in exhibits P-l to P-10. The trial court has acquitted the accused solely on the ground that the prosecution has not produced the affidavit sworn by the person who deposited the amount with the respondents. The affidavit of the depositor is the document of the respondents and if there is any reasonable cause for receiving the amount, otherwise than by account payee cheque or bank draft, it is the duty of the respondents to file a copy of the affidavit before the court. It is the duty of the respondents to establish before the trial court that they have such reasonable cause or excuse for accepting the amount in cash. The trial court has completely misconstrued the provisions of Sections 278AA and 278E of the Income-tax Act. The trial court has wrongly held that the prosecution should prove that the respondents had no reasonable cause or excuse. The trial court has power to call for the production of the affidavit either from the prosecution or from the respondents under Section 165 of the Indian Evidence Act. The trial court failed to see that the complaint was instituted well before the omission of the penal Section 276DD of the Income-tax Act, and in view of the provisions of Section 6 of the General Clauses Act, it is the duty of the trial court to try the case as if the penal provision has not been omitted. The judgment of the learned judicial magistrate is contrary to law. Learned counsel for the respondents advanced arguments in all the appeals. As all the appeals involve common questions of fact and law, this common judgment is delivered.</p><p style="text-align: justify;">14. The point for determination in all the appeals is, whether the accused are liable to be punished for alleged violation of Section 269SS of the Income-tax Act.</p><p style="text-align: justify;">15. The first accused is a private limited company running a spinning mill in Salem. It is not in dispute that accused Nos. 2 to 4 are managing director, whole time director and sales director of the first accused company. The complainant/appellant, the Income-tax Department has filed these complaints against the accused under Sections 269SS, 276DD read with Section 278B of the Income-tax Act. It is alleged by the complainant in all these cases that the accused accepted certain deposits of Rs. 10,000 or more in contravention of, Section 269SS of the Act. Criminal Appeal No. 647 of 1990, is filed against the order passed in C. C. No. 341 of 1989. It is stated that the accused received a sum of Rs. 50,000 in cash on January 8, 1985 ; Criminal Appeal No. 648 of 1990 relates to payment of Rs. 10,000 in cash dated November 26, 1984 ; Criminal Appeal No. 649 of 1990 relates to the receipt of Rs. 14,000 in cash on October 15, 1984 ; Criminal Appeal No. 650 of 1990 relates to the deposit of Rs. 20,000 dated January 10, 1985 ; Criminal Appeal No. 651 of 1990 relates to the deposit of Rs. 10,000 in cash dated October 17, 1984 ; Criminal Appeal No. 652 of 1990 relates to the deposit of Rs. 30,000 dated October 16, 1984, and Criminal Appeal No. 653 of 1990 relates to the deposit of Rs. 10,000 dated August 24, 1984.</p><p style="text-align: justify;">16. Section 269SS came into force with effect from April 1, 1984. Section 269SS states thus ;</p><p style="text-align: justify;">'No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), 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.'</p><p style="text-align: justify;">17. Subsequently, the above section was amended. As per the above amendment the word 'Rs. 10,000' is substituted by 'Rs. 20,000' or more.</p><p style="text-align: justify;">18. It is not disputed by the accused that they received the amount mentioned in the complaint in cash. It is only alleged by the accused in exhibit P-8 the letter sent by them to the Income-tax Officer that the deposits were accepted from ex-employees who had deposited their money with them in cash, since they have assured that they have no bank account of their own. With regard to the deposit of amounts in cash from persons who had bank accounts, the accused have stated that the amount was received in cash for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittance to the bank to reduce the overdraft. But the complainant-Department not satisfied with the above explanation has launched prosecution against the accused.</p><p style="text-align: justify;">19. P.W.-1, the Assistant Commissioner of Income-tax, has stated that he verified the accounts of the first accused company and that exhibit P-1 is the deposit register and that exhibit P-2 is the entries in cash register, exhibit P-4 is the authorisation given by the Department to launch the prosecution. Exhibits P-5 to P-7 are the statements given by the accused. The Income-tax Department also issued a show-cause notice to the accused under exhibit P-9. The reply given by the accused is marked as exhibit P-10. It is stated in exhibit P-10 that due to the prevalent tight money conditions at that time, it was very difficult to mobilise deposits and that too at the lowest rate of 15 per cent. and that they have no other alternative, except accepting the above deposits to meet their working capital requirements. In the statement recorded in the enquiry, the accused have stated that at the time of accepting the deposits they did not know the provisions of the Act and that, therefore, they accepted it. It is admitted that the accused have also submitted affidavits of persons from whom they received cash to the Department. P.W-1 has admitted that the said affidavits are in their file. The trial court has held that the complainant failed to produce the affidavit and that the complainant failed to show that the averments contained in the affidavit will not amount to a valid explanation and that, therefore, the accused are not guilty of Section 269SS.</p><p style="text-align: justify;">20. Learned counsel for the appellants, Thiru Ramasamy, contended that the trial court failed to advert to various aspects of the case and that when once the amount was received in cash, the offence is made out and that it is for the accused to prove that they have reasonable cause to receive the amount in cash and that the burden is not upon the complainant to establish the same. On the other hand, learned counsel for the accused, Thiru Gopinath, contended that the complainant ought to have produced the affidavits of the depositors from whom the accused received cash and that it is for the complainant to prove that the accused without reasonable cause or excuse accepted deposits in contravention of Section 269SS.</p><p style="text-align: justify;">21. For proper appreciation of the rival contentions of the parties it would be useful to refer to the relevant provisions of the Income-tax Act. As already stated, Section 269SS came into force with effect from April 1, 1984. Section 276DD is the penal provision for violation of Section 269SS. As per the above section, if a person without reasonable cause or excuse, takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be punishable with imprisonment for a term which may extend to two years and also be liable to a fine equal to the amount of such loan or deposit. But the above Section 276DD was omitted with effect from April 1, 1989. New Section 271D came into force with effect from April 1, 1989, Under the above provisions, the person who contravenes Section 269SS shall be liable to pay a sum equal to the amount of the loan or deposit as penalty. The punishment of imprisonment for a term which may extend to two years is omitted in the above new section. In all these cases, the offence is said to have been committed before the deletion of Section 276DD. As the old Section 276DD was in force when the proceedings were initiated, the complaint filed under old Section 276DD is maintainable. The question whether the accused is guilty of the offences for violation of Section 269SS has to be decided only with reference to old Section 276DD and not new Section 271D.</p><p style="text-align: justify;">22. Learned counsel for the appellant relies upon a decision in C. A Baloo v. Union of India : [1992]197ITR545(Mad) . It is stated in the above decision that the principle enacted in Section 6 of the General Clauses Act that unless a contrary intention appears, the repeal of an Act would not affect any right, privilege, obligation or liability accrued under any enactment so repealed, would apply to repeal of one of the sections of the Income-tax Act, 1961, It is also held in the above decision that with effect from April 1, 1989, Section 271D had been introduced while omitting Section 276DD with effect from the same date and that it is not possible to gather a contrary intention that the Legislature desired that prosecutions which are permissible under Section 276DD of the Act and already initiated before the insertion of the new section were to be erased or obliterated. It is thus clear from the above decision that the repeal of Section 276DD after the proceedings were initiated by the Department will not take away the rights of the Department to prove the case against the accused as per old Section 276DD.</p><p style="text-align: justify;">23. It is contended by learned counsel for the respondents/accused that the complainant should prove that the accused without reasonable cause or excuse have contravened Section 269SS. But learned counsel for the complainant contends that it is for the accused to prove that they had reasonable cause for accepting the amount in cash. Both parties rely upon certain decisions on this aspect.</p><p style="text-align: justify;">24. Learned counsel for the appellant relies upon a decision in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The facts of the above case will show that the assessee filed the wealth-tax returns belatedly and that though he applied for extension of time, the returns were filed after the expiry of the periods of extension. It is also held that the assessee was conscious of the fact that the wealth-tax returns should be filed within the time stipulated under Section 14(1) of the Act. Relying upon the above facts, the Division Bench has held thus (headnote) :</p><p style="text-align: justify;">'It was not for the Department to establish that the assessee was guilty of contumacious conduct and acted in conscious disregard of his obligation. It was for the assessee to plead and prove that the delay in filing the returns was due to reasonable cause. Such reasonable cause was not pleaded.'</p><p style="text-align: justify;">25. The Division Bench also relied upon a decision of the Supreme Court reported in CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) .</p><p style="text-align: justify;">26. In CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) , the Supreme Court in a case arising under Section 271(1)(a) of the Act has held thus (headnote):</p><p style="text-align: justify;">'There is nothing in Section 271(1)(a) of the Income-tax Act, 1961, which requires that mens rea has to be established by the Department before penalty can be levied under that section for delay in filing the return. It is for the assessee, should he file a belated return, to show 'reasonable cause' for the delay.'</p><p style="text-align: justify;">27. Section 271(1)(a) of the Act imposes penalty for failure to furnish returns and comply with the notice and concealment of income. Section 271(l)(a) reads 'has without reasonable cause failed to furnish'. Clause (b) reads 'has without reasonable cause failed to comply with the notice'. As per amended Section 276C which came into effect from October 1, 1975, if a person wilfully attempts to evade any tax, penalty or interest, he shall without prejudice to any penalty that may be imposable on him under any other provision of the Act be punishable . . . with rigorous imprisonment which shall not be less than six months but which may extend to seven years. In the above decision, the Supreme Court has held that Section 271(1)(a) provides that penalty may be imposed if the Income-tax Officer is satisfied that any person has, without reasonable cause, failed to furnish the return of total income and that it is clear that iff the above case, what is intended is a civil obligation while in the latter that is, Section 276C what is imposed is a criminal sentence. The court has further held that there can be no dispute that having regard to the provisions of Section 276C which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. It is also held in the above decision that reasonable cause is an ingredient of the offence for which the punishment is provided and the taxing authority has prima facie to prove the absence of reasonable cause in the sense that has been explained above. The distinction between Sections 276C and 271(1)(a) has been communicated in the above decision. The above decision is referred to in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The case reported in CWTv. P. Nainakhan : [1996]221ITR805(Mad) , relates to non-filing of wealth-tax returns within the time stipulated under Section 14(1) of the Wealth-tax Act. Section 18(1)(a) of the Wealth-tax Act imposes penalty for failure to furnish wealth-tax returns. Under the above provisions, a sum equal to two per cent. of the assessed tax for every month shall be imposed as penalty. Therefore, it is held in the above decisions that in such cases, mens rea is not essential.</p><p style="text-align: justify;">28. Learned counsel for the respondent/accused relies upon a decision reported in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO : [1986]158ITR496(Delhi) . The liability of the assessee under Section 201(1) of the Act and Section 276B of the Act are elaborately discussed in the above decision. Section 276B imposes punishment of imprisonment on a person who without reasonable cause or excuse fails to deduct the tax. But under Section 201 read with Section 221 no imprisonment is provided, but only penalty equivalent to a certain percentage of the amount has to be imposed. Bearing in mind the language employed in the above two provisions, the court has held thus (headnote) :</p><p style="text-align: justify;">'The standard of proof and explanation and onus of proof to be discharged by the assessee in penalty proceedings under Section 201(1) is much higher and heavy. In a criminal prosecution for an offence under Section 276B, however, the dictates of law merely demand the requirement of reasonable cause, i.e., what appeals ex facie to reason, which is made more milder.'</p><p style="text-align: justify;">29. Learned counsel for the respondent also relies upon a decision of the Patna High Court reported in ITO v. Taunts Equipment (P.) Ltd. : [1979]118ITR982(Patna) . It is seen from the facts of the above case that the Income-tax Department filed a complaint under Section 276B. As already stated, the above section reads 'if a person without reasonable cause or excuse'. Section 276DD also reads 'if a person without reasonable cause or excuse'. While interpreting the above words, the Patna High Court has held that the prosecution must prove that there was no reasonable cause or excuse for not filing the returns. The relevant observations of the Patna High Court are extracted below (headnote) :</p><p style="text-align: justify;">'The words 'fails without reasonable cause or excuse' occurring in Section 276 (now Section 272A(2)) of the Income-tax Act, 1961, show that mens rea is an ingredient before punishing the defaulter. It must be shown that the default was deliberate and conscious. It is not enough for the Department to show that the payment or return was not made or filed in time. It has to go further and prove that it was without reasonable cause or excuse. Unless the prosecution proves by evidence that there was no reasonable cause or excuse for not filing the return or depositing the money within the prescribed time, no offence can be said to have been committed.'</p><p style="text-align: justify;">30. In the above decision, the decision of the Supreme Court reported in CIT v. Anwar Ali : [1970]76ITR696(SC) is referred to. In the above decision, it is held thus (headnote) :</p><p style="text-align: justify;">'Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars.'</p><p style="text-align: justify;">31. It is thus clear from the above decisions that it is for the prosecution to prove that the accused without reasonable cause or excuse failed to receive the amount by way of cheque. The Patna High Court has further held that the words 'fails without reasonable cause or excuse' will show that mens rea is an ingredient to be proved by the Department before punishing the defaulter. It is thus seen that the application of mens rea would depend upon the language used in a particular provision and the nature of penalty. It is no doubt true that mens rea is not a necessary ingredient to prove when the person who contravenes the provisions of the Act is imposed with only penalty by way of amount. But, if a particular provision imposes imprisonment for a specific term on the assessee it is for the prosecution to prove mens rea. Bearing the principles of law laid down in the above decisions in mind the case on hand has to be decided.</p><p style="text-align: justify;">32. It is pointed out by learned counsel for the respondent that the words 'without reasonable cause or excuse' are absent in the complaint. In paragraph 5 of the complaint, it is only stated that the first accused accepted deposits violating Section 269SS. It is alleged in paragraph 6 that the Department issued summons to the accused requiring them to produce books of account and that in the enquiry, the accused admitted the default under Section 276DD and pleaded ignorance of the provisions. It is significant to note that the Department recorded the statement of the accused in the form of questions and answers. The above statements are marked as exhibits P-5 to P-7. In the above statements, the accused have stated that they are not aware of the new provisions and that they needed cash urgently to meet the day-to-day expenses and that some of the depositors had no bank accounts. In the letter exhibit P-8 addressed to the Department, the accused have stated that cash received from the depositors who had bank accounts were taken for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittances to the bank and that as cash was urgently required for their immediate needs which cannot wait till the cheques are collected by the bank, the deposits were accepted from the parties, who had bank accounts. It is thus, clear that the accused gave an explanation for accepting deposits in cash, in the above enquiry proceedings. It is also admitted by P.W. 1 that the accused produced affidavits of persons from whom they received cash of more than Rs. 10,000 and that the affidavits are in their file. The explanation given by the accused during the enquiry proceedings and also the affidavits of depositors produced by the accused were in the file of the complainant. But, unfortunately the complainant has not even stated in the complaint that the explanation and reasons given by the accused for receiving the deposits in cash are not true and that the accused without any reasonable excuse received the cash. The complainant ought to have given reasons in the complaint as to why the explanation given by the accused is not valid in law. It is no doubt true that the ignorance of law is not an excuse for committing the offence. But the other reasons given by the accused for accepting the cash could have been considered by the Department before launching the prosecution. As already stated, mere acceptance of cash from the depositors is not an offence. The complainant must further allege and prove that the accused accepted the loan or deposit without reasonable cause or excuse. The circumstances under which the accused accepted the cash could be proved only by producing the affidavits sworn by the depositors. But, learned counsel for the appellant contended that the burden is upon the accused to prove that they have reasonable cause to accept the deposits. As already stated, when a particular provision imposes imprisonment, the prosecution must prove the ingredients of the offence. Section 276DD clearly states that only if a person without reasonable cause or excuse accepts the loan or deposit he is liable to be punished. That being the position of law, I am unable to subscribe to the contention of learned counsel for the appellant that the burden is upon the accused to prove that they have valid reasons to accept the deposits in cash.</p><p style="text-align: justify;">33. Section 278AA came into force with effect from September 10, 1986. The section reads thus :</p><p style="text-align: justify;">'278AA. Punishment not to be imposed in certain cases.--Notwithstanding anything contained in the provisions of Section 276A, Section 276AB or Section 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.'</p><p style="text-align: justify;">34. But with effect from April 1, 1989, Section 276DD is omitted in the above section. However, it is clear that even in the new provision which was in force on September 10, 1986, no person can be punished under Section 276DD if he proves that there was reasonable cause for such failure. But the words 'if he proves' is absent in the original Section 276DD. After amendment of Section 278AA, the burden lies upon the accused to prove that there was reasonable cause for such failure. But the accused are alleged to have contravened Section 269SS while old Section 276DD was in force. Hence, the prosecution has to aver and prove that the accused contravened the rule without reasonable cause or excuse, (vide Greatway (P.) Ltd. v. Asst. CIT [1993] 199 ITR 591 .</p><p style="text-align: justify;">35. The complainant could have produced the affidavits sworn by the depositors, produced by the accused to the Department in the trial court and shown that the explanation given by the accused for accepting the deposits in cash is not true. The trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits and prove the charge levelled against the accused. Now, learned counsel for the appellant contended that the accused could have produced the copies of affidavits or requested the court to send for the affidavits under known process of law. I am unable to accept the above contention of the appellant. The complainant is in possession of the affidavits produced by the accused. The law is well settled that the party who is in custody of the best evidence must produce the same before the court and in such cases he cannot invoke the abstract doctrine of burden of proof. Therefore, it has to be held that the complainant who is in possession of the best evidence failed to produce it before the trial court and invite the court to give a finding on the question whether the explanation trotted out by the accused is true or not. From the facts discussed above, it has to be held that mere contravention of Section 269SS is not an offence unless and until it is proved that the accused have no reasonable cause or excuse to accept the loan or deposits in cash. I hold that the complainant failed to aver and prove that the accused without reasonable cause or excuse accepted the deposits in cash. In the absence of an allegation in the complaint that the accused without reasonable cause or excuse accepted the deposits in cash, the accused cannot be said to have committed an offence under Section 276DD.</p><p style="text-align: justify;">36. Learned counsel for the respondent further contended that when the offence under the Act is committed by the company, every person who at the time when the offence was committed was in charge and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence, and shall be liable to be proceeded against and punished accordingly. It is contended by learned counsel for the respondent that it is not specifically alleged in the complaint as to who is the principal officer responsible for the day-to-day affairs of the company and that in the absence of the necessary averments to bring the company within the ambit of Section 278B the complaint is not maintainable. In support of the same, the accused also relies upon certain decisions. In State of Karnataka v. Pratap Chand : 1981CriLJ595 , it is held that where a partnership firm was charged for the offences under Section 18 of the Drugs and Cosmetics Act, the partner of the firm who was in over all control of the day-to-day business of the firm would alone be liable to be convicted.</p><p style="text-align: justify;">37. In a decision in Sham Sunder v. State of Haryana : 1989CriLJ2201 , it is held thus (headnote of AIR) :</p><p style="text-align: justify;">'More often, it is common that some of the partners of a firm may not even be knowing of what is going on day-to-day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection (1) of Section 10 that the offence was committed without their knowledge. The obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution has established that the requisite condition mentioned in Sub-section (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. Thus where the documents produced by the prosecution do not indicate even remotely that all the partners were doing the business of the firm and that there was no other evidence on record on this aspect, it could not be said that when the offence was committed all the partners were conducting the business of the firm. Therefore, they would not be liable for conviction.'</p><p style="text-align: justify;">38. In Greatway (P.) Ltd. v. Asst CIT it is held that when the complaint is silent as to whether any person had been appointed as the principal officer of the petitioner-company and in the absence of such an appointment, a director or the managing director of the company could not be prosecuted. It is alleged in the complaint that the first accused is the company and accused Nos. 2 to 4 are the principal officers of the first accused who are responsible for the conduct of the business of the first accused company. In paragraph 8 of the complaint, it is stated that accused Nos. 2 to 4 being the executives of the first accused at the material time who were in charge of and responsible for the conduct of the business have committed the offence. P.W.-1 was not cross-examined on this aspect by the accused. Further, in the statements given by the accused, exhibits P-5 to P-8, they did not state that they or any of them, were not responsible for the day-to-day administration of the company. It is significant to note that all the accused have given one and the same statement. In the above circumstances, I am not inclined to accept the contention now raised by the respondent counsel that the complaint has to fail as ingredients of Section 278B are not made out. I hold that the contention raised by the respondent counsel on the above aspect has to be rejected.</p><p style="text-align: justify;">39. Learned counsel for the respondent also relies upon two decisions and contends that the appellate court should not normally interfere with the order of acquittal passed by the trial court. Ramesh Babulal Doshi v. State of Gujarat : 1996CriLJ2867 ; Awadhesh v. State of M. P., : 1988CriLJ1154 . It is no doubt true that the order of acquittal passed by the trial court would not normally be interfered with in the appeal, unless the view taken by the trial court is wholly unreasonable or erroneous. In the instant case, though the trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits the trial court did not advert to the other aspects of the case. It is open to the appellate court to give findings on all the points involved in the case, even though the same was not considered by the trial court. In any event, the reasons given by the trial court for acquitting the accused cannot be said to be unsustainable. For the above reasons, I hold that the order of acquittal passed by the trial court is not liable to be set aside. The complainant failed to prove the ingredients of the offence alleged in Section 276DD of the old Act. The complainant also failed to aver and prove that the reasons given by the accused for accepting the amount in cash is not true. Further the complainant failed to produce the affidavits sworn by the depositors to prove that the accused without reasonable cause or excuse accepted the amount in cash. For the above reasons, I hold that the contention raised by learned counsel for the appellant in these appeals cannot be accepted and as such, I hold that the order of acquittal passed by the trial court has to be confirmed.</p><p style="text-align: justify;">C. A. No. 647 of 1990:</p><p style="text-align: justify;">40. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A No. 648 of 1990:</p><p style="text-align: justify;">41. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 649 of 1990:</p><p style="text-align: justify;">42. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 650 of 1990:</p><p style="text-align: justify;">43. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 651 of 1990:</p><p style="text-align: justify;">44. In the result the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 652 of 1990:</p><p style="text-align: justify;">45. In the result the criminal appeal is dismissed. The order of acquittal is confirmed. </p><p style="text-align: justify;">C. A. No. 653 of 1990:</p><p style="text-align: justify;">46. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p>',
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			(int) 3 => 'Exhibit P-3',
			(int) 4 => 'Exhibit P-9',
			(int) 5 => 'Exhibit P-10',
			(int) 6 => 'P. W. 1',
			(int) 7 => 'P. W. 1',
			(int) 8 => 'P. W. 1',
			(int) 9 => 'P. W. 1',
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			(int) 13 => 'P. W. 1',
			(int) 14 => 'Nos',
			(int) 15 => 'Thiru Gopinath',
			(int) 16 => 'P. Nainakhan',
			(int) 17 => 'I. M. Patel',
			(int) 18 => 'I. M. Patel',
			(int) 19 => 'P. Nainakhan',
			(int) 20 => 'P. Nainakhan',
			(int) 21 => 'P. P. Suri',
			(int) 22 => 'Anwar Ali',
			(int) 23 => 'Haryana',
			(int) 24 => 'Nos',
			(int) 25 => 'Nos',
			(int) 26 => 'Doshi v. State'
		),
		'ORG' => array(
			(int) 0 => 'J. Criminal Appeal No',
			(int) 1 => 'Appellate Tribunal',
			(int) 2 => 'Chennai',
			(int) 3 => 'P.W. 1',
			(int) 4 => 'Criminal Appeal No',
			(int) 5 => 'P-l',
			(int) 6 => 'P.W. 1.Criminal Appeal No',
			(int) 7 => 'P-l',
			(int) 8 => 'Criminal Appeal No',
			(int) 9 => 'P-l',
			(int) 10 => 'P-l',
			(int) 11 => 'P-l',
			(int) 12 => 'Sections 278AA',
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			(int) 14 => 'Criminal Appeal No',
			(int) 15 => 'Criminal Appeal No',
			(int) 16 => 'Criminal Appeal No',
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			(int) 18 => 'Criminal Appeal No',
			(int) 19 => 'Department',
			(int) 20 => 'P-9',
			(int) 21 => 'Department',
			(int) 22 => 'Thiru Ramasamy',
			(int) 23 => 'Legislature',
			(int) 24 => 'Department',
			(int) 25 => 'Department',
			(int) 26 => 'CWT',
			(int) 27 => 'the Division Bench',
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			(int) 34 => 'the Supreme Court',
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			(int) 36 => 'Sequoia Construction Co. P. Ltd.',
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			(int) 38 => 'the Patna High Court',
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			(int) 58 => 'AIR',
			(int) 59 => 'Greatway',
			(int) 60 => 'Asst CIT',
			(int) 61 => 'Awadhesh'
		),
		'CARDINAL' => array(
			(int) 0 => '647',
			(int) 1 => '341',
			(int) 2 => '10,000',
			(int) 3 => '30,000',
			(int) 4 => '1985.2',
			(int) 5 => '30,000',
			(int) 6 => '648',
			(int) 7 => '5',
			(int) 8 => '342',
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			(int) 19 => '20,000',
			(int) 20 => '651',
			(int) 21 => '1990:8',
			(int) 22 => '345',
			(int) 23 => '10,000',
			(int) 24 => '647',
			(int) 25 => '652',
			(int) 26 => '346',
			(int) 27 => '30,000',
			(int) 28 => '653',
			(int) 29 => '1990:10',
			(int) 30 => '347',
			(int) 31 => '10,000',
			(int) 32 => '278E',
			(int) 33 => '2 to 4',
			(int) 34 => '10,000',
			(int) 35 => '647',
			(int) 36 => '341',
			(int) 37 => '50,000',
			(int) 38 => '648',
			(int) 39 => '10,000',
			(int) 40 => '649',
			(int) 41 => '14,000',
			(int) 42 => '650',
			(int) 43 => '20,000',
			(int) 44 => '651',
			(int) 45 => '10,000',
			(int) 46 => '652',
			(int) 47 => '30,000',
			(int) 48 => '653',
			(int) 49 => '10,000',
			(int) 50 => '1984.16',
			(int) 51 => '10,000',
			(int) 52 => '10,000',
			(int) 53 => '20,000',
			(int) 54 => '1992]197ITR545(Mad',
			(int) 55 => 'one',
			(int) 56 => '1996]221ITR805(Mad',
			(int) 57 => '1992]196ITR297(SC',
			(int) 58 => '1992]196ITR297(SC',
			(int) 59 => '1996]221ITR805(Mad',
			(int) 60 => '1996]221ITR805(Mad',
			(int) 61 => '1986]158ITR496(Delhi',
			(int) 62 => 'two',
			(int) 63 => '1979]118ITR982(Patna',
			(int) 64 => '5',
			(int) 65 => '6',
			(int) 66 => '10,000',
			(int) 67 => '199',
			(int) 68 => '1981CriLJ595',
			(int) 69 => '1',
			(int) 70 => '1',
			(int) 71 => '2 to 4',
			(int) 72 => '8',
			(int) 73 => '2 to 4',
			(int) 74 => 'two',
			(int) 75 => '1996CriLJ2867',
			(int) 76 => '1988CriLJ1154',
			(int) 77 => '647',
			(int) 78 => '1990:40',
			(int) 79 => '648',
			(int) 80 => '649',
			(int) 81 => '1990:42',
			(int) 82 => '650',
			(int) 83 => '1990:43',
			(int) 84 => '651',
			(int) 85 => '1990:44',
			(int) 86 => '652',
			(int) 87 => '1990:45',
			(int) 88 => '653',
			(int) 89 => '1990:46'
		),
		'DATE' => array(
			(int) 0 => '1990',
			(int) 1 => '1989',
			(int) 2 => '1961',
			(int) 3 => 'April 1, 1984',
			(int) 4 => 'the year March 31, 1985',
			(int) 5 => 'January 8',
			(int) 6 => 'March 16, 1988',
			(int) 7 => '1990',
			(int) 8 => '1989',
			(int) 9 => 'November 26, 1984',
			(int) 10 => '1990',
			(int) 11 => '1989',
			(int) 12 => 'October 15, 1984',
			(int) 13 => '1989',
			(int) 14 => 'January 10, 1985',
			(int) 15 => '1989',
			(int) 16 => 'October 17, 1984',
			(int) 17 => '1990',
			(int) 18 => '1989',
			(int) 19 => 'October 16, 1984',
			(int) 20 => '1989',
			(int) 21 => 'August 24, 1984',
			(int) 22 => '1990',
			(int) 23 => '1989',
			(int) 24 => 'January 8, 1985',
			(int) 25 => '1990',
			(int) 26 => 'November 26, 1984',
			(int) 27 => '1990',
			(int) 28 => 'October 15, 1984',
			(int) 29 => '1990',
			(int) 30 => 'January 10, 1985',
			(int) 31 => '1990',
			(int) 32 => 'October 17, 1984',
			(int) 33 => '1990',
			(int) 34 => 'October 16, 1984',
			(int) 35 => '1990',
			(int) 36 => 'August 24',
			(int) 37 => 'April 1, 1984',
			(int) 38 => 'the 30th day of June, 1984',
			(int) 39 => 'April 1, 1984',
			(int) 40 => 'two years',
			(int) 41 => 'April 1, 1989',
			(int) 42 => 'April 1, 1989',
			(int) 43 => 'two years',
			(int) 44 => '1961',
			(int) 45 => 'April 1, 1989',
			(int) 46 => ''25',
			(int) 47 => '1961',
			(int) 48 => ''27',
			(int) 49 => 'October 1, 1975',
			(int) 50 => 'less than six months',
			(int) 51 => 'seven years',
			(int) 52 => ''29',
			(int) 53 => '1961',
			(int) 54 => ''30',
			(int) 55 => '1970]76ITR696(SC',
			(int) 56 => ''31',
			(int) 57 => 'September 10, 1986',
			(int) 58 => ''34',
			(int) 59 => 'April 1, 1989',
			(int) 60 => 'September 10, 1986',
			(int) 61 => '1993'
		),
		'GPE' => array(
			(int) 0 => 'Salem',
			(int) 1 => 'F.O.C.C.',
			(int) 2 => 'Vaiya',
			(int) 3 => 'Act.3',
			(int) 4 => 'F. O. C. C.',
			(int) 5 => 'F.O.C.C.',
			(int) 6 => 'F. O. C. C.',
			(int) 7 => 'Salem',
			(int) 8 => 'cash.33',
			(int) 9 => 'Karnataka v. Pratap Chand',
			(int) 10 => 'Sham Sunder',
			(int) 11 => 'Gujarat'
		),
		'ORDINAL' => array(
			(int) 0 => 'first',
			(int) 1 => 'second',
			(int) 2 => 'third',
			(int) 3 => 'fourth',
			(int) 4 => 'first',
			(int) 5 => 'first',
			(int) 6 => 'first',
			(int) 7 => 'second',
			(int) 8 => 'second',
			(int) 9 => 'first',
			(int) 10 => 'first',
			(int) 11 => 'second',
			(int) 12 => 'third',
			(int) 13 => 'fourth',
			(int) 14 => 'first',
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			(int) 17 => 'first',
			(int) 18 => 'first',
			(int) 19 => 'first',
			(int) 20 => 'first',
			(int) 21 => 'first',
			(int) 22 => 'first'
		),
		'PRODUCT' => array(
			(int) 0 => 'Section 278AA',
			(int) 1 => 'Section 269SS',
			(int) 2 => 'P-10',
			(int) 3 => 'P.W. 1',
			(int) 4 => 'P-10',
			(int) 5 => 'P-10',
			(int) 6 => 'P-10',
			(int) 7 => 'P-10',
			(int) 8 => 'P-10',
			(int) 9 => 'P-10',
			(int) 10 => '276DD',
			(int) 11 => 'P-10',
			(int) 12 => 'P-10',
			(int) 13 => 'Section 276DD',
			(int) 14 => 'Section 269SS',
			(int) 15 => 'Section 269SS',
			(int) 16 => 'Section 276DD',
			(int) 17 => 'Section 276DD',
			(int) 18 => 'Section 269SS',
			(int) 19 => 'Section 276DD',
			(int) 20 => 'Section 276DD',
			(int) 21 => 'Section 276DD',
			(int) 22 => 'Section 269SS',
			(int) 23 => 'P.W. 1',
			(int) 24 => 'Section 278AA',
			(int) 25 => '278AA',
			(int) 26 => 'Section 276DD',
			(int) 27 => 'Section 276DD',
			(int) 28 => 'Section 278AA',
			(int) 29 => 'Section 269SS',
			(int) 30 => 'Section 276DD',
			(int) 31 => 'Section 269SS'
		),
		'NORP' => array(
			(int) 0 => 'P-1',
			(int) 1 => 'P-1',
			(int) 2 => 'P-1'
		),
		'MONEY' => array(
			(int) 0 => '15 per cent',
			(int) 1 => 'two per cent'
		),
		'WORK_OF_ART' => array(
			(int) 0 => 'C. A Baloo v. Union of India'
		),
		'FAC' => array(
			(int) 0 => 'Sections 276C'
		),
		'LOC' => array(
			(int) 0 => 'P-8'
		)
	),
	'desc' => array(
		'Judgement' => array(
			'id' => '821360',
			'acts' => 'Income-tax Act, 1961 - Sections 269SS, 271D and 276DD',
			'appealno' => 'Criminal Appeal Nos. 647 to 653 of 1990',
			'appellant' => 'Assistant Commissioner of Income-tax',
			'authreffered' => '',
			'casename' => 'Assistant Commissioner of Income-tax Vs. Jawahar Mills Ltd. and ors.',
			'casenote' => 'Direct Taxation - deposits - Sections 269SS, 271D and 276DD of Income Tax Act, 1961 - respondent company engaged in running of spinning mill - Section 269SS prescribes mode of acceptance of any deposit or loan by assessee - respondent accepted cash of certain amount of Rs. 10000 in violation of provisions of Section 269SS - acquitted by Trial Court - appeal - Order of Trial Court not to be interfered unless Trial Court wholly unreasonable or erroneous - appellant failed to prove ingredient of offence alleged in Section 276DD - failed to give reasons for accepting cash not true - failed to prove that respondent without reasonable cause or excuse accepted cash - decision of Trial Court upheld.


 - ',
			'caseanalysis' => null,
			'casesref' => 'Awadhesh v. State of M. P.;',
			'citingcases' => '',
			'counselplain' => 'K. Ramasamy, Special Public Prosecutor',
			'counseldef' => 'Gopinath, Adv.',
			'court' => 'Chennai',
			'court_type' => 'HC',
			'decidedon' => '1998-03-10',
			'deposition' => '',
			'favorof' => null,
			'findings' => null,
			'judge' => 'V. Bakthavatsalu, J.',
			'judgement' => '<p style="text-align: justify;">V. Bakthavatsalu, J. </p><p style="text-align: justify;">Criminal Appeal No. 647 of 1990 :</p><p style="text-align: justify;">1. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, Salem, against the order of acquittal passed in F.O.C.C. No. 341 of 1989. The case of the complainant is that the first accused is a private limited company engaged in running a spinning mill in the name and the style of 'Jawahar Mills Limited'. The second, third and fourth accused are the principal officers of the first accused who are responsible for the conduct of the business. The provisions of Section 269SS of the Income-tax Act, 1961, prescribed the mode of acceptance of any deposit or loan by the income-tax assessee. The above provision has come into force with effect from April 1, 1984. On scrutiny of the books of account of the first accused company for the year March 31, 1985, it was noticed that the first accused accepted the deposit of Rs. 10,000 or more violating the provisions of Section 269SS of the Act. In the case of Vaiya-puri, an amount of Rs. 30,000 was received in cash on January 8, 1985.</p><p style="text-align: justify;">2. The complainant issued summons to the accused to produce books of account on March 16, 1988. In response to his summons, the second accused had appeared before the complainant with the relevant books of account. The second accused has admitted the default under Section 276DD and pleaded his ignorance of the provision and represented the same as unintentional. A show-cause notice under Section 278AA was also issued to the accused. The first accused company has violated Section 269SS by acceptance of loans and deposits otherwise than by account payee cheque or bank draft. The first accused has committed an offence punishable under Section 276DD. The second, third and fourth accused being the executives of the first accused who were in charge and responsible for the conduct of the business have committed an offence punishable under Section 276DD read with Section 278B of the Income-tax Act.</p><p style="text-align: justify;">3. The complainant was examined as P. W. 1 who is an authorised representative of the Income-tax Appellate Tribunal, Chennai. When P.W. 1 perused the account produced by the accused. It is revealed that a sum of Rs. 30,000 was received by the accused. Exhibit P-1 is the fixed deposit register, exhibit P-2 is the corresponding entry in the cash register. Exhibit P-3 is the corresponding entry in the ledger. Exhibit P-4 is the order of sanction for launching prosecution against the accused. Exhibits P-5 to P-7 are the statements given by the accused in the enquiry. After enquiry the Income-tax Officer also issued a show-cause notice exhibit P-8 under Section 2(35). Exhibit P-9 is another notice issued to the accused. Exhibit P-10 is the reply given by the accused.</p><p style="text-align: justify;">4. When the incriminating circumstances appearing against the accused were explained to them under Section 313 of the Criminal Procedure Code, the accused denied the evidence. On consideration of oral and documentary evidence, the trial court acquitted the accused holding that the accused are not guilty under Section 276DD of the Act.</p><p style="text-align: justify;">Criminal Appeal No. 648 of 1990: </p><p style="text-align: justify;">5. The appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F. O. C. C. No. 342 of 1989. The above complaint is filed in respect of an amount of Rs. 10,000 received by the respondent in cash on November 26, 1984. Except the above fact, all other allegations in the complaint are similar to the complaint filed in the case relating to Criminal Appeal No. 647 of 1990. The complainant has also marked exhibits P-1 to P-10. The accused denied the evidence of P.W. 1 in the Section 313 examination.</p><p style="text-align: justify;">Criminal Appeal No. 649 of 1990:</p><p style="text-align: justify;">6. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F.O.C.C. No. 343 of 1989. The complaint is filed in respect of the receipt of Rs. 14,000 in cash by the accused on October 15, 1984. The other averments in the complaint are similar to the complaint filed in the other cases. P.W. 1 the complainant has marked exhibits P-l to P-10. The accused is examined under Section 313 of the Criminal Procedure Code and he denied the evidence of P.W. 1.</p><p style="text-align: justify;">Criminal Appeal No. 650 of 1990:</p><p style="text-align: justify;">7. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 344 of 1989. The complaint in the above ease was filed in respect of an amount of Rs. 20,000 received in cash by the accused on January 10, 1985. The other grounds in the complaint are similar to the complaint filed in the other case. P. W. 1, the complainant has marked exhibits P-l to P-10. The incriminating materials available in the evidence of P. W. 1 were explained to the accused and the accused denied the same.</p><p style="text-align: justify;">Criminal Appeal No. 651 of 1990:</p><p style="text-align: justify;">8. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 345 of 1989. The complaint was filed in respect of Rs. 10,000 received by the accused by cash on October 17, 1984. The other averments in the complaint are similar to the complaint filed in Criminal Appeal No. 647 of 1990. In this case also P. W. 1 was examined and documents exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 652 of 1990:</p><p style="text-align: justify;">9. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. O. C. C. No. 346 of 1989. The above complaint was filed in respect of an amount of Rs. 30,000 received by the accused by cash on October 16, 1984. In this case also P. W. 1 was examined and document exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined by the court under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 653 of 1990:</p><p style="text-align: justify;">10. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 347 of 1989. The above complaint was filed in respect of Rs. 10,000 received by the accused by cash on August 24, 1984. In this case also P. W. 1 was examined and documents exhibits P-1 to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">11. All the above complaints were filed against the same accused/respondents. The case of the complainant in all the above cases is that the accused received the amount in cash in violation of Section 269SS of the Income-tax Act, and that the accused ought to have received the amount only by way of account payee cheque or bank draft.</p><p style="text-align: justify;">12. The trial court on consideration of oral and documentary evidence has held that the accused have obtained affidavits from their customers, for remitting the amount in cash, and that those affidavits were not produced by the complainant in court and the burden is upon the complainant to prove that the explanation offered by the accused is not acceptable and that as the complainant failed to produce the affidavits the benefit of doubt has to be given to the accused.</p><p style="text-align: justify;">13. In all the appeals preferred by the complainant, the common contentions raised are as follows :</p><p style="text-align: justify;">The learned magistrate has not even whispered a word on the documentary evidence let in by the prosecution. The trial court has not appreciated and analysed the evidence of the prosecution found in exhibits P-l to P-10. The trial court has acquitted the accused solely on the ground that the prosecution has not produced the affidavit sworn by the person who deposited the amount with the respondents. The affidavit of the depositor is the document of the respondents and if there is any reasonable cause for receiving the amount, otherwise than by account payee cheque or bank draft, it is the duty of the respondents to file a copy of the affidavit before the court. It is the duty of the respondents to establish before the trial court that they have such reasonable cause or excuse for accepting the amount in cash. The trial court has completely misconstrued the provisions of Sections 278AA and 278E of the Income-tax Act. The trial court has wrongly held that the prosecution should prove that the respondents had no reasonable cause or excuse. The trial court has power to call for the production of the affidavit either from the prosecution or from the respondents under Section 165 of the Indian Evidence Act. The trial court failed to see that the complaint was instituted well before the omission of the penal Section 276DD of the Income-tax Act, and in view of the provisions of Section 6 of the General Clauses Act, it is the duty of the trial court to try the case as if the penal provision has not been omitted. The judgment of the learned judicial magistrate is contrary to law. Learned counsel for the respondents advanced arguments in all the appeals. As all the appeals involve common questions of fact and law, this common judgment is delivered.</p><p style="text-align: justify;">14. The point for determination in all the appeals is, whether the accused are liable to be punished for alleged violation of Section 269SS of the Income-tax Act.</p><p style="text-align: justify;">15. The first accused is a private limited company running a spinning mill in Salem. It is not in dispute that accused Nos. 2 to 4 are managing director, whole time director and sales director of the first accused company. The complainant/appellant, the Income-tax Department has filed these complaints against the accused under Sections 269SS, 276DD read with Section 278B of the Income-tax Act. It is alleged by the complainant in all these cases that the accused accepted certain deposits of Rs. 10,000 or more in contravention of, Section 269SS of the Act. Criminal Appeal No. 647 of 1990, is filed against the order passed in C. C. No. 341 of 1989. It is stated that the accused received a sum of Rs. 50,000 in cash on January 8, 1985 ; Criminal Appeal No. 648 of 1990 relates to payment of Rs. 10,000 in cash dated November 26, 1984 ; Criminal Appeal No. 649 of 1990 relates to the receipt of Rs. 14,000 in cash on October 15, 1984 ; Criminal Appeal No. 650 of 1990 relates to the deposit of Rs. 20,000 dated January 10, 1985 ; Criminal Appeal No. 651 of 1990 relates to the deposit of Rs. 10,000 in cash dated October 17, 1984 ; Criminal Appeal No. 652 of 1990 relates to the deposit of Rs. 30,000 dated October 16, 1984, and Criminal Appeal No. 653 of 1990 relates to the deposit of Rs. 10,000 dated August 24, 1984.</p><p style="text-align: justify;">16. Section 269SS came into force with effect from April 1, 1984. Section 269SS states thus ;</p><p style="text-align: justify;">'No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), 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.'</p><p style="text-align: justify;">17. Subsequently, the above section was amended. As per the above amendment the word 'Rs. 10,000' is substituted by 'Rs. 20,000' or more.</p><p style="text-align: justify;">18. It is not disputed by the accused that they received the amount mentioned in the complaint in cash. It is only alleged by the accused in exhibit P-8 the letter sent by them to the Income-tax Officer that the deposits were accepted from ex-employees who had deposited their money with them in cash, since they have assured that they have no bank account of their own. With regard to the deposit of amounts in cash from persons who had bank accounts, the accused have stated that the amount was received in cash for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittance to the bank to reduce the overdraft. But the complainant-Department not satisfied with the above explanation has launched prosecution against the accused.</p><p style="text-align: justify;">19. P.W.-1, the Assistant Commissioner of Income-tax, has stated that he verified the accounts of the first accused company and that exhibit P-1 is the deposit register and that exhibit P-2 is the entries in cash register, exhibit P-4 is the authorisation given by the Department to launch the prosecution. Exhibits P-5 to P-7 are the statements given by the accused. The Income-tax Department also issued a show-cause notice to the accused under exhibit P-9. The reply given by the accused is marked as exhibit P-10. It is stated in exhibit P-10 that due to the prevalent tight money conditions at that time, it was very difficult to mobilise deposits and that too at the lowest rate of 15 per cent. and that they have no other alternative, except accepting the above deposits to meet their working capital requirements. In the statement recorded in the enquiry, the accused have stated that at the time of accepting the deposits they did not know the provisions of the Act and that, therefore, they accepted it. It is admitted that the accused have also submitted affidavits of persons from whom they received cash to the Department. P.W-1 has admitted that the said affidavits are in their file. The trial court has held that the complainant failed to produce the affidavit and that the complainant failed to show that the averments contained in the affidavit will not amount to a valid explanation and that, therefore, the accused are not guilty of Section 269SS.</p><p style="text-align: justify;">20. Learned counsel for the appellants, Thiru Ramasamy, contended that the trial court failed to advert to various aspects of the case and that when once the amount was received in cash, the offence is made out and that it is for the accused to prove that they have reasonable cause to receive the amount in cash and that the burden is not upon the complainant to establish the same. On the other hand, learned counsel for the accused, Thiru Gopinath, contended that the complainant ought to have produced the affidavits of the depositors from whom the accused received cash and that it is for the complainant to prove that the accused without reasonable cause or excuse accepted deposits in contravention of Section 269SS.</p><p style="text-align: justify;">21. For proper appreciation of the rival contentions of the parties it would be useful to refer to the relevant provisions of the Income-tax Act. As already stated, Section 269SS came into force with effect from April 1, 1984. Section 276DD is the penal provision for violation of Section 269SS. As per the above section, if a person without reasonable cause or excuse, takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be punishable with imprisonment for a term which may extend to two years and also be liable to a fine equal to the amount of such loan or deposit. But the above Section 276DD was omitted with effect from April 1, 1989. New Section 271D came into force with effect from April 1, 1989, Under the above provisions, the person who contravenes Section 269SS shall be liable to pay a sum equal to the amount of the loan or deposit as penalty. The punishment of imprisonment for a term which may extend to two years is omitted in the above new section. In all these cases, the offence is said to have been committed before the deletion of Section 276DD. As the old Section 276DD was in force when the proceedings were initiated, the complaint filed under old Section 276DD is maintainable. The question whether the accused is guilty of the offences for violation of Section 269SS has to be decided only with reference to old Section 276DD and not new Section 271D.</p><p style="text-align: justify;">22. Learned counsel for the appellant relies upon a decision in C. A Baloo v. Union of India : [1992]197ITR545(Mad) . It is stated in the above decision that the principle enacted in Section 6 of the General Clauses Act that unless a contrary intention appears, the repeal of an Act would not affect any right, privilege, obligation or liability accrued under any enactment so repealed, would apply to repeal of one of the sections of the Income-tax Act, 1961, It is also held in the above decision that with effect from April 1, 1989, Section 271D had been introduced while omitting Section 276DD with effect from the same date and that it is not possible to gather a contrary intention that the Legislature desired that prosecutions which are permissible under Section 276DD of the Act and already initiated before the insertion of the new section were to be erased or obliterated. It is thus clear from the above decision that the repeal of Section 276DD after the proceedings were initiated by the Department will not take away the rights of the Department to prove the case against the accused as per old Section 276DD.</p><p style="text-align: justify;">23. It is contended by learned counsel for the respondents/accused that the complainant should prove that the accused without reasonable cause or excuse have contravened Section 269SS. But learned counsel for the complainant contends that it is for the accused to prove that they had reasonable cause for accepting the amount in cash. Both parties rely upon certain decisions on this aspect.</p><p style="text-align: justify;">24. Learned counsel for the appellant relies upon a decision in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The facts of the above case will show that the assessee filed the wealth-tax returns belatedly and that though he applied for extension of time, the returns were filed after the expiry of the periods of extension. It is also held that the assessee was conscious of the fact that the wealth-tax returns should be filed within the time stipulated under Section 14(1) of the Act. Relying upon the above facts, the Division Bench has held thus (headnote) :</p><p style="text-align: justify;">'It was not for the Department to establish that the assessee was guilty of contumacious conduct and acted in conscious disregard of his obligation. It was for the assessee to plead and prove that the delay in filing the returns was due to reasonable cause. Such reasonable cause was not pleaded.'</p><p style="text-align: justify;">25. The Division Bench also relied upon a decision of the Supreme Court reported in CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) .</p><p style="text-align: justify;">26. In CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) , the Supreme Court in a case arising under Section 271(1)(a) of the Act has held thus (headnote):</p><p style="text-align: justify;">'There is nothing in Section 271(1)(a) of the Income-tax Act, 1961, which requires that mens rea has to be established by the Department before penalty can be levied under that section for delay in filing the return. It is for the assessee, should he file a belated return, to show 'reasonable cause' for the delay.'</p><p style="text-align: justify;">27. Section 271(1)(a) of the Act imposes penalty for failure to furnish returns and comply with the notice and concealment of income. Section 271(l)(a) reads 'has without reasonable cause failed to furnish'. Clause (b) reads 'has without reasonable cause failed to comply with the notice'. As per amended Section 276C which came into effect from October 1, 1975, if a person wilfully attempts to evade any tax, penalty or interest, he shall without prejudice to any penalty that may be imposable on him under any other provision of the Act be punishable . . . with rigorous imprisonment which shall not be less than six months but which may extend to seven years. In the above decision, the Supreme Court has held that Section 271(1)(a) provides that penalty may be imposed if the Income-tax Officer is satisfied that any person has, without reasonable cause, failed to furnish the return of total income and that it is clear that iff the above case, what is intended is a civil obligation while in the latter that is, Section 276C what is imposed is a criminal sentence. The court has further held that there can be no dispute that having regard to the provisions of Section 276C which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. It is also held in the above decision that reasonable cause is an ingredient of the offence for which the punishment is provided and the taxing authority has prima facie to prove the absence of reasonable cause in the sense that has been explained above. The distinction between Sections 276C and 271(1)(a) has been communicated in the above decision. The above decision is referred to in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The case reported in CWTv. P. Nainakhan : [1996]221ITR805(Mad) , relates to non-filing of wealth-tax returns within the time stipulated under Section 14(1) of the Wealth-tax Act. Section 18(1)(a) of the Wealth-tax Act imposes penalty for failure to furnish wealth-tax returns. Under the above provisions, a sum equal to two per cent. of the assessed tax for every month shall be imposed as penalty. Therefore, it is held in the above decisions that in such cases, mens rea is not essential.</p><p style="text-align: justify;">28. Learned counsel for the respondent/accused relies upon a decision reported in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO : [1986]158ITR496(Delhi) . The liability of the assessee under Section 201(1) of the Act and Section 276B of the Act are elaborately discussed in the above decision. Section 276B imposes punishment of imprisonment on a person who without reasonable cause or excuse fails to deduct the tax. But under Section 201 read with Section 221 no imprisonment is provided, but only penalty equivalent to a certain percentage of the amount has to be imposed. Bearing in mind the language employed in the above two provisions, the court has held thus (headnote) :</p><p style="text-align: justify;">'The standard of proof and explanation and onus of proof to be discharged by the assessee in penalty proceedings under Section 201(1) is much higher and heavy. In a criminal prosecution for an offence under Section 276B, however, the dictates of law merely demand the requirement of reasonable cause, i.e., what appeals ex facie to reason, which is made more milder.'</p><p style="text-align: justify;">29. Learned counsel for the respondent also relies upon a decision of the Patna High Court reported in ITO v. Taunts Equipment (P.) Ltd. : [1979]118ITR982(Patna) . It is seen from the facts of the above case that the Income-tax Department filed a complaint under Section 276B. As already stated, the above section reads 'if a person without reasonable cause or excuse'. Section 276DD also reads 'if a person without reasonable cause or excuse'. While interpreting the above words, the Patna High Court has held that the prosecution must prove that there was no reasonable cause or excuse for not filing the returns. The relevant observations of the Patna High Court are extracted below (headnote) :</p><p style="text-align: justify;">'The words 'fails without reasonable cause or excuse' occurring in Section 276 (now Section 272A(2)) of the Income-tax Act, 1961, show that mens rea is an ingredient before punishing the defaulter. It must be shown that the default was deliberate and conscious. It is not enough for the Department to show that the payment or return was not made or filed in time. It has to go further and prove that it was without reasonable cause or excuse. Unless the prosecution proves by evidence that there was no reasonable cause or excuse for not filing the return or depositing the money within the prescribed time, no offence can be said to have been committed.'</p><p style="text-align: justify;">30. In the above decision, the decision of the Supreme Court reported in CIT v. Anwar Ali : [1970]76ITR696(SC) is referred to. In the above decision, it is held thus (headnote) :</p><p style="text-align: justify;">'Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars.'</p><p style="text-align: justify;">31. It is thus clear from the above decisions that it is for the prosecution to prove that the accused without reasonable cause or excuse failed to receive the amount by way of cheque. The Patna High Court has further held that the words 'fails without reasonable cause or excuse' will show that mens rea is an ingredient to be proved by the Department before punishing the defaulter. It is thus seen that the application of mens rea would depend upon the language used in a particular provision and the nature of penalty. It is no doubt true that mens rea is not a necessary ingredient to prove when the person who contravenes the provisions of the Act is imposed with only penalty by way of amount. But, if a particular provision imposes imprisonment for a specific term on the assessee it is for the prosecution to prove mens rea. Bearing the principles of law laid down in the above decisions in mind the case on hand has to be decided.</p><p style="text-align: justify;">32. It is pointed out by learned counsel for the respondent that the words 'without reasonable cause or excuse' are absent in the complaint. In paragraph 5 of the complaint, it is only stated that the first accused accepted deposits violating Section 269SS. It is alleged in paragraph 6 that the Department issued summons to the accused requiring them to produce books of account and that in the enquiry, the accused admitted the default under Section 276DD and pleaded ignorance of the provisions. It is significant to note that the Department recorded the statement of the accused in the form of questions and answers. The above statements are marked as exhibits P-5 to P-7. In the above statements, the accused have stated that they are not aware of the new provisions and that they needed cash urgently to meet the day-to-day expenses and that some of the depositors had no bank accounts. In the letter exhibit P-8 addressed to the Department, the accused have stated that cash received from the depositors who had bank accounts were taken for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittances to the bank and that as cash was urgently required for their immediate needs which cannot wait till the cheques are collected by the bank, the deposits were accepted from the parties, who had bank accounts. It is thus, clear that the accused gave an explanation for accepting deposits in cash, in the above enquiry proceedings. It is also admitted by P.W. 1 that the accused produced affidavits of persons from whom they received cash of more than Rs. 10,000 and that the affidavits are in their file. The explanation given by the accused during the enquiry proceedings and also the affidavits of depositors produced by the accused were in the file of the complainant. But, unfortunately the complainant has not even stated in the complaint that the explanation and reasons given by the accused for receiving the deposits in cash are not true and that the accused without any reasonable excuse received the cash. The complainant ought to have given reasons in the complaint as to why the explanation given by the accused is not valid in law. It is no doubt true that the ignorance of law is not an excuse for committing the offence. But the other reasons given by the accused for accepting the cash could have been considered by the Department before launching the prosecution. As already stated, mere acceptance of cash from the depositors is not an offence. The complainant must further allege and prove that the accused accepted the loan or deposit without reasonable cause or excuse. The circumstances under which the accused accepted the cash could be proved only by producing the affidavits sworn by the depositors. But, learned counsel for the appellant contended that the burden is upon the accused to prove that they have reasonable cause to accept the deposits. As already stated, when a particular provision imposes imprisonment, the prosecution must prove the ingredients of the offence. Section 276DD clearly states that only if a person without reasonable cause or excuse accepts the loan or deposit he is liable to be punished. That being the position of law, I am unable to subscribe to the contention of learned counsel for the appellant that the burden is upon the accused to prove that they have valid reasons to accept the deposits in cash.</p><p style="text-align: justify;">33. Section 278AA came into force with effect from September 10, 1986. The section reads thus :</p><p style="text-align: justify;">'278AA. Punishment not to be imposed in certain cases.--Notwithstanding anything contained in the provisions of Section 276A, Section 276AB or Section 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.'</p><p style="text-align: justify;">34. But with effect from April 1, 1989, Section 276DD is omitted in the above section. However, it is clear that even in the new provision which was in force on September 10, 1986, no person can be punished under Section 276DD if he proves that there was reasonable cause for such failure. But the words 'if he proves' is absent in the original Section 276DD. After amendment of Section 278AA, the burden lies upon the accused to prove that there was reasonable cause for such failure. But the accused are alleged to have contravened Section 269SS while old Section 276DD was in force. Hence, the prosecution has to aver and prove that the accused contravened the rule without reasonable cause or excuse, (vide Greatway (P.) Ltd. v. Asst. CIT [1993] 199 ITR 591 .</p><p style="text-align: justify;">35. The complainant could have produced the affidavits sworn by the depositors, produced by the accused to the Department in the trial court and shown that the explanation given by the accused for accepting the deposits in cash is not true. The trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits and prove the charge levelled against the accused. Now, learned counsel for the appellant contended that the accused could have produced the copies of affidavits or requested the court to send for the affidavits under known process of law. I am unable to accept the above contention of the appellant. The complainant is in possession of the affidavits produced by the accused. The law is well settled that the party who is in custody of the best evidence must produce the same before the court and in such cases he cannot invoke the abstract doctrine of burden of proof. Therefore, it has to be held that the complainant who is in possession of the best evidence failed to produce it before the trial court and invite the court to give a finding on the question whether the explanation trotted out by the accused is true or not. From the facts discussed above, it has to be held that mere contravention of Section 269SS is not an offence unless and until it is proved that the accused have no reasonable cause or excuse to accept the loan or deposits in cash. I hold that the complainant failed to aver and prove that the accused without reasonable cause or excuse accepted the deposits in cash. In the absence of an allegation in the complaint that the accused without reasonable cause or excuse accepted the deposits in cash, the accused cannot be said to have committed an offence under Section 276DD.</p><p style="text-align: justify;">36. Learned counsel for the respondent further contended that when the offence under the Act is committed by the company, every person who at the time when the offence was committed was in charge and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence, and shall be liable to be proceeded against and punished accordingly. It is contended by learned counsel for the respondent that it is not specifically alleged in the complaint as to who is the principal officer responsible for the day-to-day affairs of the company and that in the absence of the necessary averments to bring the company within the ambit of Section 278B the complaint is not maintainable. In support of the same, the accused also relies upon certain decisions. In State of Karnataka v. Pratap Chand : 1981CriLJ595 , it is held that where a partnership firm was charged for the offences under Section 18 of the Drugs and Cosmetics Act, the partner of the firm who was in over all control of the day-to-day business of the firm would alone be liable to be convicted.</p><p style="text-align: justify;">37. In a decision in Sham Sunder v. State of Haryana : 1989CriLJ2201 , it is held thus (headnote of AIR) :</p><p style="text-align: justify;">'More often, it is common that some of the partners of a firm may not even be knowing of what is going on day-to-day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection (1) of Section 10 that the offence was committed without their knowledge. The obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution has established that the requisite condition mentioned in Sub-section (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. Thus where the documents produced by the prosecution do not indicate even remotely that all the partners were doing the business of the firm and that there was no other evidence on record on this aspect, it could not be said that when the offence was committed all the partners were conducting the business of the firm. Therefore, they would not be liable for conviction.'</p><p style="text-align: justify;">38. In Greatway (P.) Ltd. v. Asst CIT it is held that when the complaint is silent as to whether any person had been appointed as the principal officer of the petitioner-company and in the absence of such an appointment, a director or the managing director of the company could not be prosecuted. It is alleged in the complaint that the first accused is the company and accused Nos. 2 to 4 are the principal officers of the first accused who are responsible for the conduct of the business of the first accused company. In paragraph 8 of the complaint, it is stated that accused Nos. 2 to 4 being the executives of the first accused at the material time who were in charge of and responsible for the conduct of the business have committed the offence. P.W.-1 was not cross-examined on this aspect by the accused. Further, in the statements given by the accused, exhibits P-5 to P-8, they did not state that they or any of them, were not responsible for the day-to-day administration of the company. It is significant to note that all the accused have given one and the same statement. In the above circumstances, I am not inclined to accept the contention now raised by the respondent counsel that the complaint has to fail as ingredients of Section 278B are not made out. I hold that the contention raised by the respondent counsel on the above aspect has to be rejected.</p><p style="text-align: justify;">39. Learned counsel for the respondent also relies upon two decisions and contends that the appellate court should not normally interfere with the order of acquittal passed by the trial court. Ramesh Babulal Doshi v. State of Gujarat : 1996CriLJ2867 ; Awadhesh v. State of M. P., : 1988CriLJ1154 . It is no doubt true that the order of acquittal passed by the trial court would not normally be interfered with in the appeal, unless the view taken by the trial court is wholly unreasonable or erroneous. In the instant case, though the trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits the trial court did not advert to the other aspects of the case. It is open to the appellate court to give findings on all the points involved in the case, even though the same was not considered by the trial court. In any event, the reasons given by the trial court for acquitting the accused cannot be said to be unsustainable. For the above reasons, I hold that the order of acquittal passed by the trial court is not liable to be set aside. The complainant failed to prove the ingredients of the offence alleged in Section 276DD of the old Act. The complainant also failed to aver and prove that the reasons given by the accused for accepting the amount in cash is not true. Further the complainant failed to produce the affidavits sworn by the depositors to prove that the accused without reasonable cause or excuse accepted the amount in cash. For the above reasons, I hold that the contention raised by learned counsel for the appellant in these appeals cannot be accepted and as such, I hold that the order of acquittal passed by the trial court has to be confirmed.</p><p style="text-align: justify;">C. A. No. 647 of 1990:</p><p style="text-align: justify;">40. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A No. 648 of 1990:</p><p style="text-align: justify;">41. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 649 of 1990:</p><p style="text-align: justify;">42. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 650 of 1990:</p><p style="text-align: justify;">43. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 651 of 1990:</p><p style="text-align: justify;">44. In the result the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 652 of 1990:</p><p style="text-align: justify;">45. In the result the criminal appeal is dismissed. The order of acquittal is confirmed. </p><p style="text-align: justify;">C. A. No. 653 of 1990:</p><p style="text-align: justify;">46. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p>',
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			'pubs' => '[2000]242ITR89(Mad)',
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			'respondent' => 'Jawahar Mills Ltd. and ors.',
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		(int) 23 => 'Legislature',
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		(int) 36 => 'Sequoia Construction Co. P. Ltd.',
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		(int) 38 => 'the Patna High Court',
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		(int) 60 => 'Asst CIT',
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	),
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		(int) 0 => '647',
		(int) 1 => '341',
		(int) 2 => '10,000',
		(int) 3 => '30,000',
		(int) 4 => '1985.2',
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		(int) 6 => '648',
		(int) 7 => '5',
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		(int) 11 => '649',
		(int) 12 => '1990:6',
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		(int) 17 => '1990:7',
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		(int) 19 => '20,000',
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		(int) 21 => '1990:8',
		(int) 22 => '345',
		(int) 23 => '10,000',
		(int) 24 => '647',
		(int) 25 => '652',
		(int) 26 => '346',
		(int) 27 => '30,000',
		(int) 28 => '653',
		(int) 29 => '1990:10',
		(int) 30 => '347',
		(int) 31 => '10,000',
		(int) 32 => '278E',
		(int) 33 => '2 to 4',
		(int) 34 => '10,000',
		(int) 35 => '647',
		(int) 36 => '341',
		(int) 37 => '50,000',
		(int) 38 => '648',
		(int) 39 => '10,000',
		(int) 40 => '649',
		(int) 41 => '14,000',
		(int) 42 => '650',
		(int) 43 => '20,000',
		(int) 44 => '651',
		(int) 45 => '10,000',
		(int) 46 => '652',
		(int) 47 => '30,000',
		(int) 48 => '653',
		(int) 49 => '10,000',
		(int) 50 => '1984.16',
		(int) 51 => '10,000',
		(int) 52 => '10,000',
		(int) 53 => '20,000',
		(int) 54 => '1992]197ITR545(Mad',
		(int) 55 => 'one',
		(int) 56 => '1996]221ITR805(Mad',
		(int) 57 => '1992]196ITR297(SC',
		(int) 58 => '1992]196ITR297(SC',
		(int) 59 => '1996]221ITR805(Mad',
		(int) 60 => '1996]221ITR805(Mad',
		(int) 61 => '1986]158ITR496(Delhi',
		(int) 62 => 'two',
		(int) 63 => '1979]118ITR982(Patna',
		(int) 64 => '5',
		(int) 65 => '6',
		(int) 66 => '10,000',
		(int) 67 => '199',
		(int) 68 => '1981CriLJ595',
		(int) 69 => '1',
		(int) 70 => '1',
		(int) 71 => '2 to 4',
		(int) 72 => '8',
		(int) 73 => '2 to 4',
		(int) 74 => 'two',
		(int) 75 => '1996CriLJ2867',
		(int) 76 => '1988CriLJ1154',
		(int) 77 => '647',
		(int) 78 => '1990:40',
		(int) 79 => '648',
		(int) 80 => '649',
		(int) 81 => '1990:42',
		(int) 82 => '650',
		(int) 83 => '1990:43',
		(int) 84 => '651',
		(int) 85 => '1990:44',
		(int) 86 => '652',
		(int) 87 => '1990:45',
		(int) 88 => '653',
		(int) 89 => '1990:46'
	),
	'DATE' => array(
		(int) 0 => '1990',
		(int) 1 => '1989',
		(int) 2 => '1961',
		(int) 3 => 'April 1, 1984',
		(int) 4 => 'the year March 31, 1985',
		(int) 5 => 'January 8',
		(int) 6 => 'March 16, 1988',
		(int) 7 => '1990',
		(int) 8 => '1989',
		(int) 9 => 'November 26, 1984',
		(int) 10 => '1990',
		(int) 11 => '1989',
		(int) 12 => 'October 15, 1984',
		(int) 13 => '1989',
		(int) 14 => 'January 10, 1985',
		(int) 15 => '1989',
		(int) 16 => 'October 17, 1984',
		(int) 17 => '1990',
		(int) 18 => '1989',
		(int) 19 => 'October 16, 1984',
		(int) 20 => '1989',
		(int) 21 => 'August 24, 1984',
		(int) 22 => '1990',
		(int) 23 => '1989',
		(int) 24 => 'January 8, 1985',
		(int) 25 => '1990',
		(int) 26 => 'November 26, 1984',
		(int) 27 => '1990',
		(int) 28 => 'October 15, 1984',
		(int) 29 => '1990',
		(int) 30 => 'January 10, 1985',
		(int) 31 => '1990',
		(int) 32 => 'October 17, 1984',
		(int) 33 => '1990',
		(int) 34 => 'October 16, 1984',
		(int) 35 => '1990',
		(int) 36 => 'August 24',
		(int) 37 => 'April 1, 1984',
		(int) 38 => 'the 30th day of June, 1984',
		(int) 39 => 'April 1, 1984',
		(int) 40 => 'two years',
		(int) 41 => 'April 1, 1989',
		(int) 42 => 'April 1, 1989',
		(int) 43 => 'two years',
		(int) 44 => '1961',
		(int) 45 => 'April 1, 1989',
		(int) 46 => ''25',
		(int) 47 => '1961',
		(int) 48 => ''27',
		(int) 49 => 'October 1, 1975',
		(int) 50 => 'less than six months',
		(int) 51 => 'seven years',
		(int) 52 => ''29',
		(int) 53 => '1961',
		(int) 54 => ''30',
		(int) 55 => '1970]76ITR696(SC',
		(int) 56 => ''31',
		(int) 57 => 'September 10, 1986',
		(int) 58 => ''34',
		(int) 59 => 'April 1, 1989',
		(int) 60 => 'September 10, 1986',
		(int) 61 => '1993'
	),
	'GPE' => array(
		(int) 0 => 'Salem',
		(int) 1 => 'F.O.C.C.',
		(int) 2 => 'Vaiya',
		(int) 3 => 'Act.3',
		(int) 4 => 'F. O. C. C.',
		(int) 5 => 'F.O.C.C.',
		(int) 6 => 'F. O. C. C.',
		(int) 7 => 'Salem',
		(int) 8 => 'cash.33',
		(int) 9 => 'Karnataka v. Pratap Chand',
		(int) 10 => 'Sham Sunder',
		(int) 11 => 'Gujarat'
	),
	'ORDINAL' => array(
		(int) 0 => 'first',
		(int) 1 => 'second',
		(int) 2 => 'third',
		(int) 3 => 'fourth',
		(int) 4 => 'first',
		(int) 5 => 'first',
		(int) 6 => 'first',
		(int) 7 => 'second',
		(int) 8 => 'second',
		(int) 9 => 'first',
		(int) 10 => 'first',
		(int) 11 => 'second',
		(int) 12 => 'third',
		(int) 13 => 'fourth',
		(int) 14 => 'first',
		(int) 15 => 'first',
		(int) 16 => 'first',
		(int) 17 => 'first',
		(int) 18 => 'first',
		(int) 19 => 'first',
		(int) 20 => 'first',
		(int) 21 => 'first',
		(int) 22 => 'first'
	),
	'PRODUCT' => array(
		(int) 0 => 'Section 278AA',
		(int) 1 => 'Section 269SS',
		(int) 2 => 'P-10',
		(int) 3 => 'P.W. 1',
		(int) 4 => 'P-10',
		(int) 5 => 'P-10',
		(int) 6 => 'P-10',
		(int) 7 => 'P-10',
		(int) 8 => 'P-10',
		(int) 9 => 'P-10',
		(int) 10 => '276DD',
		(int) 11 => 'P-10',
		(int) 12 => 'P-10',
		(int) 13 => 'Section 276DD',
		(int) 14 => 'Section 269SS',
		(int) 15 => 'Section 269SS',
		(int) 16 => 'Section 276DD',
		(int) 17 => 'Section 276DD',
		(int) 18 => 'Section 269SS',
		(int) 19 => 'Section 276DD',
		(int) 20 => 'Section 276DD',
		(int) 21 => 'Section 276DD',
		(int) 22 => 'Section 269SS',
		(int) 23 => 'P.W. 1',
		(int) 24 => 'Section 278AA',
		(int) 25 => '278AA',
		(int) 26 => 'Section 276DD',
		(int) 27 => 'Section 276DD',
		(int) 28 => 'Section 278AA',
		(int) 29 => 'Section 269SS',
		(int) 30 => 'Section 276DD',
		(int) 31 => 'Section 269SS'
	),
	'NORP' => array(
		(int) 0 => 'P-1',
		(int) 1 => 'P-1',
		(int) 2 => 'P-1'
	),
	'MONEY' => array(
		(int) 0 => '15 per cent',
		(int) 1 => 'two per cent'
	),
	'WORK_OF_ART' => array(
		(int) 0 => 'C. A Baloo v. Union of India'
	),
	'FAC' => array(
		(int) 0 => 'Sections 276C'
	),
	'LOC' => array(
		(int) 0 => 'P-8'
	)
)
$desc = array(
	'Judgement' => array(
		'id' => '821360',
		'acts' => 'Income-tax Act, 1961 - Sections 269SS, 271D and 276DD',
		'appealno' => 'Criminal Appeal Nos. 647 to 653 of 1990',
		'appellant' => 'Assistant Commissioner of Income-tax',
		'authreffered' => '',
		'casename' => 'Assistant Commissioner of Income-tax Vs. Jawahar Mills Ltd. and ors.',
		'casenote' => 'Direct Taxation - deposits - Sections 269SS, 271D and 276DD of Income Tax Act, 1961 - respondent company engaged in running of spinning mill - Section 269SS prescribes mode of acceptance of any deposit or loan by assessee - respondent accepted cash of certain amount of Rs. 10000 in violation of provisions of Section 269SS - acquitted by Trial Court - appeal - Order of Trial Court not to be interfered unless Trial Court wholly unreasonable or erroneous - appellant failed to prove ingredient of offence alleged in Section 276DD - failed to give reasons for accepting cash not true - failed to prove that respondent without reasonable cause or excuse accepted cash - decision of Trial Court upheld.


 - ',
		'caseanalysis' => null,
		'casesref' => 'Awadhesh v. State of M. P.;',
		'citingcases' => '',
		'counselplain' => 'K. Ramasamy, Special Public Prosecutor',
		'counseldef' => 'Gopinath, Adv.',
		'court' => 'Chennai',
		'court_type' => 'HC',
		'decidedon' => '1998-03-10',
		'deposition' => '',
		'favorof' => null,
		'findings' => null,
		'judge' => 'V. Bakthavatsalu, J.',
		'judgement' => '<p style="text-align: justify;">V. Bakthavatsalu, J. </p><p style="text-align: justify;">Criminal Appeal No. 647 of 1990 :</p><p style="text-align: justify;">1. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, Salem, against the order of acquittal passed in F.O.C.C. No. 341 of 1989. The case of the complainant is that the first accused is a private limited company engaged in running a spinning mill in the name and the style of 'Jawahar Mills Limited'. The second, third and fourth accused are the principal officers of the first accused who are responsible for the conduct of the business. The provisions of Section 269SS of the Income-tax Act, 1961, prescribed the mode of acceptance of any deposit or loan by the income-tax assessee. The above provision has come into force with effect from April 1, 1984. On scrutiny of the books of account of the first accused company for the year March 31, 1985, it was noticed that the first accused accepted the deposit of Rs. 10,000 or more violating the provisions of Section 269SS of the Act. In the case of Vaiya-puri, an amount of Rs. 30,000 was received in cash on January 8, 1985.</p><p style="text-align: justify;">2. The complainant issued summons to the accused to produce books of account on March 16, 1988. In response to his summons, the second accused had appeared before the complainant with the relevant books of account. The second accused has admitted the default under Section 276DD and pleaded his ignorance of the provision and represented the same as unintentional. A show-cause notice under Section 278AA was also issued to the accused. The first accused company has violated Section 269SS by acceptance of loans and deposits otherwise than by account payee cheque or bank draft. The first accused has committed an offence punishable under Section 276DD. The second, third and fourth accused being the executives of the first accused who were in charge and responsible for the conduct of the business have committed an offence punishable under Section 276DD read with Section 278B of the Income-tax Act.</p><p style="text-align: justify;">3. The complainant was examined as P. W. 1 who is an authorised representative of the Income-tax Appellate Tribunal, Chennai. When P.W. 1 perused the account produced by the accused. It is revealed that a sum of Rs. 30,000 was received by the accused. Exhibit P-1 is the fixed deposit register, exhibit P-2 is the corresponding entry in the cash register. Exhibit P-3 is the corresponding entry in the ledger. Exhibit P-4 is the order of sanction for launching prosecution against the accused. Exhibits P-5 to P-7 are the statements given by the accused in the enquiry. After enquiry the Income-tax Officer also issued a show-cause notice exhibit P-8 under Section 2(35). Exhibit P-9 is another notice issued to the accused. Exhibit P-10 is the reply given by the accused.</p><p style="text-align: justify;">4. When the incriminating circumstances appearing against the accused were explained to them under Section 313 of the Criminal Procedure Code, the accused denied the evidence. On consideration of oral and documentary evidence, the trial court acquitted the accused holding that the accused are not guilty under Section 276DD of the Act.</p><p style="text-align: justify;">Criminal Appeal No. 648 of 1990: </p><p style="text-align: justify;">5. The appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F. O. C. C. No. 342 of 1989. The above complaint is filed in respect of an amount of Rs. 10,000 received by the respondent in cash on November 26, 1984. Except the above fact, all other allegations in the complaint are similar to the complaint filed in the case relating to Criminal Appeal No. 647 of 1990. The complainant has also marked exhibits P-1 to P-10. The accused denied the evidence of P.W. 1 in the Section 313 examination.</p><p style="text-align: justify;">Criminal Appeal No. 649 of 1990:</p><p style="text-align: justify;">6. This appeal is preferred by the complainant, the Assistant Commissioner of Income-tax, against the order of acquittal passed in F.O.C.C. No. 343 of 1989. The complaint is filed in respect of the receipt of Rs. 14,000 in cash by the accused on October 15, 1984. The other averments in the complaint are similar to the complaint filed in the other cases. P.W. 1 the complainant has marked exhibits P-l to P-10. The accused is examined under Section 313 of the Criminal Procedure Code and he denied the evidence of P.W. 1.</p><p style="text-align: justify;">Criminal Appeal No. 650 of 1990:</p><p style="text-align: justify;">7. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 344 of 1989. The complaint in the above ease was filed in respect of an amount of Rs. 20,000 received in cash by the accused on January 10, 1985. The other grounds in the complaint are similar to the complaint filed in the other case. P. W. 1, the complainant has marked exhibits P-l to P-10. The incriminating materials available in the evidence of P. W. 1 were explained to the accused and the accused denied the same.</p><p style="text-align: justify;">Criminal Appeal No. 651 of 1990:</p><p style="text-align: justify;">8. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 345 of 1989. The complaint was filed in respect of Rs. 10,000 received by the accused by cash on October 17, 1984. The other averments in the complaint are similar to the complaint filed in Criminal Appeal No. 647 of 1990. In this case also P. W. 1 was examined and documents exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 652 of 1990:</p><p style="text-align: justify;">9. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. O. C. C. No. 346 of 1989. The above complaint was filed in respect of an amount of Rs. 30,000 received by the accused by cash on October 16, 1984. In this case also P. W. 1 was examined and document exhibits P-l to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined by the court under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">Criminal Appeal No. 653 of 1990:</p><p style="text-align: justify;">10. The appeal is preferred by the Assistant Commissioner of Income-tax against the order of acquittal passed in F. 0. C. C. No. 347 of 1989. The above complaint was filed in respect of Rs. 10,000 received by the accused by cash on August 24, 1984. In this case also P. W. 1 was examined and documents exhibits P-1 to P-10 were marked. The accused denied the evidence of P. W. 1, when they were examined under Section 313 of the Criminal Procedure Code.</p><p style="text-align: justify;">11. All the above complaints were filed against the same accused/respondents. The case of the complainant in all the above cases is that the accused received the amount in cash in violation of Section 269SS of the Income-tax Act, and that the accused ought to have received the amount only by way of account payee cheque or bank draft.</p><p style="text-align: justify;">12. The trial court on consideration of oral and documentary evidence has held that the accused have obtained affidavits from their customers, for remitting the amount in cash, and that those affidavits were not produced by the complainant in court and the burden is upon the complainant to prove that the explanation offered by the accused is not acceptable and that as the complainant failed to produce the affidavits the benefit of doubt has to be given to the accused.</p><p style="text-align: justify;">13. In all the appeals preferred by the complainant, the common contentions raised are as follows :</p><p style="text-align: justify;">The learned magistrate has not even whispered a word on the documentary evidence let in by the prosecution. The trial court has not appreciated and analysed the evidence of the prosecution found in exhibits P-l to P-10. The trial court has acquitted the accused solely on the ground that the prosecution has not produced the affidavit sworn by the person who deposited the amount with the respondents. The affidavit of the depositor is the document of the respondents and if there is any reasonable cause for receiving the amount, otherwise than by account payee cheque or bank draft, it is the duty of the respondents to file a copy of the affidavit before the court. It is the duty of the respondents to establish before the trial court that they have such reasonable cause or excuse for accepting the amount in cash. The trial court has completely misconstrued the provisions of Sections 278AA and 278E of the Income-tax Act. The trial court has wrongly held that the prosecution should prove that the respondents had no reasonable cause or excuse. The trial court has power to call for the production of the affidavit either from the prosecution or from the respondents under Section 165 of the Indian Evidence Act. The trial court failed to see that the complaint was instituted well before the omission of the penal Section 276DD of the Income-tax Act, and in view of the provisions of Section 6 of the General Clauses Act, it is the duty of the trial court to try the case as if the penal provision has not been omitted. The judgment of the learned judicial magistrate is contrary to law. Learned counsel for the respondents advanced arguments in all the appeals. As all the appeals involve common questions of fact and law, this common judgment is delivered.</p><p style="text-align: justify;">14. The point for determination in all the appeals is, whether the accused are liable to be punished for alleged violation of Section 269SS of the Income-tax Act.</p><p style="text-align: justify;">15. The first accused is a private limited company running a spinning mill in Salem. It is not in dispute that accused Nos. 2 to 4 are managing director, whole time director and sales director of the first accused company. The complainant/appellant, the Income-tax Department has filed these complaints against the accused under Sections 269SS, 276DD read with Section 278B of the Income-tax Act. It is alleged by the complainant in all these cases that the accused accepted certain deposits of Rs. 10,000 or more in contravention of, Section 269SS of the Act. Criminal Appeal No. 647 of 1990, is filed against the order passed in C. C. No. 341 of 1989. It is stated that the accused received a sum of Rs. 50,000 in cash on January 8, 1985 ; Criminal Appeal No. 648 of 1990 relates to payment of Rs. 10,000 in cash dated November 26, 1984 ; Criminal Appeal No. 649 of 1990 relates to the receipt of Rs. 14,000 in cash on October 15, 1984 ; Criminal Appeal No. 650 of 1990 relates to the deposit of Rs. 20,000 dated January 10, 1985 ; Criminal Appeal No. 651 of 1990 relates to the deposit of Rs. 10,000 in cash dated October 17, 1984 ; Criminal Appeal No. 652 of 1990 relates to the deposit of Rs. 30,000 dated October 16, 1984, and Criminal Appeal No. 653 of 1990 relates to the deposit of Rs. 10,000 dated August 24, 1984.</p><p style="text-align: justify;">16. Section 269SS came into force with effect from April 1, 1984. Section 269SS states thus ;</p><p style="text-align: justify;">'No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), 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.'</p><p style="text-align: justify;">17. Subsequently, the above section was amended. As per the above amendment the word 'Rs. 10,000' is substituted by 'Rs. 20,000' or more.</p><p style="text-align: justify;">18. It is not disputed by the accused that they received the amount mentioned in the complaint in cash. It is only alleged by the accused in exhibit P-8 the letter sent by them to the Income-tax Officer that the deposits were accepted from ex-employees who had deposited their money with them in cash, since they have assured that they have no bank account of their own. With regard to the deposit of amounts in cash from persons who had bank accounts, the accused have stated that the amount was received in cash for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittance to the bank to reduce the overdraft. But the complainant-Department not satisfied with the above explanation has launched prosecution against the accused.</p><p style="text-align: justify;">19. P.W.-1, the Assistant Commissioner of Income-tax, has stated that he verified the accounts of the first accused company and that exhibit P-1 is the deposit register and that exhibit P-2 is the entries in cash register, exhibit P-4 is the authorisation given by the Department to launch the prosecution. Exhibits P-5 to P-7 are the statements given by the accused. The Income-tax Department also issued a show-cause notice to the accused under exhibit P-9. The reply given by the accused is marked as exhibit P-10. It is stated in exhibit P-10 that due to the prevalent tight money conditions at that time, it was very difficult to mobilise deposits and that too at the lowest rate of 15 per cent. and that they have no other alternative, except accepting the above deposits to meet their working capital requirements. In the statement recorded in the enquiry, the accused have stated that at the time of accepting the deposits they did not know the provisions of the Act and that, therefore, they accepted it. It is admitted that the accused have also submitted affidavits of persons from whom they received cash to the Department. P.W-1 has admitted that the said affidavits are in their file. The trial court has held that the complainant failed to produce the affidavit and that the complainant failed to show that the averments contained in the affidavit will not amount to a valid explanation and that, therefore, the accused are not guilty of Section 269SS.</p><p style="text-align: justify;">20. Learned counsel for the appellants, Thiru Ramasamy, contended that the trial court failed to advert to various aspects of the case and that when once the amount was received in cash, the offence is made out and that it is for the accused to prove that they have reasonable cause to receive the amount in cash and that the burden is not upon the complainant to establish the same. On the other hand, learned counsel for the accused, Thiru Gopinath, contended that the complainant ought to have produced the affidavits of the depositors from whom the accused received cash and that it is for the complainant to prove that the accused without reasonable cause or excuse accepted deposits in contravention of Section 269SS.</p><p style="text-align: justify;">21. For proper appreciation of the rival contentions of the parties it would be useful to refer to the relevant provisions of the Income-tax Act. As already stated, Section 269SS came into force with effect from April 1, 1984. Section 276DD is the penal provision for violation of Section 269SS. As per the above section, if a person without reasonable cause or excuse, takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be punishable with imprisonment for a term which may extend to two years and also be liable to a fine equal to the amount of such loan or deposit. But the above Section 276DD was omitted with effect from April 1, 1989. New Section 271D came into force with effect from April 1, 1989, Under the above provisions, the person who contravenes Section 269SS shall be liable to pay a sum equal to the amount of the loan or deposit as penalty. The punishment of imprisonment for a term which may extend to two years is omitted in the above new section. In all these cases, the offence is said to have been committed before the deletion of Section 276DD. As the old Section 276DD was in force when the proceedings were initiated, the complaint filed under old Section 276DD is maintainable. The question whether the accused is guilty of the offences for violation of Section 269SS has to be decided only with reference to old Section 276DD and not new Section 271D.</p><p style="text-align: justify;">22. Learned counsel for the appellant relies upon a decision in C. A Baloo v. Union of India : [1992]197ITR545(Mad) . It is stated in the above decision that the principle enacted in Section 6 of the General Clauses Act that unless a contrary intention appears, the repeal of an Act would not affect any right, privilege, obligation or liability accrued under any enactment so repealed, would apply to repeal of one of the sections of the Income-tax Act, 1961, It is also held in the above decision that with effect from April 1, 1989, Section 271D had been introduced while omitting Section 276DD with effect from the same date and that it is not possible to gather a contrary intention that the Legislature desired that prosecutions which are permissible under Section 276DD of the Act and already initiated before the insertion of the new section were to be erased or obliterated. It is thus clear from the above decision that the repeal of Section 276DD after the proceedings were initiated by the Department will not take away the rights of the Department to prove the case against the accused as per old Section 276DD.</p><p style="text-align: justify;">23. It is contended by learned counsel for the respondents/accused that the complainant should prove that the accused without reasonable cause or excuse have contravened Section 269SS. But learned counsel for the complainant contends that it is for the accused to prove that they had reasonable cause for accepting the amount in cash. Both parties rely upon certain decisions on this aspect.</p><p style="text-align: justify;">24. Learned counsel for the appellant relies upon a decision in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The facts of the above case will show that the assessee filed the wealth-tax returns belatedly and that though he applied for extension of time, the returns were filed after the expiry of the periods of extension. It is also held that the assessee was conscious of the fact that the wealth-tax returns should be filed within the time stipulated under Section 14(1) of the Act. Relying upon the above facts, the Division Bench has held thus (headnote) :</p><p style="text-align: justify;">'It was not for the Department to establish that the assessee was guilty of contumacious conduct and acted in conscious disregard of his obligation. It was for the assessee to plead and prove that the delay in filing the returns was due to reasonable cause. Such reasonable cause was not pleaded.'</p><p style="text-align: justify;">25. The Division Bench also relied upon a decision of the Supreme Court reported in CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) .</p><p style="text-align: justify;">26. In CIT (Addl) v. I. M. Patel and Co. : [1992]196ITR297(SC) , the Supreme Court in a case arising under Section 271(1)(a) of the Act has held thus (headnote):</p><p style="text-align: justify;">'There is nothing in Section 271(1)(a) of the Income-tax Act, 1961, which requires that mens rea has to be established by the Department before penalty can be levied under that section for delay in filing the return. It is for the assessee, should he file a belated return, to show 'reasonable cause' for the delay.'</p><p style="text-align: justify;">27. Section 271(1)(a) of the Act imposes penalty for failure to furnish returns and comply with the notice and concealment of income. Section 271(l)(a) reads 'has without reasonable cause failed to furnish'. Clause (b) reads 'has without reasonable cause failed to comply with the notice'. As per amended Section 276C which came into effect from October 1, 1975, if a person wilfully attempts to evade any tax, penalty or interest, he shall without prejudice to any penalty that may be imposable on him under any other provision of the Act be punishable . . . with rigorous imprisonment which shall not be less than six months but which may extend to seven years. In the above decision, the Supreme Court has held that Section 271(1)(a) provides that penalty may be imposed if the Income-tax Officer is satisfied that any person has, without reasonable cause, failed to furnish the return of total income and that it is clear that iff the above case, what is intended is a civil obligation while in the latter that is, Section 276C what is imposed is a criminal sentence. The court has further held that there can be no dispute that having regard to the provisions of Section 276C which speaks of wilful failure on the part of the defaulter and taking into consideration the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mens rea is established. It is also held in the above decision that reasonable cause is an ingredient of the offence for which the punishment is provided and the taxing authority has prima facie to prove the absence of reasonable cause in the sense that has been explained above. The distinction between Sections 276C and 271(1)(a) has been communicated in the above decision. The above decision is referred to in CWT v. P. Nainakhan : [1996]221ITR805(Mad) . The case reported in CWTv. P. Nainakhan : [1996]221ITR805(Mad) , relates to non-filing of wealth-tax returns within the time stipulated under Section 14(1) of the Wealth-tax Act. Section 18(1)(a) of the Wealth-tax Act imposes penalty for failure to furnish wealth-tax returns. Under the above provisions, a sum equal to two per cent. of the assessed tax for every month shall be imposed as penalty. Therefore, it is held in the above decisions that in such cases, mens rea is not essential.</p><p style="text-align: justify;">28. Learned counsel for the respondent/accused relies upon a decision reported in Sequoia Construction Co. P. Ltd. v. P. P. Suri, ITO : [1986]158ITR496(Delhi) . The liability of the assessee under Section 201(1) of the Act and Section 276B of the Act are elaborately discussed in the above decision. Section 276B imposes punishment of imprisonment on a person who without reasonable cause or excuse fails to deduct the tax. But under Section 201 read with Section 221 no imprisonment is provided, but only penalty equivalent to a certain percentage of the amount has to be imposed. Bearing in mind the language employed in the above two provisions, the court has held thus (headnote) :</p><p style="text-align: justify;">'The standard of proof and explanation and onus of proof to be discharged by the assessee in penalty proceedings under Section 201(1) is much higher and heavy. In a criminal prosecution for an offence under Section 276B, however, the dictates of law merely demand the requirement of reasonable cause, i.e., what appeals ex facie to reason, which is made more milder.'</p><p style="text-align: justify;">29. Learned counsel for the respondent also relies upon a decision of the Patna High Court reported in ITO v. Taunts Equipment (P.) Ltd. : [1979]118ITR982(Patna) . It is seen from the facts of the above case that the Income-tax Department filed a complaint under Section 276B. As already stated, the above section reads 'if a person without reasonable cause or excuse'. Section 276DD also reads 'if a person without reasonable cause or excuse'. While interpreting the above words, the Patna High Court has held that the prosecution must prove that there was no reasonable cause or excuse for not filing the returns. The relevant observations of the Patna High Court are extracted below (headnote) :</p><p style="text-align: justify;">'The words 'fails without reasonable cause or excuse' occurring in Section 276 (now Section 272A(2)) of the Income-tax Act, 1961, show that mens rea is an ingredient before punishing the defaulter. It must be shown that the default was deliberate and conscious. It is not enough for the Department to show that the payment or return was not made or filed in time. It has to go further and prove that it was without reasonable cause or excuse. Unless the prosecution proves by evidence that there was no reasonable cause or excuse for not filing the return or depositing the money within the prescribed time, no offence can be said to have been committed.'</p><p style="text-align: justify;">30. In the above decision, the decision of the Supreme Court reported in CIT v. Anwar Ali : [1970]76ITR696(SC) is referred to. In the above decision, it is held thus (headnote) :</p><p style="text-align: justify;">'Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished inaccurate particulars.'</p><p style="text-align: justify;">31. It is thus clear from the above decisions that it is for the prosecution to prove that the accused without reasonable cause or excuse failed to receive the amount by way of cheque. The Patna High Court has further held that the words 'fails without reasonable cause or excuse' will show that mens rea is an ingredient to be proved by the Department before punishing the defaulter. It is thus seen that the application of mens rea would depend upon the language used in a particular provision and the nature of penalty. It is no doubt true that mens rea is not a necessary ingredient to prove when the person who contravenes the provisions of the Act is imposed with only penalty by way of amount. But, if a particular provision imposes imprisonment for a specific term on the assessee it is for the prosecution to prove mens rea. Bearing the principles of law laid down in the above decisions in mind the case on hand has to be decided.</p><p style="text-align: justify;">32. It is pointed out by learned counsel for the respondent that the words 'without reasonable cause or excuse' are absent in the complaint. In paragraph 5 of the complaint, it is only stated that the first accused accepted deposits violating Section 269SS. It is alleged in paragraph 6 that the Department issued summons to the accused requiring them to produce books of account and that in the enquiry, the accused admitted the default under Section 276DD and pleaded ignorance of the provisions. It is significant to note that the Department recorded the statement of the accused in the form of questions and answers. The above statements are marked as exhibits P-5 to P-7. In the above statements, the accused have stated that they are not aware of the new provisions and that they needed cash urgently to meet the day-to-day expenses and that some of the depositors had no bank accounts. In the letter exhibit P-8 addressed to the Department, the accused have stated that cash received from the depositors who had bank accounts were taken for the purpose of meeting urgent expenses like payment of wages, payment of petty cash or urgent remittances to the bank and that as cash was urgently required for their immediate needs which cannot wait till the cheques are collected by the bank, the deposits were accepted from the parties, who had bank accounts. It is thus, clear that the accused gave an explanation for accepting deposits in cash, in the above enquiry proceedings. It is also admitted by P.W. 1 that the accused produced affidavits of persons from whom they received cash of more than Rs. 10,000 and that the affidavits are in their file. The explanation given by the accused during the enquiry proceedings and also the affidavits of depositors produced by the accused were in the file of the complainant. But, unfortunately the complainant has not even stated in the complaint that the explanation and reasons given by the accused for receiving the deposits in cash are not true and that the accused without any reasonable excuse received the cash. The complainant ought to have given reasons in the complaint as to why the explanation given by the accused is not valid in law. It is no doubt true that the ignorance of law is not an excuse for committing the offence. But the other reasons given by the accused for accepting the cash could have been considered by the Department before launching the prosecution. As already stated, mere acceptance of cash from the depositors is not an offence. The complainant must further allege and prove that the accused accepted the loan or deposit without reasonable cause or excuse. The circumstances under which the accused accepted the cash could be proved only by producing the affidavits sworn by the depositors. But, learned counsel for the appellant contended that the burden is upon the accused to prove that they have reasonable cause to accept the deposits. As already stated, when a particular provision imposes imprisonment, the prosecution must prove the ingredients of the offence. Section 276DD clearly states that only if a person without reasonable cause or excuse accepts the loan or deposit he is liable to be punished. That being the position of law, I am unable to subscribe to the contention of learned counsel for the appellant that the burden is upon the accused to prove that they have valid reasons to accept the deposits in cash.</p><p style="text-align: justify;">33. Section 278AA came into force with effect from September 10, 1986. The section reads thus :</p><p style="text-align: justify;">'278AA. Punishment not to be imposed in certain cases.--Notwithstanding anything contained in the provisions of Section 276A, Section 276AB or Section 276B, no person shall be punishable for any failure referred to in the said provisions if he proves that there was reasonable cause for such failure.'</p><p style="text-align: justify;">34. But with effect from April 1, 1989, Section 276DD is omitted in the above section. However, it is clear that even in the new provision which was in force on September 10, 1986, no person can be punished under Section 276DD if he proves that there was reasonable cause for such failure. But the words 'if he proves' is absent in the original Section 276DD. After amendment of Section 278AA, the burden lies upon the accused to prove that there was reasonable cause for such failure. But the accused are alleged to have contravened Section 269SS while old Section 276DD was in force. Hence, the prosecution has to aver and prove that the accused contravened the rule without reasonable cause or excuse, (vide Greatway (P.) Ltd. v. Asst. CIT [1993] 199 ITR 591 .</p><p style="text-align: justify;">35. The complainant could have produced the affidavits sworn by the depositors, produced by the accused to the Department in the trial court and shown that the explanation given by the accused for accepting the deposits in cash is not true. The trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits and prove the charge levelled against the accused. Now, learned counsel for the appellant contended that the accused could have produced the copies of affidavits or requested the court to send for the affidavits under known process of law. I am unable to accept the above contention of the appellant. The complainant is in possession of the affidavits produced by the accused. The law is well settled that the party who is in custody of the best evidence must produce the same before the court and in such cases he cannot invoke the abstract doctrine of burden of proof. Therefore, it has to be held that the complainant who is in possession of the best evidence failed to produce it before the trial court and invite the court to give a finding on the question whether the explanation trotted out by the accused is true or not. From the facts discussed above, it has to be held that mere contravention of Section 269SS is not an offence unless and until it is proved that the accused have no reasonable cause or excuse to accept the loan or deposits in cash. I hold that the complainant failed to aver and prove that the accused without reasonable cause or excuse accepted the deposits in cash. In the absence of an allegation in the complaint that the accused without reasonable cause or excuse accepted the deposits in cash, the accused cannot be said to have committed an offence under Section 276DD.</p><p style="text-align: justify;">36. Learned counsel for the respondent further contended that when the offence under the Act is committed by the company, every person who at the time when the offence was committed was in charge and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence, and shall be liable to be proceeded against and punished accordingly. It is contended by learned counsel for the respondent that it is not specifically alleged in the complaint as to who is the principal officer responsible for the day-to-day affairs of the company and that in the absence of the necessary averments to bring the company within the ambit of Section 278B the complaint is not maintainable. In support of the same, the accused also relies upon certain decisions. In State of Karnataka v. Pratap Chand : 1981CriLJ595 , it is held that where a partnership firm was charged for the offences under Section 18 of the Drugs and Cosmetics Act, the partner of the firm who was in over all control of the day-to-day business of the firm would alone be liable to be convicted.</p><p style="text-align: justify;">37. In a decision in Sham Sunder v. State of Haryana : 1989CriLJ2201 , it is held thus (headnote of AIR) :</p><p style="text-align: justify;">'More often, it is common that some of the partners of a firm may not even be knowing of what is going on day-to-day in the firm. There may be partners, better known as sleeping partners who are not required to take part in the business of the firm. There may be ladies and minors who were admitted for the benefit of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all partners and ask them to prove under the proviso to subsection (1) of Section 10 that the offence was committed without their knowledge. The obligation for the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution has established that the requisite condition mentioned in Sub-section (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was during the relevant time in charge of the business. In the absence of any such proof, no partner could be convicted. Thus where the documents produced by the prosecution do not indicate even remotely that all the partners were doing the business of the firm and that there was no other evidence on record on this aspect, it could not be said that when the offence was committed all the partners were conducting the business of the firm. Therefore, they would not be liable for conviction.'</p><p style="text-align: justify;">38. In Greatway (P.) Ltd. v. Asst CIT it is held that when the complaint is silent as to whether any person had been appointed as the principal officer of the petitioner-company and in the absence of such an appointment, a director or the managing director of the company could not be prosecuted. It is alleged in the complaint that the first accused is the company and accused Nos. 2 to 4 are the principal officers of the first accused who are responsible for the conduct of the business of the first accused company. In paragraph 8 of the complaint, it is stated that accused Nos. 2 to 4 being the executives of the first accused at the material time who were in charge of and responsible for the conduct of the business have committed the offence. P.W.-1 was not cross-examined on this aspect by the accused. Further, in the statements given by the accused, exhibits P-5 to P-8, they did not state that they or any of them, were not responsible for the day-to-day administration of the company. It is significant to note that all the accused have given one and the same statement. In the above circumstances, I am not inclined to accept the contention now raised by the respondent counsel that the complaint has to fail as ingredients of Section 278B are not made out. I hold that the contention raised by the respondent counsel on the above aspect has to be rejected.</p><p style="text-align: justify;">39. Learned counsel for the respondent also relies upon two decisions and contends that the appellate court should not normally interfere with the order of acquittal passed by the trial court. Ramesh Babulal Doshi v. State of Gujarat : 1996CriLJ2867 ; Awadhesh v. State of M. P., : 1988CriLJ1154 . It is no doubt true that the order of acquittal passed by the trial court would not normally be interfered with in the appeal, unless the view taken by the trial court is wholly unreasonable or erroneous. In the instant case, though the trial court acquitted the accused solely on the ground that the complainant failed to produce the affidavits the trial court did not advert to the other aspects of the case. It is open to the appellate court to give findings on all the points involved in the case, even though the same was not considered by the trial court. In any event, the reasons given by the trial court for acquitting the accused cannot be said to be unsustainable. For the above reasons, I hold that the order of acquittal passed by the trial court is not liable to be set aside. The complainant failed to prove the ingredients of the offence alleged in Section 276DD of the old Act. The complainant also failed to aver and prove that the reasons given by the accused for accepting the amount in cash is not true. Further the complainant failed to produce the affidavits sworn by the depositors to prove that the accused without reasonable cause or excuse accepted the amount in cash. For the above reasons, I hold that the contention raised by learned counsel for the appellant in these appeals cannot be accepted and as such, I hold that the order of acquittal passed by the trial court has to be confirmed.</p><p style="text-align: justify;">C. A. No. 647 of 1990:</p><p style="text-align: justify;">40. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A No. 648 of 1990:</p><p style="text-align: justify;">41. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 649 of 1990:</p><p style="text-align: justify;">42. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 650 of 1990:</p><p style="text-align: justify;">43. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 651 of 1990:</p><p style="text-align: justify;">44. In the result the criminal appeal is dismissed. The order of acquittal is confirmed.</p><p style="text-align: justify;">C. A. No. 652 of 1990:</p><p style="text-align: justify;">45. In the result the criminal appeal is dismissed. The order of acquittal is confirmed. </p><p style="text-align: justify;">C. A. No. 653 of 1990:</p><p style="text-align: justify;">46. In the result, the criminal appeal is dismissed. The order of acquittal is confirmed.</p>',
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LAW: Section 269SS, Section 269SS, Section 276DD, Section 276DD, Section 276DD, Section 278B, P-5 to P-7, P-8 under Section 2(35, Section 313, the Criminal Procedure Code, Section 276DD, Section 313, the Criminal Procedure Code, Section 313, the Criminal Procedure Code, the Criminal Procedure Code, Section 313, Section 269SS, Section 165, the Indian Evidence Act, Section 276DD, Section 6, Section 269SS, Section 278B, Section 269SS, P-5 to P-7, Section 269SS.20, Section 269SS.21, Section 269SS, Section 269SS, Section 276DD, Section 276DD, Section 271D.22, Section 6, Section 271D, Section 276DD, Section 276DD, Section 276DD.23, Section 269SS, Section 14(1, Section 271(1)(a, Act, Section 276C, Section 276C, Section 276C, Section 14(1, Section 201(1, Section 276B of the Act, Section 201, Section 221, Section 201(1, Section 276B, Section 276B., Section 276, Section 272A(2, Section 276DD, P-5, Section 276A, Section 276B, Section 276DD, Section 276DD.36, Section 278B, Section 18, Section 10, P-5, Section 278B, Section 276DD

PERSON: V. Bakthavatsalu, P. W. 1, Exhibit P-1, Exhibit P-3, Exhibit P-9, Exhibit P-10, P. W. 1, P. W. 1, P. W. 1, P. W. 1, P. W. 1, P. W. 1, P. W. 1, P. W. 1, Nos, Thiru Gopinath, P. Nainakhan, I. M. Patel, I. M. Patel, P. Nainakhan, P. Nainakhan, P. P. Suri, Anwar Ali, Haryana, Nos, Nos, Doshi v. State

ORG: J. Criminal Appeal No, Appellate Tribunal, Chennai, P.W. 1, Criminal Appeal No, P-l, P.W. 1.Criminal Appeal No, P-l, Criminal Appeal No, P-l, P-l, P-l, Sections 278AA, Sections 269SS, Criminal Appeal No, Criminal Appeal No, Criminal Appeal No, Criminal Appeal No, Criminal Appeal No, Department, P-9, Department, Thiru Ramasamy, Legislature, Department, Department, CWT, the Division Bench, Department, the Supreme Court, CIT, CIT, the Supreme Court, Department, the Supreme Court, CWT, Sequoia Construction Co. P. Ltd., ITO, the Patna High Court, ITO, the Patna High Court, the Patna High Court, Department, the Supreme Court, CIT, The Patna High Court, Department, Department, Department, P-8, Department, Department, Greatway, P.) Ltd., Asst, CIT, Department, State, AIR, Greatway, Asst CIT, Awadhesh

CARDINAL: 647, 341, 10,000, 30,000, 1985.2, 30,000, 648, 5, 342, 10,000, 647, 649, 1990:6, 343, 14,000, 1, 650, 1990:7, 344, 20,000, 651, 1990:8, 345, 10,000, 647, 652, 346, 30,000, 653, 1990:10, 347, 10,000, 278E, 2 to 4, 10,000, 647, 341, 50,000, 648, 10,000, 649, 14,000, 650, 20,000, 651, 10,000, 652, 30,000, 653, 10,000, 1984.16, 10,000, 10,000, 20,000, 1992]197ITR545(Mad, one, 1996]221ITR805(Mad, 1992]196ITR297(SC, 1992]196ITR297(SC, 1996]221ITR805(Mad, 1996]221ITR805(Mad, 1986]158ITR496(Delhi, two, 1979]118ITR982(Patna, 5, 6, 10,000, 199, 1981CriLJ595, 1, 1, 2 to 4, 8, 2 to 4, two, 1996CriLJ2867, 1988CriLJ1154, 647, 1990:40, 648, 649, 1990:42, 650, 1990:43, 651, 1990:44, 652, 1990:45, 653, 1990:46

DATE: 1990, 1989, 1961, April 1, 1984, the year March 31, 1985, January 8, March 16, 1988, 1990, 1989, November 26, 1984, 1990, 1989, October 15, 1984, 1989, January 10, 1985, 1989, October 17, 1984, 1990, 1989, October 16, 1984, 1989, August 24, 1984, 1990, 1989, January 8, 1985, 1990, November 26, 1984, 1990, October 15, 1984, 1990, January 10, 1985, 1990, October 17, 1984, 1990, October 16, 1984, 1990, August 24, April 1, 1984, the 30th day of June, 1984, April 1, 1984, two years, April 1, 1989, April 1, 1989, two years, 1961, April 1, 1989, '25, 1961, '27, October 1, 1975, less than six months, seven years, '29, 1961, '30, 1970]76ITR696(SC, '31, September 10, 1986, '34, April 1, 1989, September 10, 1986, 1993

GPE: Salem, F.O.C.C., Vaiya, Act.3, F. O. C. C., F.O.C.C., F. O. C. C., Salem, cash.33, Karnataka v. Pratap Chand, Sham Sunder, Gujarat

ORDINAL: first, second, third, fourth, first, first, first, second, second, first, first, second, third, fourth, first, first, first, first, first, first, first, first, first

PRODUCT: Section 278AA, Section 269SS, P-10, P.W. 1, P-10, P-10, P-10, P-10, P-10, P-10, 276DD, P-10, P-10, Section 276DD, Section 269SS, Section 269SS, Section 276DD, Section 276DD, Section 269SS, Section 276DD, Section 276DD, Section 276DD, Section 269SS, P.W. 1, Section 278AA, 278AA, Section 276DD, Section 276DD, Section 278AA, Section 269SS, Section 276DD, Section 269SS

NORP: P-1, P-1, P-1

MONEY: 15 per cent, two per cent

WORK_OF_ART: C. A Baloo v. Union of India

FAC: Sections 276C

LOC: P-8