2026 (2) TMI 97

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Sections 276B(ii) and 278B of the Income Tax Act, 1961, relating to the alleged non-payment of Tax Deducted at Source (TDS) for the Assessment Year 1983-1984. The gravamen of the complaint pertained to the alleged non-payment of Tax Deducted at Source (TDS) for the Assessment Year 1983-1984, stemming from a search operation conducted as far back as 1983. 2. The procedural history of this litigation reveals a distressing trajectory of judicial inertia followed by misplaced zeal. The litigation is a vestige of a search operation conducted in 1983. In 1986, the Department filed approximately 54 criminal cases against the petitioner company and its directors. In 1988, a Division Bench of this Court stayed the proceedings pending the disposal....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ut as a tool of administrative harassment. 5. It is pertinent to note that despite multiple opportunities and repeated calls, the Opposite Party (Income Tax Department) has failed to appear or contest these proceedings. The record reflects that the Department has remained unrepresented on several prior occasions as well. In view of such prolonged litigative apathy from the Revenue, this Court deems it necessary to adjudicate the matter on its merits based on the available records, as the petitioners cannot be left in a state of perpetual legal limbo. 6. The legal rationale governing this case is rooted in the doctrine of compounding as envisaged under Section 279(2) of the Income Tax Act. Compounding is essentially a bilateral contrac....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... for proclamation and attachment, particularly after the company's appearance through an authorized representative and the full settlement of dues, indicates a malfunction of the judicial machinery as the process was being utilized as a tool of harassment. In fiscal offenses, where the exchequer has been satisfied through the recovery of the tax, interest, and compounding fees, the public interest in continuing a criminal prosecution evaporates. Any attempt to revive such a trial-especially against deceased parties-constitutes a gross abuse of the process of law. 11. This Court is of view that in the event, a statutory compounding fee is accepted by the Revenue during the pendency of a stayed criminal proceeding, the offence is settled. ....