CHENNAI, JUNE 25, 2007 : VEAI NNIRADNirmala was a heartthrob of
Tamil cinema and a favourite of MGR. She took a loan of Rs. 4,65,000
from the AIDMK in cash and was awarded a sentence of two years
Rigorous Imprisonment in addition to a fine of Rs.4,65,000/- in
1986. After an exhausting court battle for more than 20 years, she
is now set free of the sentence by the High Court while the fine was
retained.
The short facts of the complaint is that the revision
petitioner/accused, a cinema actress, had obtained a loan of
Rs.4,65,000/- from the All India Anna D.M.K party, Chennai, as per
the entry made in the above said party's ledger folio on 17.4.1986.
The accused had admitted in her sworn statement given before the
Assistant Director of Inspection (Investigation) on 23.4.1986 about
the above said borrowal of Rs.4,65,000/-.
According to the prosecution as per section 269SS of Income Tax Act
1961, a person can obtain any loan or deposit only through an
account payee cheque or an account payee bank draft if the amount of
loan exceeds Rs.10,000/-. Since the loan obtained by the accused
which is above Rs.10,000/- was not by way of account payee cheque or
account payee bank draft, according to the prosecution, there is a
violation of Section 269SS of the Income Tax Act, 1961, by the
accused which is liable to be punished under Section 276DD r/w 269SS
of the Income Tax Act.
4. Before the Trial Court, the accused had denied her complicity
with the crime.
When the proceedings were pending, the accused approached the Apex
Court against the order passed by the Madras High Court challenging
the constitutional validity of Section 269SS, 276DD & 271D of the
Income Tax Act. The Supreme Court held that Section 269SS, 271D,
276DD are constitutional.
When the above appeal was pending before the Apex Court, a direction
was given by the Supreme Court to the effect that the substantive
sentence in E.O.C.C.No.207 of 1986 shall not be given effect to
until further orders from the Apex Court.
The Trial Judge after due consideration of the evidence both oral
and documentary placed before him has come to the conclusion that
the charges levelled against the accused under Section 276DD r/w
269SS of Income Tax Act has been proved beyond any reasonable doubt
and accordingly convicted the accused and sentenced her to undergo 2
years RI and a fine of Rs.4,65,000/- with default sentence. The
trial judge has suspended the sentence of imprisonment alone as per
the directions of the Supreme Court.
Aggrieved by the findings of the Trial Judge, the accused had
preferred an appeal before the Principal Sessions Judge, Chennai.
The Sessions Judge confirmed the orders of the trial judge, thereby
dismissing the appeal. The Sessions Judge has also suspended the
sentence of imprisonment and fine as per the directions of the
Supreme Court and the matter is before the Madras High Court.
The counsel for the revision petitioner has not touched the merits
of the case, but his entire arguments revolved around the subsequent
amendment in the Income Tax Act in respect of Section 276DD which is
the penal section for violation of the provision of Section 269SS of
the Income Tax Act, 1961. Section 276DD of the Income Tax Act, 1961
was omitted by Direct Tax Laws (Amendment) Act, 1987 which came into
force with effect from 1.4.1989. Relying on the ratio of the Apex
Court in AIR M/s.General Finance Co. and anther Vs. Assistant
Commission of Income Tax, the counsel would contend that after the
omission of Section 276DD from the Income Tax Act, a prosecution
cannot be launched or continued for the violation of the provisions
under Section 269SS.
Now the point to be considered by the High Court is whether the
imposition of sentence by the Court below can be sustained.
The High Court observed that the accused was convicted by the Court
below to undergo RI for 2 years and a fine of Rs.4,65,000/- even
after the amendment and after the omission of Section 276DD of the
Act, as per the penal provision inducted thereafter under Section
271D of the Act, the Income Tax Commissioner can levy only penalty
and the person who violates the provisions of Section 269SS of the
Act, cannot be sentenced to any imprisonment.
Under such circumstances took the view that the penalty levied by
the Courts below by way of fine should sustain and only the sentence
of 2 years RI alone is to be set aside in lieu of march of law on
this subject.
In fine, the revision is allowed in part and the sentence of two
years RI on the accused passed in E.O.C.C.No.207/1986 on the file of
the Additional Chief Metropolitan Magistrate E.O-II, Egmore,
Chennai, is set aside while confirming the fine of Rs.4,65,000/-
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