Court sets aside order, remands for compounding fee collection. Appellant to pay within 6 weeks. Writ Appeal allowed.

The Court set aside the impugned order and remanded the matter to the Respondents to demand the compounding fee from the Appellant in accordance with revised guidelines. The Respondents were directed to complete this process within six weeks, with the Appellant required to pay the amount to the Revenue upon demand. The Writ Appeal was allowed without costs, and the connected Miscellaneous Petition was closed.

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Issues Involved:
1. Legality of the order passed by the Respondents without proper quorum.
2. Applicability of the Central Board of Direct Taxes (CBDT) guidelines for compounding of offences.
3. Consideration of the Appellant's age and the duration of prosecution.
4. Relevance of subsequent liberalization in CBDT guidelines for compounding offences.

Detailed Analysis:

1. Legality of the order passed by the Respondents without proper quorum:
The Appellant argued that the impugned order dated 03.03.2016 by the Respondents was passed without constituting a proper quorum as required by the CBDT guidelines dated 16.05.2008. The guidelines stipulate that applications for compounding of non-technical offences should be decided by a Committee consisting of CCIT (CCA), DGIT (Inv.), and CCIT/DGIT having jurisdiction over the case. The learned Single Judge dismissed the writ petition without addressing this procedural irregularity.

2. Applicability of the Central Board of Direct Taxes (CBDT) guidelines for compounding of offences:
The Appellant contended that the order was contrary to the CBDT guidelines issued on 16.05.2008, which should have been considered for compounding the offence under Section 276C(1) of the Income Tax Act. The revised guidelines dated 16.09.2022 and the press release dated 17.09.2022 were also highlighted, which relaxed the scope of eligibility for compounding offences, making certain previously non-compoundable offences now compoundable.

3. Consideration of the Appellant's age and the duration of prosecution:
The Appellant, aged 76, has been facing prosecution for over a decade. The Court noted that prosecuting the Appellant at this stage would serve no useful purpose, especially since the Appellant had already been subjected to penalties and had taken advantage of the legal remedies available.

4. Relevance of subsequent liberalization in CBDT guidelines for compounding offences:
The Court observed that the guidelines have been liberalized over time, with the latest press release dated 17.09.2022 allowing for the compounding of offences that were previously non-compoundable. The Court referred to previous judgments, including the case of K.M.Mammen Vs. Principal Commissioner of Income Tax, which emphasized the discretion available to authorities in compounding offences and the importance of considering the age and circumstances of the petitioner.

Conclusion:
The Court concluded that the impugned order of the learned Single Judge dated 24.01.2020 should be set aside. The matter was remanded back to the Respondents to demand the compounding fee payable by the Appellant in terms of the revised guidelines dated 16.09.2022. The Respondents were directed to carry out this exercise within six weeks, and upon such demand, the Appellant was to pay the amount to the Revenue. The Writ Appeal was allowed with no costs, and the connected Miscellaneous Petition was closed.

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