2023 (7) TMI 1094
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.... 2. Petitioners received the show cause notice dated 30th November 2011 calling upon petitioners to show cause as to why prosecution against them be not lodged for offence under Section 276B read with Section 278B of the Income Tax Act, 1961 (the Act). On 26th March 2012, petitioners filed a compounding application dated 5th March 2012 (first application) in the prescribed format. On 25th February 2013, hearing notice was issued to petitioners and petitioners were given a personal hearing. Chief Commissioner of Income Tax, i.e., respondent no. 3 declined the prayer to compound the offence. This was because on 25th February 2013, during the personal hearing, petitioners' representative had agreed to pay the compounding fees of Rs. 7,39,984/- as calculated by CIT (TDS) Mumbai by 15th March 2013 but petitioners failed to deposit the compounding fees. The break up of Rs. 7,39,984/- is as under: Particulars Amt.(Rs.) Compounding fees 5,89,984/- Establishment Expense of accused assessee company 50,000/- Mr. Taslim A Chougule, Director, Co-accused 50,000/- Mrs. Dishad T Chougule, Director, Co-accused 50,000/- TOTAL 7,39,984/- 3. On 22nd April 2013, petitioner reque....
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....March 2013, over 10 years later, department has filed evidence before the Additional Chief Metropolitan Magistrate Court. Therefore, petitioner addressed a letter on 17th March 2013 to respondent no. 3 requesting him to provide a copy of order passed in the second application. In response petitioner received a letter dated 13th April 2023 which reads as under: "No. CCIT(TDS)/Mum/Compounding/173/2023-24/22 Date: 13.04.2023 To, The Principal Officer, M/s. Sofitel Reality Pvt Ltd. Plot No 1/838, Lady Jamshedji Road, Near Bank of Maharashtra, Mahim(W). Mumbai 400 016. Sir. Sub: Application for compounding of offences u/s 276B of the I.T. Act, 1961 in the case of M/s. Sofitel Reality Pvt Ltd. TAN:MUMS60078E for A.Y.2009-10 - Reg. Ref: Your compounding application filed on 04.08.2015 for AY 2009- 10. Kindly refer to the above. 2. In this regard, I am directed to state that your application mentioned above for compounding of offence u/s 276B of Income tax Act 1961 has been rejected on 17.07.2013. 3. As requested, a copy of the order passed u/s 279(2) of the I.T. Act, 1961 dated 17.07.2013 for AY 2009-10 is enclosed. The copy of the same had alrea....
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....affidavit in reply filed by Shashi Shekhar Singh. 9. We have to observe, in view of the comment made by the Income Tax Officer in the affidavit in reply, that sub-section (2) of Section 279 of the Act provides for compounding of any offence by the authorised officer either before or after the institution of the proceedings. There is no limitation provided under sub section (2) of Section 279 of the Act for submission or consideration of the compounding application. What is relied upon by the Income Tax Officer is the Guidelines issued by respondent no. 4, Central Board of Direct Taxes (CBDT). CBDT by the Guidelines cannot provide for limitation nor can it restrict the operation of sub section (2) of Section 279 of the Act. Mr. Suresh Kumar submitted that the Guidelines were issued under second explanation appended to Section 279 of the Act. The Guidelines is subordinate to the principal Act or Rules, it cannot override or restrict the application of specific provision enacted by legislature. The Guidelines cannot travel beyond the scope of the powers conferred by the Act or the Rules. It cannot contain instructions or directions curtailing a statutory provision by prescribing the ....
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....ion to a statutory provision is - (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and (e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same." 11. By means of para 7(ii) of the compounding guidelines circulated by F.No. 285/08 /2014-IT(Inv.V)/147 dated 14-6-2019, that has been quoted in the impugned notice dated 16-11-2021 the period for filing an application for compounding has been r....
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....ourt finds nothing in section 279 of the Act or the Explanation thereunder to permit the CBDT to prescribe such an onerous and irrational procedure which runs contrary to the very object of section 279 of the Act. The CBDT cannot arrogate to itself, on the strength of section 279 of the Act or the Explanation thereunder, the power to insist on a 'pre-deposit' of sorts of the compounding fee even without considering the application for compounding. Indeed Mr Kaushik was unable to deny the possibility, even if theoretical, of the application for compounding being rejected despite the compounding fee being deposited in advance. If that is the understanding of para 11(v) of the above Guidelines by the Department, then certainly it is undoubtedly ultra vires section 279 of the Act. The Court, accordingly, clarifies that the Department cannot on the strength of para 11(v) of the Guidelines dated 23rd December 2014 of the CBDT reject an application for compounding either on the ground of limitation or on the ground that such application was not accompanied by the compounding fee or that the compounding fee was not paid prior to the application being considered on merits." 13. H....
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....owing order :- (i) The impugned order dated 1st June 2021 passed by respondent no. 3-Chief Commissioner of Income Tax (TDS), Mumbai, on the application filed by the petitioners for compounding of an offence, is quashed and set aside. (ii) Consequently, we remand the application, under the provisions of section 279(2) of the Income-tax Act, of the petitioners back to respondent no. 3 to consider afresh on its own merits. (iii) Respondent no. 3 shall dispose of the application of the petitioners preferably within a period of thirty days from the date of receipt of this judgment. (iv) Until disposal of the application of the petitioners for compounding of offence, under sub-section (2) of Section 279 of the Income-tax Act, 1961, by respondent no. 3, the proceedings, being Criminal Appeal No. 127 of 2020, along with Criminal Miscellaneous Application No. 407 of 2020, pending before the City Sessions Court, Greater Mumbai, shall remain stayed. (v) The challenge to the validity of clause 7(ii) contained in Guidelines F. No. 285/08/2014- IT(INV.V)/147 dated 14th June 2019, as raised in the present petition, is left open in the event the petitioners are aggrieved by a fresh ....
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....at a closure report was in fact filed before the competent court. Having regard to all these facts, this Court is of the opinion that the refusal to consider and accept the petitioner's application under Section 279(2) cannot be sustained. The impugned order is hereby set aside." (emphasis supplied) 11. We should also note that a Division Bench of this Court in Durgeshwari Hi-Rise & Farms (P) Ltd. Vs. Chief Commissioner of Income Tax (TDS) (2019) 103 taxmann.com 292 (Bombay), was considering a matter where the assessee had filed more than one compounding application. Though court has observed that the order was being passed in peculiar facts of that case, we find that the court has observed that just because the first application was rejected for default, does not mean the second application should be rejected. 12. It will also be appropriate to reproduce paragraphs 12 to 15 of the judgment of Delhi High Court in Vikram Singh Vs. Union of India (2017) 80 taxmann.com 371 (Delhi) which read as under: "12. Mr. Rahul Kaushik, learned counsel for the Department, in seeking to justify the levy of the compounding fee in advance, placed reliance on the decision of the Supreme C....