2022 (2) TMI 648

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....e others) was filed in the Court of Special C.J.M., Varanasi under Section 276C(1) read with Section 277 and 278B of the Income Tax Act, 1961 against the petitioner on 29.3.2000 praying that the accused opposite parties may be summoned, tried and punished in accordance with law. 4. The petitioner filed an application for compounding of the offences which was received in the Office of the Chief Commissioner, Income Tax on 23.4.2021. The Chief Commissioner of Income Tax Allahabad issued a show cause notice dated 16.11.2021 which is reproduced below: "F.No.-CCIT/Alld./ITO(Hq.-Tech.)/Compounding(Pros.)/2021-22/3081 Date-16.11.2021 To, M/s G.P. Engineering Works R/o Kachhwa P.S. Kachhwa, Mirzapur Sir, Sub- Application for compounding of prosecution u/s 276C(1) of the I.T. Act in the case of M/s G.P. Engineering Works R/o Kachhwa, P.S. Kachhwa, Mirzapur relating to A.Y. 1990-91 for willful attempt to evade tax in accordance with the section 139(1) of the Income Tax Act, 1961-Regarding- Kindly refer to your application dated 22/04/2021 received in this office on 23/04/2021 on the subject mentioned above, for compou....

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....aintainable. 7. We have carefully considered the submission of the learned counsel for the parties. 8. Section 279 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act, 1961'), provides as under: "279. Prosecution to be at instance of [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner. - [(1) A person shall not be proceeded against for an offence under section 275-A, [section 275-B], section 276, section 276A, section 276B, section 276BB, section 276C, section 276CC, section 276D, section 277, [section 277A] or section 278 except with the previous sanction of the [Principal Commissioner or] Commissioner or Commissioner (Appeals) or the appropriate authority: Provided that the [Principal Commissioner or] Chief Commissioner or, as the case may be, [Principal Director General or] Director General may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for institution of proceedings under this sub-section. Explanation.- For the purposes of this section, "appropriate authority" shall have the same meaning as in clause (c) of section 269-UA.] ....

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....e respondent or in the impugned show cause notice that the criminal case in question is still pending. 10. A circular is subordinate to the principle Act or Rules, it cannot override or restrict the application of specific provision enacted by legislature. A circular cannot travel beyond the scope of the powers conferred by the Act or the Rules. Circulars containing instructions or directions cannot curtail a statutory provision as aforesaid by prescribing a period of limitation where none has been provided by either the Act, 1961 or the Rules. The authority to issue instructions or directions by the Board stems from the second Explanation appended to Section 279 of the Act, 1961. It is well settled that the Explanation merely explains the main section and is not meant to carve out a particular exception to the contents of the main section (Sonia Bhatia Vs. State of U.P., (1981) 2 SCC 585 at page 597). The object of an Explanation to a statutory provision was elaborated by the Supreme Court in S. Sundaram Pillai Vs. V.R. Pattabiraman, (1985) 1 SCC 591, in which it was held as follows: "53. Thus, from a conspectus of the authorities referred to above, it is manifest that....

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....reply filed to the writ petition, the Department, inter alia, stated that the compounding application under consideration was filed by the accused after about 10 years of filing the prosecution complaint; that para 8(vii) of the revised guidelines for compounding dated 23.12.2014 provides that offences committed by a person for which prosecution complaint was filed by the Department with the competent court 12 months prior to receipt of the compounding application are generally not to be compounded. With that reply, the Department had also filed an order dated 3.11.2016 passed by the Chief Commissioner of Income Tax on the ground that there was inordinate delay of 9 years in filing of the application for compounding of offences by the assessee. While referring to para 8(vii) of the circular dated 23.12.2014, the Court observed that it did not stipulate a limitation period for filing the application for compounding. It gave a discretion to the competent authority to reject an application for compounding on certain grounds. Thus, the Court held that resort cannot be had to para 8 of the circular to prescribe a period of limitation for filing an application for compounding. The Court ....