Compounding of income-tax offences remains valid even before proof of the offence, and agency does not defeat statutory liability.

Section 53 of the Income-tax Act permitted compounding of offences under sections 51 and 52 before or after proceedings, and did not require prior proof that the offence had already been established. A voluntary payment made to avert prosecution was therefore within the statutory power to compound, and the composition was valid and binding. Liability under the income-tax provisions also could not be avoided merely because the return was signed and verified by an agent rather than personally by the assessee, since the scheme independently covered failure to furnish a return and making a false return. The challenge to both compounding and liability was rejected.

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Issues: (i) Whether a proceeding could be compounded under section 53 of the Income-tax Act where the assessee sought composition to avoid prosecution, and whether the compounding was invalid because the offence was said not to have been actually committed; (ii) Whether the assessee could avoid liability under sections 51(c) and 52 of the Income-tax Act on the ground that the return was signed and verified by his agent and not personally by him.

Issue (i): Whether a proceeding could be compounded under section 53 of the Income-tax Act where the assessee sought composition to avoid prosecution, and whether the compounding was invalid because the offence was said not to have been actually committed.

Analysis: Section 53 barred prosecution except at the instance of the Inspecting Assistant Commissioner and authorised that officer to compound offences under sections 51 and 52 before or after proceedings. The section did not require proof that the offence had already been established before composition. Where a proceeding on a charge under section 51 or section 52 existed, it fell within the scope of section 53. The payment was made by the assessee voluntarily to avert prosecution, and the authority accepted the composition within power.

Conclusion: The composition under section 53 was valid and binding, and this contention failed.

Issue (ii): Whether the assessee could avoid liability under sections 51(c) and 52 of the Income-tax Act on the ground that the return was signed and verified by his agent and not personally by him.

Analysis: Even assuming the return was not personally verified by the assessee, liability under section 51(c) for failure without reasonable cause to furnish the return remained available. The statutory scheme covered both failure to furnish the return and making a false statement in the return, and section 53 applied to offences under both provisions. The authority to compound was therefore unaffected by whether the charge ultimately rested on section 51(c) or section 52.

Conclusion: The assessee remained liable under the income-tax provisions and could not escape the consequence on the ground of agency.

Final Conclusion: The appeal raised no substantial question of law and the concurrent findings below stood undisturbed; the assessee's challenge to the compounding and to liability under the income-tax provisions was rejected.

Ratio Decidendi: A statutory power to compound offences under the Income-tax Act extends to proceedings under the specified offence provisions even where the assessee contests actual commission of the offence, and liability cannot be avoided merely because the return was acted upon or verified by an agent where the statute independently supports charge under failure-to-furnish or false-return provisions.

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