Tax Authority Must Exercise Discretion When Considering Late Compounding Applications Despite 36-Month Limitation Period

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....The HC set aside the Chief Commissioner's rejection of petitioner's compounding application, which was dismissed solely for being filed beyond the 36-month limitation period. The Court held that CBDT guidelines of 2014 do not preclude the competent authority from exercising discretion in exceptional circumstances. The authority erroneously treated the guidelines as binding statute and failed to exercise any discretion, incorrectly concluding it lacked jurisdiction to entertain applications beyond the limitation period. This approach contradicted precedents from the SC and Madras HC. The matter was remanded for reconsideration in light of Vinubhai Dobaria, requiring evaluation of all facts and circumstances to determine if discretionary compounding is warranted.....