Court Directs Compounding of Offence, Considers Petitioner's Circumstances

The court set aside the rejection of the compounding application by the fourth respondent and directed the fourth respondent to compound the offence by fixing the compounding fee to be paid by the petitioner. The court emphasized the petitioner's age, status, and prolonged prosecution as factors warranting a favorable consideration for compounding the offence.

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Issues Involved:
1. Legality of the rejection of the compounding application by the fourth respondent.
2. Applicability of the guidelines for compounding offences.
3. Consideration of the petitioner's age, status, and prolonged prosecution.
4. Adherence to the previous court orders and directions.

Detailed Analysis:

1. Legality of the Rejection of the Compounding Application:
The petitioner filed a Writ Petition challenging the rejection of their compounding application by the fourth respondent. The fourth respondent's impugned order dated 30.08.2021 rejected the application based on the guidelines issued by the Board in F.No.285/08/2014-IT(IN.V)/147 dated 14.06.2019. The Committee noted that the petition filed on 09.03.2021 was a fresh petition and should be dealt with under the 2019 guidelines, which exclude offences related to undisclosed foreign bank accounts from being compounded. The Committee also considered the conduct, nature, and magnitude of the offence and found the petitioner's case ineligible for compounding under Para 8(x) and 8(xiii) of the guidelines.

2. Applicability of the Guidelines for Compounding Offences:
The petitioner’s case involved cross-border transactions and undisclosed foreign bank accounts, which are generally not compounded as per the 2019 guidelines. The guidelines under Para 8.1 list offences normally not to be compounded, including those with cross-border elements and undisclosed foreign assets. The Committee found that the petitioner’s case fell within these categories and thus was not eligible for compounding. However, the court noted that the guidelines allow for discretion, stating that offences "normally not to be compounded" can still be considered for compounding under exceptional circumstances.

3. Consideration of the Petitioner's Age, Status, and Prolonged Prosecution:
The court observed that the petitioner, now over 70 years old, had been facing prosecution for over a decade for an offence allegedly committed during 2001-2002. The petitioner had already paid the tax, interest, and penalty imposed. The court emphasized the need to consider the petitioner's age, status in society, and the prolonged nature of the prosecution. The court highlighted that further prosecution would serve no purpose and that the petitioner should be allowed to buy peace by paying the compounding fee.

4. Adherence to Previous Court Orders and Directions:
The court referred to its previous order dated 28.08.2019, which had set aside an earlier rejection of the compounding application and directed the Committee to reconsider the application in light of the observations made. Despite this, the fourth respondent rejected the application again based on the 2019 guidelines. The court noted that the guidelines are binding but allow for discretion. The court also referred to the Supreme Court's decision in Prem Dass Vs. ITO, which emphasized the legislative intent of Section 279(1A) of the Income Tax Act, 1961, where there is a reduction of penalty.

Conclusion:
The court set aside the impugned order of the fourth respondent and remitted the case back, directing the fourth respondent to compound the offence by fixing the compounding fee to be paid by the petitioner. The court allowed the Writ Petition with consequential relief, emphasizing that the petitioner's age, status, and prolonged prosecution warranted a favorable consideration for compounding the offence.

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