TaxTMI 
TaxTMI 
1999 (3) TMI 607
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....ss place of the petitioner was inspected by the Intelligence Officer on March 7, 1988 and detected certain irregularities in accounting. Petitioner applied for compounding under section 47 and the authorised officer accepted the offer. The maximum compounding fee of Rs. 1 lakh was imposed on the petitioner and that was paid. Once the compounding fee is paid and accepted, both parties, that is, neither the Revenue nor the assessee can question the compounding order and that particular offence stands as compounded. Section 47 deals with compounding of offence which reads as follows: "47. Composition of offences.-(1) The assessing authority or other officer or authority authorised by the Government in this behalf may accept from any person ....
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....s his goods again, or other amends, upon agreement not to prosecute (Jacob)..." "Compounding a felony" under the English Law is an offence perverting public justice by bargaining to allow a criminal to escape. In tax matters, it is different. Once the compounding is done the offence is settled, no action can be taken against the assessee for that particular offence and of course assessment or even best judgment assessment can be made as per law but no further penal action can be taken against that particular offence. But penalty was imposed on the petitioner under section 45A for the very same offence which was compounded under section 47. It is not disputed that section 45A is penal in nature. 3.. It is the contention of the learned ....
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.... against the petitioner for the same offence. The wording of section 47 is very clear that on payment of compounding fee fixed offence as such is settled. Therefore, after compounding no penalty or prosecution can be launched. 5.. Learned Government Pleader cited the decision of the Madras High Court in Deputy Commissioner (C.T.), Coimbatore v. N. Pillar Chetty & Co. [1976] 38 STC 342. But in that case an offence of failure to maintain true and correct accounts was compounded. Penalty was imposed for not filing the return in time and not for the offence of failure in maintaining correct accounts. The Madras High Court held that collection of compounding fee is with reference to an independent contravention of the Act while the imposition....
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....llowed to be compounded. 6.. Learned Government Pleader also cited the decision in Sree Sastha Trading Co. v. State of Kerala [1991] 2 KLT 875 wherein the question considered was whether the proceedings of compounding is revisable or not and not the question whether after compounding, penalty orders can be imposed. The Division Bench observed as follows: "The language employed in section 47 would indicate that the proceeding contemplated thereunder partakes of the character of a compromise between the parties. The section provides that the assessing authority or other officer or authority authorised by the Government in this behalf may accept from any person who has committed or is reasonably suspected of having committed an of....