TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: Whether the liquidator was liable to reimburse the compounding fee paid in respect of prosecution under the Income-tax Act, and whether the order directing reimbursement could be sustained under the Insolvency and Bankruptcy Code, 2016.
Analysis: The prosecution was for non-deposit of TDS for financial year 2012-13 and had been launched before commencement of CIRP. The complaint was against both the company and the then Managing Director in his personal capacity under Sections 276-B and 278-B of the Income-tax Act, 1961. Compounding is sought by the person who is exposed to the penal consequences of the alleged offence. Since the Managing Director was the person alleged to be responsible for the default, he was required to face the criminal proceedings in his personal capacity. The liquidator, who had not committed the alleged offence, could not be compelled to treat the compounding fee as a liability payable from the liquidation process. Section 35(1)(k) of the Insolvency and Bankruptcy Code, 2016 did not justify reimbursement of a personal criminal liability from the corporate estate, and the direction to do so was inconsistent with the statutory scheme.
Conclusion: The reimbursement direction was unsustainable and was set aside. The issue was decided against the assessee-side and in favour of Revenue.
Final Conclusion: The appeal succeeded and the liquidator was not bound to reimburse the compounding fee from the liquidation estate.
Ratio Decidendi: Where prosecution for non-deposit of TDS is launched against both the company and its responsible officer, the officer facing personal criminal liability cannot shift the compounding burden to the liquidator or liquidation estate unless the statute clearly authorises such reimbursement.
TaxTMI 
