TaxTMI 
TaxTMI 
2019 (9) TMI 59
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....or Standing counsel appearing on behalf of the respondents. 3. The brief facts of the case are as follows:- a) The case of the respondent is that the petitioner had created a Trust in the name of Webster Foundation and the said Trust had opened an account with LGT bank, Liechtenstein, a Foreign State in Europe. The petitioner, his father and his brother were named as direct beneficiaries of the Trust. It is further alleged that the petitioner, had made a declaration of endowment in favour of M/s. Webster Foundation, by endowing the Foundation with a sum of EUR 1,23,000 on 24.03.2000. The statement of accounts showing the balance in the foreign account of Webster Foundation as on 31.12.2001, including the accrued interest, was a sum of Swiss Franc 778, 437.80 (equivalent to Indian Rs. 2,26,38,372/-). b) On 25.03.2009, a notice under Section 148 of the Income Tax Act was issued, stating that the income of the petitioner chargeable to tax for the assessment year 2002-03, has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. The petitioner gave a reply to the said notice on 13.04.2009, based on which a sworn statement was recorded under Section 131 ....
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....eable income was due to the omission or failure on the part of the assessee. E) The notice under Section 148 is beyond the limitation period of six years as provided under Section 149 of the Act and hence is without jurisdiction. 5. To such submissions, the learned Standing counsel for the respondents would place his objections in the following manner: A) The application for compounding the offences were rejected in the preliminary stage and as such, the Committee contemplated under the CBDT Guidelines need not be approached. Even otherwise, the offence under Section 277 is a technical offence and as such, the DGIT was well within his jurisdiction to pass the order. Insofar as the offence under Section 276C (1) is concerned, the conditions prescribed in paragraph 4 of the Guidelines were not satisfied and in view of paragraph 5.1 of the Guidelines, such non-satisfaction would entitle the DGIT to pass the impugned order. B) Reduction of penalty will not be a ground to quash the impugned order and the decision in Prem Dass's case (supra) is not applicable to the present case since the order passed under Section 273A of the Act, reducing the penalty has not become final sin....
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.....3. When the petitioner was alleged to have concealed the declaration of endowment in a foreign country in his return of income filed for the assessment year 2002-2003 and thereby wilfully attempted to evade tax penalty and interest, prosecution was launched against him for offences under Section 276C (1) and 277 of the Income Tax Act. The learned Standing counsel for the respondents would attempt to say that since, the offence under Section 277 is a technical offence as per the aforesaid Guidelines and therefore the DGIT was well within his jurisdiction in passing the impugned order. Insofar as the non-technical offence under Section 276C (1) of the Act is concerned, it is his submission that the conditions prescribed in paragraph 4 of the Guidelines were not fulfilled and since Guideline No. 5.1 prescribes that all conditions prescribed in paragraph 4 should be satisfied before a non-technical offence is considered for compounding, the DGIT was well within its powers in passing the impugned orders. Above all, the impugned order was rejected in the preliminary stage itself and therefore, there was no necessity for the Committee to consider the compounding application. 8.4. I am....
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.... authorities. The said provision reads as follows: " Section 119 ( 1): The Board may, from time to time, issue such orders, instructions and directions to other income- tax authorities as it may deem fit for the proper administration of this Act, and such authorities and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be issued- a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or b) so as to interfere with the discretion of the [***][Commissioner (Appeals)] in the exercise of his appellate functions." 8.8. The Hon'ble Apex Court in the case of Catholic Syrian bank Ltd V. Commissioner of Income Tax, Thrissur reported in 2012 (3) SCC 784 had held that the circulars can be issued by the Board to explain or tone down the rigours of law and that the circulars cannot be ignored. The relevant portion of the said order reads as follows: "23. Now, we shall proceed to examine the effect of the circulars which are in force and are issued by the Cen....
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.... against for an offence under section 276C or section 277 in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause (iii) of subsection (1) of section 271 has been reduced or waived by an order under section 273A." 9.3. In the case of Prem Dass (supra), the Hon'ble Supreme Court was of the view that the assessee cannot be proceeded against for the offences, when the Commissioner (Appeals) has reduced the penalty. The relevant portion of the order reads as follows: "10. We also find sufficient force in the contention of Mr. Salve that the legislative mandate in Section 279(1A) of the Income Tax Act has not been borne in mind by the High Court while interfering with an order of acquittal. Mr. Shukla, no doubt has indicated that the said provision will have no application as the penalty imposed has not been reduced or waived by an order under Section 273A. We do not agree with the aforesaid literal interpretation of the provisions of Section 279(1A) of the Act, when we find that the Commissioner of Income Tax(Appeal) has reduced the penalty. Further the tribunal has totally set aside the order, imposing penalty....
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....that the petitioner would be entitled to the benefit of Section 279 (1A) of the Act and the mere challenge to the order reducing the penalty may not suffice to deny such a benefit. In view of these subsequent developments, there cannot now be any impediment on the part of the Department to compound the offences under Sections 276C and 277 of the Act. 9.7. The learned Standing counsel for the respondents made a faint attempt by placing reliance on paragraph 19 of the dismissal order dated 28.02.2019 passed in Crl.O.P.No.9065 of 2011 and submitted that Prem Dass's case (supra) has been distinguished and held to be not applicable to the present case. Hence the learned Standing counsel would submit that, since the order of reduction of penalty was not passed under Section 273B of the Act, Section 279 (1A) of the Act is not applicable to the petitioner. 9.8. As observed earlier, Section 279 (1A) is self-explanatory and the Hon'ble Supreme Court in Prem Dass's case (supra) has further clarified that the assessee cannot be proceeded against for an offence when the penalty imposed on him has been reduced. Under Article 141 of the Constitution of India, the law declared by the Ho....