TaxTMI 
TaxTMI 
2023 (12) TMI 1189
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....fore the Commissioner (Appeals) and Tribunal, Writ Petitions and Contempt Petition / Appeal. It may thus be necessary to give a broad overview of the history of the litigation so far under the following heads: a. Assessment and Appellate Proceedings; b. Criminal Proceedings; c. Writ and Contempt Proceedings a. Assessment and Appellate Proceedings: (i) The respondent herein is an individual aged about 72 years and the Chairman and Managing Director of MRF Limited. He was assessed to tax with PAN AAEMP0314R. (ii) For the Assessment Year 2002-03, the assessee filed the return of income on 29.07.2002 declaring a total income of Rs. 45,48,850/- and the same was processed under Section 143(1) of the Act. (iii) Whileso, the assessing officer allegedly received information that the respondent had transferred through LGT Bank Liechenstein, substantial sums of Euro currencies in favour of Webster Foundation, a Trust, in which the respondent is stated to be one of the direct beneficiaries, apart from his father and brother. (iv) The assessment was sought to be reopened and notice under Section 148 of the Act for the assessment ....
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....istrate (Economic Offence-I) to expedite the trial and conclude the same. Though a clarification was sought to the order dated 28.02.2019, vide order dated 06.03.2019, it was declined. Importantly, reliance was placed by the respondent herein on the decision of the Hon'ble Supreme Court in Prem Dass v. ITO, (1999) 5 SCC 241 to contend that in view of the reduction of penalty from 300% to 100%, no prosecution can be launched or continued, which was however distinguished by the learned Judge, while disposing the Criminal Original Petition. The matter was challenged before the Apex Court and an order of stay of operation of the order dated 28.02.2019 passed by the learned Judge in Crl.O.P.No. 9065 of 2011 was granted by the Apex Court. c. Writ and Contempt Proceedings: i) The respondent filed a Writ Petition in W.P.No.3929 of 2014 before this Court challenging the order dated 15.01.2014, whereby the petition for compounding under Section 279(2) of the Act stood rejected. This Court found that in view of the reduction of penalty from 300% of the tax evaded to 100%, the decision in Prem Dass case would apply. Further, it was found that the respondent would be entitled to the b....
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.... 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." iv) A Writ Appeal in W.A.No. 967 of 2020 was filed by the revenue against the order of the learned Judge in Cont. P. No. 2079 of 2019 dated 13.01.2020 insofar as the learned Judge after finding that the Contempt Petition had no merits, proceeded to direct the authority to re-examine the application filed by the respondent herein, in the light of the fresh circular dated 14.06.2019, which provides for a more liberal policy. The Division Bench of this court found that the learned Judge directing the application to be considered in line with the subsequent circular was unsustainable inasmuch as the issue as to whether the previous or the later circular should be applied, was never an issue in W.P.No.3929 of 2014. In view thereof, the Division Bench was pleased to set aside the observations in Pa....
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....'s judgement in the case of Prem Dass was distinguished. The Committee observed that the case of the assessee was fully covered by the decision of Hon'ble Madras High Court in the case of South India Surgical Co. cited supra. ... " vi) Aggrieved by the above order of rejection, the respondent herien filed a Writ Petition in W.P. No.23800 of 2021 dated 13.04.2022 wherein the learned Judge had allowed the Writ Petition, finding that the case was fit for compounding inter alia for the following reasons: "41. Earlier, the petitioner faced, adjudication proceeding both under Section 148 and penalty proceeding under Section 279(2) of the Income Tax Act, 1961. The petitioner has paid the tax interest and the penalty imposed on him. Though, the petitioner has paid the penalty, the petitioner has filed an appeal against order of CIT (Appeals) confirming imposition of penalty to the extent of 100% of the tax. The Department is also in appeal as mentioned above. 42. The 2019 Circular which has been pressed against the petitioner in the impugned order makes it clear that there is fair amount of discretion vested with the fourth respondent. Even in the case covered ....
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....Appeals) or the Tribunal cannot be treated as an order under Section 273A of the Act and would thus not be covered under Section 279(1A) of the Act. In any view, the decision in Prem Dass is distinguishable on facts. Further, reliance was placed on the judgment of this Court in South India Surgical Company v. K. Govindan, (2001) 251 ITR 78. 4. To the contrary, it is submitted by the learned counsel for the Respondent herein that the learned Judge in W.P. No. 3929 of 2014 had found that in view of the reduction in penalty from 300% to 100%, the respondent would be entitled to the benefit of Sections 279 (1A) of the Act. Further, it was also observed that there cannot be any impediment for the Department to compound the offence under Sections 276 and 276C of the Act. The learned Judge after making the above observations, which are conclusive of the respondent's right to compound, directed the Committee to dispose the applications in the light of the observations made and pass appropriate orders in accordance with law. It is thus submitted that the above order of the learned Judge does not give any room/discretion to the appellants to reject the compounding application. 4.1.....
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....e 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 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. 8.7. 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. As observed earlier, Section 279 (1A) is selfexplanatory and the Hon'ble Supreme Court in P....
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....n Prem Dass v. ITO, (1999) 5 SCC 241 "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 could not have been lost sight of by the High Court while considering the question whether the order of acquittal passed by the Sessions Judge has to be interfered with or not, particularly, when the gravamen of indictment relates to filing of incorrect return and making wrong verification of the statements filed in support of the return, resulting in initiation of penalty proceedings. Bearing in mind the legislative intent engrafted under Section 279(1A) of the Income Tax Act and the conclus....
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....ection issued by the Court in paragraphs 37 to 40 of the impugned order and all the observations, which were made by the Court in paragraphs 32 to 36, which have led to issuance of the impugned directions. Having held so, we need to take note of the submissions of the learned Senior Counsel for the respondent that the respondent should not be left without a remedy because his contempt petition was dismissed as being devoid of merit and now we have come to a conclusion that the direction could not have been issued by the Contempt Court, which was beyond the scope of the contempt petition. Bearing this in mind, we are inclined to give liberty to the respondent to file a fresh petition for compounding in which, he may canvass all issues available to him on law as well as on facts and orders and directions which according to them are in their favour as well as the decisions which he chooses to rely upon." 8.1. The above observation of the Division Bench in W.A. No. 967 of 2020 clearly indicates that the scope and purport of the observations in W.P. No. 3929 of 2014 were not examined in the above Writ Appeal. We had dealt with the order in the Contempt Petition and the order in appea....
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....y ambiguity in the directions issued therein then it will be better to direct the parties to approach the court which disposed of the matter for clarification of the order instead of the court exercising contempt jurisdiction taking upon itself the power to decide the original proceeding in a manner not dealt with by the court passing the judgment or order. If this limitation is borne in mind then criticisms which are sometimes levelled against the courts exercising contempt of court jurisdiction "that it has exceeded its powers in granting substantive relief and issuing a direction regarding the same without proper adjudication of the dispute" in its entirety can be avoided. This will also avoid multiplicity of proceedings because the party which is prejudicially affected by the judgment or order passed in the contempt proceeding and granting relief and issuing fresh directions is likely to challenge that order and that may give rise to another round of litigation arising from a proceeding which is intended to maintain the majesty and image of courts." ii) Sudhir Vasudeva v. M. George Ravishekaran , (2014) 3 SCC 373 : "19...... The Courts must not, therefore, tra....