Compounding of Income-tax prosecution upheld, leading to setting aside of conviction and sentence after fee payment

Leave to compound an offence under section 276CC(i) of the Income-tax Act was granted because the competent income-tax authority had agreed to compounding on payment of the stipulated fee, and the amount was paid. Applying section 279(2), the Court treated the request as in accordance with law and held that the conviction and sentence were liable to be set aside as a consequence of the compounding.

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Issues: Whether leave should be granted to compound the offence under the Income-tax Act, and, if so, whether the conviction and sentence were liable to be set aside.

Analysis: The offence related to failure attracting prosecution under Section 276CC(i) of the Income-tax Act, 1961. The competent income-tax authority had agreed to compound the matter on payment of the stipulated compounding fee, and the amount had been paid. In view of Section 279(2) of the Income-tax Act, 1961, the Court found the request to compound the offence to be in accordance with law.

Conclusion: Leave to compound the offence was granted, and the prosecution consequence of the conviction and sentence was liable to be set aside.

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