M/S GENERAL FINANCE CO.(REGD.) vs A.C.P. OF I.T.

The appellants challenged the prosecution initiated under Section 276DD of the Income Tax Act, 1961, for violating Section 269SS regarding the acceptance of loans/deposits exceeding the prescribed limit. The legal issue concerns whether prosecution is sustainable when the penal provision (Section 276DD) was omitted by the Direct Tax Law (Amendment) Act, 1987, effective from 1.4.1989. The High Court previously held that since the offence occurred while the provision was in force, the prosecution remained justified.