TaxTMI 
TaxTMI 
2022 (9) TMI 856
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....urns under the FCR Act, for the financial years 2009-10, 2010-11 and 2011-12. The petitioner contends that the delay in filing an annual return is not an offence punishable under the FCR Act. It is also contended that since the FCR Act came into effect on 01.05.2011, the same cannot be applied to impute commission of an offence prior to that date. Controversy 2. The questions that fall for consideration before this Court are: (a) whether the impugned notification is violative of the provisions of the FCR Act; (b) whether the delay in filing of the returns is an offence punishable under the FCR Act; (c) whether the impugned order to the extent it advises the petitioner to pay the penalty for the financial years 2009-10, 2010-11 and 2011-12 is beyond out the scope of the FCR Act; and (d) if the answer to the aforesaid question is in affirmative, whether the impugned order to that extent it calls upon the petitioner to pay the penalty for a period prior to 01.05.2011 is sustainable. Context The relevant facts necessary to address the aforesaid controversy are as under: 2.1 The petitioner, a charitable trust, has filed the present peti....
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....ms of the impugned notification. Submissions 3. Mr Manoj V. George, learned counsel appearing on behalf of the petitioner, contended that Chapter-VIII of FCR Act contains provisions relating to 'Offences and Penalties' and there is no provision in the said chapter, which stipulates that the delay in filing an annual return is an offence. Section 41 of the FCR Act provides for compounding of certain offences. Since delay in filing the annual return is not an offence, the question of compounding the same does not arise. 4. Next, he submitted that the effect of the impugned notification was to treat non-filing of the annual return as an offence. Thus, applying the impugned notification to cover a period prior to its issuance is unconstitutional. He contended that an offence could not be created with retrospective effect and if the impugned notification was so construed, it was liable to be set aside as ultra vires to the Constitution of India. Reasons and Conclusion 5. The principal question to be addressed is whether the impugned notification violates the provisions of the FCR Act and / or is ultra vires the Constitution of India. 6. The petitioner's challenge to th....
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....f April within nine months of the closure of the financial year. (2) The annual return in Form FC-6 shall reflect the foreign contribution received in the exclusive bank account and include the details in respect of the funds transferred to other bank accounts for utilisation. (3) If the foreign contribution relates only to articles, the intimation shall be submitted in FC-7. (4) If the foreign contribution relates to foreign securities, the intimation shall be submitted in form FC-8. (5) Every report submitted under sub-rules (2) to (4) shall be duly certified by a chartered accountant. (6) Every such return in Form FC-7 shall also be accompanied by a copy of a statement of account from the bank where the exclusive foreign contribution account is maintained by the person, duly certified by an officer of such bank. (7) The accounting statements referred to above in the preceding sub-rule shall be preserved by the person for a period of six years. (8) A 'NIL' report shall be furnished even if no foreign contribution is received during a financial year." 9. It is clear from the above that the petitioner was required to....
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....under the FCR Act is not an offence, is rejected. The question as noted in paragraph 2(b) is answered in the affirmative. 17. The next aspect to be examined is regarding challenge to the validity of the impugned notification. It is relevant to refer to Subsection (1) of Section 41 of the FCR Act. The same reads as under: "41. Composition of certain offences.-(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act (whether committed by an individual or association or any officer or employee thereof), not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the Official Gazette, specify in this behalf." 18. Section 41 of the FCR Act expressly provides that any offence, other than an offence, which is punishable by imprisonment only, made prior to institution of any prosecution be compounded for such sums as the Central Government may specify. 19. The impugned notification has been issued by the Central Government in exercise of powers ....
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....gned order is set out below:- "Dated 12.3.2014. To MIZPAH CHARITABLE TRUST NALLUR, KAZGHIPPARA POST PALAKKAD PALLAKKAD (PALIGHAT) KEARALA-678557 SUBJECT:- Submission of annual reports under Foreign Contribution (Regulation) Act, 2010 for acceptance of foreign contribution. ______________________ Sir, Your organisation is registered with us bearing No.052890090 has submitted your annual return for the financial years mentioned below with the following details:- Financial Date of filing Return Foreign contrib. received. Delay Period in days Covered under Para Penalty Proposed. 2009-10 11.11.2013 2675838 180+866 3 566792 2010-11 11.11.2013 2648525 180+501 3 392926 2011-12 11.11.2013 3220844 180+135 3 228542 Total 1178260 Late submission of Annual Return is violation of the provisions of the foreign contribution (Regulation) Act, 2010. Thus, in terms of Rule 21 of the Foreign Contribution (Regulation) Act, 2011, you are advised to submit an application for compounding the offence u....
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....r prosecuted for committing an offence under the FCR Act or for not complying with any provisions of the FCR Act, prior to the same coming into force. Thus, clearly, the impugned order to the extent it calls upon the petitioner to pay the penalty for the delay in filing the Income Tax Return for the financial year 2009-10, is unsustainable. However, this Court finds no infirmity with the penalty stipulated for compounding the offence of failure to file the annual returns for the financial years 2009-10 and 2010-11. 28. It was contended on behalf of the petitioner that the financial year 2010-11 would not be covered under the FCR Act as the said financial year ended prior to 01.05.2011. However, the said contention is unmerited. It is relevant to bear in mind that the offence in question is of non-filing of an annual return. The FCR Act came into force on 01.05.2011. In terms of Rule 17 of the FCR Rules, the petitioner was required to file the return for the financial year 2010-11 on or before 31.12.2011 (which was after the FCR Act and the FCR Rules came into force). Thus, the petitioner's first default under the FCR Act occurred on account of its failure to file the returns wit....