TaxTMI 
TaxTMI 
2022 (6) TMI 30
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....y this Court in W.P.No.3929 of 2014, dated 28.08.2019 and the Judgment of the Division Bench of this Court in W.A.No.967 of 2020 dated 11.02.2021. 3. By the impugned order dated 30.08.2021, the fourth respondent has rejected the Compounding Application filed by the petitioner pursuant to the order dated 11.02.2021 of the Division Bench of this Court in W.A.No.967 of 2020. The Relevant portion of the impugned order reads as under:- 22.6. In view of the above, the Committee recommended that since the assessee's petition filed on 25.03.2011 was disposed off, the present petition filed on 09.03.2021 was to be construed as a new petition. Having thus recommended that the compounding application filed by the assessee on 09.03.2021 was a fresh petition, the Committee held that the same was to be dealt with in accordance to the guidelines issued by the Board in F.No.285/08/2014-IT(IN.V)/147 dated 14.06.2019 which is applicable to all petitions filed on or after 17.06.2019. 22.7. The Committee noted the provisions of Para 8 of the guidelines dated 14.06.2019 relating to offences normally not to be compounded which are reproduced as under for ease of reference. ....
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....' and such offence has bearing on offence sought to be compounded. x. Any offence which has bearing on an offence relating to undisclosed foreign bank account / assets in any manner. xi. Any offence which has bearing on any offence under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. xii. Any offence which has bearing on any offence under the Benami Transactions (Prohibition) Act, 1988. xiii. Any other offence, which the Pr.CCIT/CCIT/Pr.DGIT/DGIT concerned considers not fit for compounding in view of factors such as conduct of the person, nature and magnitude of the offence." 23. Recommendations of the Committee as per guidelines dated 14.06.2019:- 23.1. On examination of the facts of the case of the assessee, the committee noted that: i. The assessee has cross border transactions. But for the information received from a foreign Government, the Revenue would have been put to a great loss. ii. The evidence gathered in the instance case establishes major frauds in so far as funds have gone out of the country and if not for the information obtained, would have remained....
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....operative conduct of the assessee during the proceedings before the Assessing Officer, the Committee is of the considered opinion that the offences are not eligible for compounding in view of Para 8(xiii) of the said guidelines too. 23.3. In view of the above , the Committee recommended that the assessee's petition filed on 9.3.2021 was clearly not eligible for compounding of offences in terms of Paras 8(x) and 8(xiii) of the guidelines dated 14.06.2019. 4. The facts of the case are that the petitioner is being prosecuted under Sections 276C and 277 of the Income Tax Act, 1961 in E.O.C.C.No.121 of 2011 before the Additional Chief Metropolitan Magistrate (Economic Offences - 1), Egmore, Chennai, pursuant to proceedings initiated under Section 148 of the Income Tax Act, 1961 against the petitioner. In the said proceeding, it was held that the petitioner had willfully and deliberately failed to file returns of income of Rs.2,71,87,222/- without reflecting the investment in the form of bank balance in a foreign bank account, thereby, attempted to evade tax. 5. The petitioner had earlier filed Crl.O.P.No.9065 of 2011 before this Court under Section 482 of the Criminal....
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....nabled others in large scale concealment of income in a systematic and planned way over a number of years like hawala entries, bogus trusts, bogus remittance etc. e) Offences committed by an assessee whose application for 'plea- bargaining' under Chapter XXI-A of 'Code of Criminal Procedure' is pending in a Court or a Court has recorded that a 'mutually satisfactory disposition' of such an application is not worked out. f) Where conviction order has been passed by a Court. g) Any other ground, which the CCIT/DGIT may consider relevant for not accepting the compounding petition, in view of the nature and magnitude of the offence. From the above, it is clear that assessee cannot claim as a matter of right that his offence should be compounded. Clause (g) of para 4.4 clearly states that the DGIT/CCIT may consider any other relevant ground for not accepting the compounding petition. The facts as obtained in the case of the assessee shows that he has cross border transactions and if not for the information received from a foreign Government, the Revenue would have been put to a great loss. No doubt, the assessee may claim certa....
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....oresaid application along with a copy of this order, the Committee shall consider the same, in the light of the observations made in this order and pass appropriate orders in accordance with law, within a period of 60 days there from. The Writ Petition stands allowed accordingly. Consequently, connected Miscellaneous Petition is closed. No costs." 10. Pursuant to the direction of this Court in W.P.No.3929 of 2014, the petitioner had filed a fresh application for compounding the offences before the Compounding Committee on 10.09.2019 for the second time. 11. The Compounding Committee once again rejected the application filed for compounding of offences on 06.11.2019 based on the CBDT Circular dated 16.05.2008 issued under Section 279(2) of the Income Tax Act, 1961. The reason given for not compounding of offences of the petitioner reads as under:- "5.2. The RCC considered all the material and records before it, in detail. The Assessing Officer reopened the case under section 147 after receiving information on moneys deposited in a foreign bank account and the assessee remained non-cooperative during the course of the assessment proceedings. While replying to the issue....
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....ght to be evaded. Further, the ITAT has also confirmed the CIT(A) order. 5.5 The Regional Compounding Committee also took into consideration the fact that a large sum was deposited in the foreign bank accounts and the period in which the offence was committed. The Indian rupee equivalent of the Euro currency at the time of deposit in foreign bank account was Rs.2,26,38,372/- in Asst. year 2002-03. This was a high amount at that point of time. 5.6 Moreover, the RCC deliberated on the following points: a) the assessee has cross border transactions, but for the information received from a foreign Government, the Revenue would have been put to loss. b) the evidence gathered in the instant case establishes major frauds in so far as funds have gone out of the country and if not for the information obtained, the monies would have remained untaxed. c) The assessee has neither produced the documents nor the account copy to disprove the contentions of the department. The attitude of the assessee was of total non-cooperation in the entire proceedings before Assessing Officer on the issue. 5.7 Considering the above fact and circumstances, t....
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....ated 14.06.2019, Section 279(1A) and other facts mentioned herein. 38.In my view, the petitioner's case deserves to be considered by the respondents in the light of the liberalised policy since the petitioner's application was entertained after the new guideline came into force. Also for the same reason, it cannot be construed that the respondents committed contempt of this court since the order did not specify the same. 39.The respondents shall pass appropriate orders within a period of three months from the date of receipt of a copy of this order in the light of the observation contained herein. Needless to state, petitioner shall also be heard in person or through authorised representatives/legal representatives. 40.The present Contempt Petition is dismissed with the above observations. No cost. Consequently, connected Sub Applications are also closed. 15. Though the above contempt petition was dismissed, there was a direction to the respondents to pass appropriate order in the light of the liberalized policy and the new guideline. Both the petitioner and the respondent filed Writ Appeals. 16. The Income Tax Department preferred an appeal before ....
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....e Supreme Court, in Prem Dass's case (supra) has reiterated this proposition as seen from the above extract. The Commissioner of Appeals, in his order dated 25.03.2014 in ITA, had taken note of the fact that in the penalty order, the Assessing Officer has not accorded any justification or reasons for levying the maximum penalty of 300% of the tax sought to be evaded and thereby was of the opinion that a minimum amount of penalty at 100% can be imposed. 8.6. The only objection to such a proposition from the Department is that the order passed by the Tribunal, reducing the penalty, has been challenged in Tax Case Appeal before this Court. It is not the case of the Department that this Court had stayed the order of the Commissioner of Appeals, as well as the Tribunal in the Tax Case Appeals. Just because the order reducing the penalty has been put under challenge in the Tax Case Appeals, it cannot be said that the order reducing the penalty itself has been kept under abeyance. In this background, it can only be said 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 den....
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....ny detail with regard to deposit or investment of money in the bank account, we do not find any reason to find fault with the authorities below that the balance as on 31.12.2001 is the money belonging to the asseesee for the year under consideration. 10.Now coming to the quatum of penalty, the Assessing officer levied penalty at 300%. However, the CIT(Appeals) restricted the same to 100%. This Tribunal is of the considered opinion that levy of penalty is the discretion of the Assessing Officer. The CIT (Appeals) has also power coterminous as that of the Assessing Officer. Therefore, when the lower authority exercised his discreation in restricting the penalty to 100% instead of 300% levied by the Assessing Offier, this Tribunal do not find any reason to interfere with the discretion exercised by the Lower Authority. Therefore, we do not find fault with the CIT(Appeals) in restricting the penalty to 100%. 24. Both the department and petitioner are in appeal before the division Bench of this High Court in TCA No. 216of 2018 and TCA No.875 of 2017 respectively. These appeals are pending on this date. 25. Prior to the Order dated 25.03.2014 in ITA No.12 of 2012-13 of CIT....
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....ceedings, be compounded by the [Principal Chief Commissioner or chief Commissioner or a [Principal Director General or] Director General." 30. An explanation to Section 279 reads as under: "For the removal of doubts, it is hereby declared that the power of the Board to issue orders, instructions or directions under this Act shall include and shall be deemed always to have included the power to issue instructions or directions (including instructions or directions to obtain the previous approval of the Board) to other income-tax authorities for the proper composition of offences under this Section." Thus, there is no bar for compounding the offences on payment of compounding fee on a plain reading of Sub -Section 2 to Section 279 of the Income Tax Act,1961. 31. Guidelines for compounding offences have been issued in the form of Circulars under Section 119(1) of the Income Tax Act,1961. At the time when the first application for compounding the offence was filed, Circular No.F.No.285/90/2008-IT(Inv.)/12 dated 16.5.2008 was in force. By the time , when W.P.No.3729 of 2014 and Contempt petition were disposed on 28.08.2019 and on 31.01.2020, respectively Circular beari....
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....ng circumstance for compounding offence on application filed under Section 279(2) of the Act. 39. In Y.P.Chawla and others Vs. M.P.Tiwari and another, (1992) 2 SCC 672, the Hon'ble Supreme Court observed as under: 9. This Court in Navnitlal C. Javeri v. K.K. Sen, Appellant Assistant C.I.T.[(1965) 1 SCR 909 : AIR 1965 SC 1375 : (1965) 56 ITR 198] , Ellerman Lines Ltd. v. C.I.T. [(1972) 4 SCC 474 : 1974 SCC (Tax) 304] and in K.P. Varghese v. ITO [(1981) 4 SCC 173 : 1981 SCC (Tax) 293] has held that circulars issued by the Central Board of Direct Taxes under Section 119(1) of the Act are binding on all officers and persons employed in the execution of the Act even if they deviate from the provisions of the Act. The High Court has discussed these judgments in detail and has distinguished them on plausible grounds. It is not necessary for us to go into this question because the legal position has altered to the advantage of the Revenue by the introduction of an Explanation to Section 279 of the Act by the Finance Act (2 of 1991) which has been made operative with effect from April 1, 1962. The Explanation is as under:- "Explanation.- For the removal of doubts, i....