2001 (11) TMI 31 - HC - Income Tax

Offences And Prosecution Belated Return Under Amnesty Scheme - I am of the view that the petitioner was not properly advised as regards filing of this writ petition challenging the order of the Commissioner of Income-tax and instead he should have participated in the proceedings before the competent court viz. CJM (EO) Jaipur by setting up any defence as admissible to him in accordance with law. - The learned Commissioner of Income-tax vide communication dated March 21 1991 addressed to the petitioner on the petitioner s application under section 279(2) had given option as regards compounding of the offence under section 276CC for the assessment year 1978-79 by depositing the penalty of Rs.99, 871 towards the composition charges in addition to the litigation expenses if any for which he was required to send a written communication under due intimation to the Department but he failed to do so. It was left open to the petitioner to file the return within fifteen days of receipt of the above. Hence I do not find any satisfactory explanation on the record as to whether the communication was at all complied with by the petitioner.

Summary

Issues:
Challenge to assessment orders for years 1975-76 to 1979-80, Penalty imposition under sections 139(8), 215, 271(1)(a), 273, Rejection of penalty waiver request by Commissioner of Income-tax, Prosecution under section 276CC, Proper course of action for challenging orders, Compounding of offense under section 276CC.

Analysis:
The petitioner-firm challenged assessment orders for the years 1975-76 to 1979-80 due to adverse effects on business from a money block in the U.S.A. The firm's income for these years varied, with losses in some years and profits in others. The Income-tax Officer assessed tax and imposed penalties and interest for the year 1978-79. The petitioner appealed to the Commissioner of Income-tax, who rejected the penalty waiver request citing non-satisfaction of conditions under section 273A of the Income-tax Act, 1961. Prosecution was initiated under section 276CC for failure to furnish returns on time.

The petitioner contended that the Commissioner disregarded section 273A conditions for penalty waiver. The return for 1978-79 was filed late, and penalty notices were issued, but the petitioner failed to respond. Financial constraints were cited for the delayed filing. The Commissioner held that the petitioner did not meet conditions for penalty waiver due to outstanding demand. The petitioner argued that the penalty exceeded the due amount and challenged the prosecution under section 276CC.

The Court noted that the petitioner should have pursued remedies under the Act and participated in court proceedings rather than directly filing a writ petition. Options for compounding the offense under section 276CC were provided to the petitioner, but compliance was not confirmed. The petitioner was advised to contest the pending criminal case and prosecution under section 276CC with a plausible defense and explore other legal remedies.

In conclusion, the Court disposed of both writ petitions, emphasizing the need for the petitioner to engage in legal proceedings and explore available remedies in accordance with the law.