TaxTMI 
TaxTMI 
2025 (12) TMI 1231
X X X X Extracts X X X X
X X X X Extracts X X X X
....pliance with the order of the Hon'ble Supreme Court dated 05.03.2025 in S.L.P. (Crl.) No. 6179 of 2019 and S.L.P. (C) No. 7047 of 2024. 4. By the impugned communication the Petitioner has been asked to pay a sum of Rs. 1,29,88,765/- as compounding charges. Operative portion of the impugned communication is extracted as below:- I am directed to inform you that the compounding charges determined by the Assessing Officer, in accordance with the Guidelines dated 17.10.2024, have been approved by the Director General of Income Tax (Investigation), Tamil Nadu & Puducherry. As per the compounding Guidelines dated 17.10.2024 the compounding charges have been determined as below:- Income sought to be concealed as per order u/s 143(3) r.w.s 147 dated 29.12.2009 Rs.2,26,38,372/- Tax thereon @ 30% and Surcharge @ 2% Rs.69,27,342/- Compounding Fees @ 125% of tax sought to be evaded on unreporting income u/s 276C(1) Rs.86,59,177/- Compounding Fees @ 50% of tax sought to be evaded due to offence committed u/s 277* Rs.0/- Increased compounding charges as per para 10.7 of the guideline** Rs.43,29,588/- Compounding Charges payable now Rs.1,29,88,765/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 60 days there from. The Writ Petition stands allowed accordingly. Consequently connected Miscellaneous petition is closed. No costs. 7. The Petitioner therefore filed a fresh application on 10.09.2019 for compounding of offences under Section 279(2) of the Income Tax Act, 1961. However, the Compounding Committee consisting of the three Respondents rejected the said application vide order dated 06.11.2019. The reasons given for rejecting the application was based on the CBDT guidelines dated 16.05.2008. It is reproduced below:- 5. Acceptance or Rejection of the petitions: 5.1 The assessee's Compounding Petition was considered by the RCC in line with the Compounding guidelines dated 16.05.2008. As per Compounding guidelines, the following has been mentioned in para 4.4: "Cases not to be compounded: Notwithstanding anything contained in the guidelines, the following cases should normally not to be compounded a) In case of a non technical offence, offences other than the first offence as defined in para 8 below. b) Offences involving major fraud or scam or misappropriation of government funds or public property. c) Offences ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rom the assessee by the Assessing Officer on 10.11.2009. Some of the intercepts are reproduced here under: Q.17 There is a Trust by name M/s. Webster Foundation. Are you reminded of anything when you hear it. Ans: I am not aware of such Trust or Foundation. Nothing comes to my mind further in the sworn statement, assessee also stated that Ans-18: The signature appears to be mine but I have never signed any such document. Ans-21: I am not aware of the existence of Webster Foundation. 5.3 The above replies by the assessee clearly show that the assessee gave false statement under oath before the Assessing officer. The information about the foreign bank account of the assessee was authentic since the same was received from the Govt of Germany. Thus it is clear that the assessee was hindering the course of investigation and gave false information. 5.4 The mens rea behind the offence, committed by the assessee, is clear and this stand is supported by the fact that the CIT (A) confirmed the penalty order under section 271(1)(c) of the Income Tax Act, though the penalty was restricted to 100% instead of 300% of the tax sought t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urably in favour of the petitioner subject to payment of appropriate compounding fees by the petitioner. I am therefore of the view that the impugned order is liable to be quashed and the application filed by the petitioner should be re-examined by the respondents in the light of the liberalised policy of Central Board of Direct Taxes in its clarification dated 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 police 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. C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... light of the above, this writ appeal is allowed and the directions issued in paragraphs 37 to 40 are set aside and the observations made in paragraphs 32 to 36 leading to the directions are vacated. Liberty is granted to the respondent to file a fresh petition under Section 279 of the I.T. Act before the first appellant within a period of 30 days from the date of receipt of a copy of this judgment and the same shall be considered in accordance with law within a reasonable time not later than 90 days from the date on which the petition is presented in full form. No costs. Consequently, connected miscellaneous petition is closed. 12. Pursuant to the order dated 11.02.2021 in W.A.No. 967 of 2020, the Petitioner filed a 3rd compounding application on 05.03.2021 under Section 279 of the Income Tax Act, 1961 before the 4th Respondent. The 4th Respondent with the approval of Regional Compounding Committee vide order dated 30.08.2021, rejected the said compounding application filed by the Petitioner on 05.03.2021. The said order dated 30.08.2021 was subjected to a challenge before this Court once again in W.P. No. 23800 of 2021. 13. By an order dated 13.04.2022, the Writ Petition in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 a fair amount of discretion vested with the fourth respondent. Even in the case covered by para 8, the phrase used is "offence normally not to be compounded". Thus, even these cases can be compounded. 43. In Prem Dass Vs. ITO, (1999) 5 SCC 241, the Hon'ble Supreme Court accepted the contention of the assessee that legislative intent of Section 279(1A) of the Income Tax Act, 1961 has to be kept in mind where there is a reduction of penalty. This aspect has also not been kept in mind by the fourth respondent while passing the impugned order. 44. Further by prosecuting a septuagenarian, who is also an industrialist will serve no purpose. The petitioner entitled for buying a peace subject to his agreeing to pay ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 279(2) of the Act in respect of the offences under Sections 276C and 277 of the Act. We say so inasmuch as in our view the respondent's entitlement to compound in terms of Section 279(2) of the Act stands resolved conclusively by the order of the learned Single Judge in the previous round of litigation in W.P.No.3929 of 2014 dated 28.08.2019 the same having not been challenged by the revenue, is bound by it, nor is it open to them to water down those directions/observations in the Contempt jurisdiction. Thus, the order of the learned Single Judge does not warrant any interference. 15. It is in this background, a further appeal was filed by the Respondents before the Hon'ble Supreme Court in S.L.P.(C) No. 7047 of 2024, which came to be dismissed on 05.03.2025 with the following observations:- S.L.P. (Civil) No.7047 of 2024:- Considering the peculiar facts of the case, we are of the view that interference under Article 136 of the Constitution of India cannot be made. The Special Leave Petition is accordingly dismissed. However, the questions of law, if any, are kept open. In terms of the directions issued by the learned Single Judge i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of offences under Section 279 of the Income Tax Act, 1961. 21. The learned counsel for the Respondent drew attention to the decision of the Hon'ble Supreme Court in Y.P.Chawla Vs. M.P.Tiwari, [1992] 195 ITR 607 (SC); [1992] 63 Taxman 538 (SC). It is submitted that the Hon'ble Supreme Court held as under:- "The Explanation is in the nature of a proviso to Section 279(2) with the result that the exercise of power by the Commissioner under the said section has to be subject to the instructions issued by the Board from time to time. The Explanation empowers the Board to issue orders, instructions or directions for the proper composition of the offences under section 279(2) and further specifically provides that directions for obtaining the previous approval of the Board can also be issued. Reading section 279(2) along with the Explanation, there is no matter of doubt that the Commissioner has to exercise his discretion under section 279(2) in conformity with the instructions issued by the Board from time to time." 22. The learned counsel for the Respondent submits that a new application was filed by the Petitioner for compounding on 05.03.2021 pursuant to the directions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2019, which was directed to be applied, by the Court vide its order dated 31.01.2020 in Cont.P.No. 2079 of 2019. However, the Respondents were aggrieved by it and filed W.A.No.967 of 2020. The Hon'ble Division Bench by its order dated 11.02.2021 ordered fresh application to be filed which was to be considered in the light of Circular in F.No.285/90/2008-IT(Inv.)/12 dated 16.5.2008 as was in force when the first application was filed on 25.03.2011. 28. Therefore, the question of imposing the revised Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT(Inv.V) in the light of the Explanation to Section 279(6) of the Income Tax Act, 1961 was not available to the Respondents. Pressing of Explanation to Section 279(6) of the Income Tax Act, 1961, in the light of the revised Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT(Inv.V) cannot be countenanced in the light of Order dated 13.04.2022. 29. Explanation to Section 279(6) merely states that the power of the Board to issue orders, instructions or directions under the Act includes and shall always be deemed to have included the power to issue instructions or directions (including instructions or direct....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idelines. Paragraph 3.2 of the new compounding Guidelines dated 17.10.2024 bearing F.No.285/08/2014-IT(Inv.V) is reproduced for the sake of clarity:- 3.2 Applications may also be filed again, in case applications under earlier guidelines were rejected only on account of curable defects such as non-payment of outstanding tax, interest, penalty, or any other sum related to the offence, filing of application in incorrect proforma, mention of incorrect assessment year/financial year or section under which offence has been committed, non-payment or short payment of compounding charges, non-submission of undertaking regarding withdrawal of appeals, etc. Credit for the payment already made shall be given against the compounding charges to be paid under these Guidelines. Further, it is clarified that those applications rejected in the past on merits by the Competent Authority shall not be reconsidered, under this provision. 34. Only if a new application was file independently in terms of Paragraph 3.2 of the new compounding Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT(Inv.V), the respondents would have been justified in imposing the content of it, in the li....
X X X X Extracts X X X X
X X X X Extracts X X X X
....udgment holding an impost or tax to be invalid, so that a validation statute can remove the defect pointed out by the judgment amending the law with retrospective effect and validate such impost or tax. But a judgment giving effect to the right of the petitioners to annual cash bonus under the Settlement by issuing a writ of mandamus directing the Life Insurance Corporation to pay the amount of such bonus. 39. The Court further held, if by reason of retrospective alteration of the factual or legal situation, the judgment is rendered erroneous, the remedy may be by way of appeal or review, but so long as the judgment stands, it cannot be disregarded or ignored and it must be obeyed by the Life Insurance Corporation. 40. In fact, the Court held that the amendment to an Act would not take away the basis of the judgment of the Court. It categorically held that the Orders of the Court cannot be touched by an ordinary Act of Parliament. Since even an Act of the Parliament cannot dilute the decision of the Courts, the issuance of revised circulars/guidelines viz., Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT(Inv.V) either taking away such rights or imposing more....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aw, where the Constitution reigns supreme. Therefore, it is inconceivable as to how the revised Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT(Inv.V) could have been applied. 45. In his dissenting view, his Lordship Hon'ble Mr. Justice. Hemant Gupta, however, observed as under:- "182. The judgment in Virender Singh Hooda is quite different. The appellants before this Court were successful in an earlier round of litigation and were thus appointed. It was thereafter that the Act in question was enacted with retrospective effect. The appellants were falling in the first category out of three category of candidates such as: (i) Those who had been appointed in implementation of decision in Hooda and Sandeep Singh's cases before passing of the impugned Act; (ii) Those, though not so appointed, who have judgments of the High Court passed in their favour relying upon Hooda and Sandeep Singh's cases, and claim a right to appointment but would be deprived of it if the validity of the Act is upheld and on that basis the judgments of the High Court upturned; and (iii) Those, who would be covered by law laid down in Hooda's case ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Sugars Ltd., [(1997) 1 SCC 326], this Court held that whenever any amendment is brought in force retrospectively or any provision of the Act is deleted retrospectively, in this process rights of some are bound to be affected one way or the other. In every case, it cannot be urged that the exercise by the legislature while introducing a new provision or deleting an existing provision with retrospective effect per se shall be violative of Article 14 of the Constitution. If that stand is accepted, then the necessary corollary shall be that legislature had no power to legislate retrospectively, because in that event a vested right is affected." 49. In Medical Council of India vs. State of Kerala and Others, (2019) 13 SCC 185, the Hon'ble Supreme Court held that, no doubt it is open to legislature to change the law in general by changing the basis but it is not open to set aside an individual decision inter partes and thus affect their rights and liabilities alone. Such an act on the part of the legislature amounts to exercising judicial power cannot be defiance to judicial decision. Once judgment has attained finality and is binding, it cannot be overruled by legislative measure. S....