Judgment R.N.Sahay, J. 1. Heard the parties. 2. Common questions of law and fact are involved in these four applications and are being disposed of by this common judgment. 3. In all these four applications, the first petitioner is the firm and other petitioners are its partners. The petitioner-firm derives income from the business of land, construction of buildings and sales/lease of buildings so constructed. The firm is an assessee under the Income-tax Act. Assessment for the assessment year 1989-90 was made for the first time, in the course of which it is alleged that the firm received loans/deposits from its partners as well as from other parties in cash in contravention of the provisions of Sec. 269SS of the Act. 4. Sec. 269SS of the Income-tax Act provides that no person shall after June 30, 1984, take or accept from any other person any loan or deposit otherwise than by an account-payee cheque or account-payee bank draft if the amount of such loan or deposit or the aggregate amount of such loan or deposit is ten thousand rupees or more. Failure to comply with the provisions of Sec. 269SS attracts penalty us well as prosecution. 5. Four complaint cases were filed against the partners under Sec. 276DD of the Act (since repealed with effect from April 1, 1989). The contention of the petitioners before the income-tax authorities was that Sec. 269SS was not applicable since the petitioners had not received loans or deposits from any parties, but had received advance consideration for sale of flats. The petitioner-firm was called upon to show cause as to why penally be not imposed in respect of a sum of Rs. 7,76,800 in the first proceeding. Penalty proceedings under Sec. 271(1)(c) of the Act were initiated. The competent authority to impose penalty is the Deputy Commissioner of Income-tax. The matter was referred to him. It appears that the Deputy Commissioner of Income-tax dropped the proceeding against the petitioners, as is apparent from annexure-6. Notwithstanding the dropping of the proceeding, the Commissioner of Income-tax by order dated July 16, 1992 (annexure-2), held that the assessee had deliberately violated the provisions of Sec. 269SS which is an offence punishable under Sec. 276DD of the Act of 1961. Accordingly, the Commissioner authorised Smt. Jyoti Kumari, Assistant Commissioner of Income-tax, Circle 1(2), Patna. to launch prosecution against the firm and its partners. Accordingly, the Commissioner authorised Smt. Jyoti Kumari, Assistant Commissioner of Income-tax, Circle 1(2), Patna. to launch prosecution against the firm and its partners. Accordingly, four complaints were filed and cognizance was taken by the magistrate of the offences. 6. The complaints were filed after the penalty proceeding was dropped by the Deputy Commissioner. The complaint petitions are annexure-1 to each of these applications. What is significant is that in none of the complaint petitions is there any mention of the penalty proceeding which was dropped. It is, therefore, clear that the complainant--Assistant Commissioner of Income-tax--suppressed the fact that the penalty proceeding has been dropped. The Commissioner of Income-tax was also ignorant of this fact. 7. Mr. K. N. Jain, learned senior counsel for the petitioners, rightly submitted that the show cause of the firm was accepted by the Deputy Commissioner of Income-tax and penalty proceeding was dropped and hence no prosecution could be launched. 8. The prosecution of the petitioners is, therefore, not maintainable in the eye of law and is an abuse of the process of the court. The sanction order was passed in ignorance of the order of the Deputy Commissioner of Income-tax. All these four applications must succeed and the prosecution of the petitioners in each, of the cases is held to be bad and is accordingly quashed.