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2018 (9) TMI 1322 - HC - Income TaxDetermination of compounding fee u/s 279 - Penalty under section 271(1)(c) - disallowance of claim of deduction for the provisions of income tax - Wilful attempt to evade tax - what would be the basic compounding charges that the petitioner must pay in order to avail the offer for compounding the offense? - Held that:- Section 279 of the Act pertains to the prosecution to be at instance of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner. Subsection (1) of section 279 provides that a person shall not be proceeded against for offenses under various sections including section 276C of the Act except with the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority. Subsection (2) of section 279 provides that any offense under this chapter may, either before or after institution of the proceedings be compounded by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or the Director General. In terms of such compounding powers, the CBDT has been issuing circulars for providing guidelines for compounding offenses under the Act. We are concerned with the latest guideline issued on 23.12.2014 issued by the CBDT. This circular contains detailed provisions and procedure for compounding offenses under the Act. When the CBDT circular refers to the amount sought to be evaded, it must be seen and understood in light of the provisions contained in section 276C(1) and in turn must be seen as amount sought to be evaded. 100% of tax sought to be evaded would be the basic compounding fees which in the present case would be ₹ 2,71,000/and not ₹ 8,70,000/as computed by the departmental authorities. The rest of the computation is consequential and automatic. The impugned communication dated 20.03.2018 is therefore set aside. The respondent shall carry out fresh computation of the petitioner's liability to pay compounding charges in terms of this order. We are informed that, to avoid any complication, the petitioner has under protest, paid up the entire amount of ₹ 10,49,000/as demanded by the department. Once such fresh computation is made, the excess would be refunded by the department to the petitioner latest by 31.10.2018.
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