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2019 (9) TMI 59 - HC - Income TaxContinuance of Prosecution proceedings u/s 279 where penalty has been reduced - Compounding petition u/s 279 of the Income Tax Act, 1961 rejected - petitioner alleged to have concealed an amount as deposited in a Foreign Bank Account and is thereby prosecuted for offences under Section 276C of the Income Tax Act, 1961 - HELD THAT:- It is not the case of the Department that this Court had stayed the order of the Commissioner of Appeals, as well as the Tribunal in the Tax Case Appeals. Just because the order reducing the penalty has been put under challenge in the Tax Case Appeals, it cannot be said that the order reducing the penalty itself has been kept under abeyance. In this background, it can only be said that the petitioner would be entitled to the benefit of Section 279 (1A) of the Act and the mere challenge to the order reducing the penalty may not suffice to deny such a benefit. In view of these subsequent developments, there cannot now be any impediment on the part of the Department to compound the offences under Sections 276C and 277 of the Act. The learned Standing counsel for the respondents made a faint attempt by placing reliance on paragraph 19 of the dismissal order [2019 (3) TMI 1638 - MADRAS HIGH COURT] and submitted that Prem Dass's case [1999 (2) TMI 6 - SUPREME COURT] has been distinguished and held to be not applicable to the present case. Hence the learned Standing counsel would submit that, since the order of reduction of penalty was not passed under Section 273B of the Act, Section 279 (1A) of the Act is not applicable to the petitioner. As observed earlier, Section 279 (1A) is self-explanatory and the Hon'ble Supreme Court in Prem Dass’s case (supra) has further clarified that the assessee cannot be proceeded against for an offence when the penalty imposed on him has been reduced. Under Article 141 of the Constitution of India, the law declared by the Hon'ble Supreme Court shall be binding on all Courts, which includes the High Courts. As such, the decision in Prem Dass’s case (supra) would be binding on this Court and as such, with due respects to the observations made in this regard in paragraph 19 of the order passed by the learned Judge in [2019 (3) TMI 1638 - MADRAS HIGH COURT] is per incuriam and the observation made therein is not the proper appraisal and cannot be relied upon. Matter remanded back to the Committee prescribed under the CBDT Guideline No.7.1 (c) dated 16.05.2008.
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