2021 (3) TMI 1170 - HC - Income Tax

Intra-court appeal against rejection of Contempt proceedings against the IRS officer / Deputy Commission of Income Tax - Prosecution for offence punishable under Section 276C - undisclosed deposit in a foreign bank account - appellant filed a petition under Section 279(1) of the I.T.Act for compounding the offence - HELD THAT - Admittedly the learned Contempt Court found that there is no merit in the contempt petition and in order to maintain an appeal under Section 19 of the 1971 Act the party on whom a punishment has been imposed alone could have approached the Court. In the instant case the appellant was the petitioner in the contempt petition and he sought for punishing the respondents for wilful disobedience of the order in the writ petition. The learned Contempt Court found that there is no violation rather the portions of the order passed in the writ petitions which were heavily relied on by the appellant were held to be observations made by the learned Writ Court. The informant who is the appellant before us does not have a right of filing an appeal under Section 19 of the 1971 Act or against an order refusing to initiate contempt proceedings or disposing of the application or petition filed for initiating such proceedings and he cannot be called an aggrieved party. Therefore the appellant could not have maintained an appeal under Section 19 of the 1971 Act. If such is the situation can the appellant invoke Clause 15 of the Letters Patent and seek for maintaining this intra-court appeal. The answer to the question should be answered in the negative and against the appellant. To put it plainly the appellant is seeking to indirectly achieve what he could not achieve in terms of the provisions of the 1971 Act. The facts in the decision in Ashis Chakraborty 1991 (12) TMI 289 - CALCUTTA HIGH COURT which was referred to in Tamil Nadu Mercantile Bank Shareholders Welfare Association 2008 (12) TMI 676 - SUPREME COURT is couched on an entirely different factual background and would not be applicable to the case of the appellant. That apart if the appellant s role is only that of an informant and upon information given the Court is convinced that no proceedings for contempt is required to be initiated then the appellant cannot be heard to say that he should be permitted to maintain an intra-court appeal against the finding of the Contempt Court especially when his role terminates the moment the information is placed before the Court. Intra-court appeal filed by the appellant is not maintainable and consequently the objection raised by the Registry is sustained and the writ appeal is dismissed as not maintainable in the SR stage itself.

Summary

Issues Involved:
1. Maintainability of the appeal under Clause 15 of the Letters Patent against the order dated 31.01.2020.
2. Interpretation and application of Section 19 of the Contempt of Courts Act, 1971.
3. Rejection of the appellant's compounding petition under Section 279 of the Income Tax Act, 1961.
4. Alleged wilful disobedience of the Court's order by the respondents.

Detailed Analysis:

1. Maintainability of the Appeal:
The primary issue was whether the appeal under Clause 15 of the Letters Patent was maintainable against the order dated 31.01.2020, which dismissed the contempt petition. The Registry questioned the appeal's maintainability, suggesting it was only permissible under Section 19 of the Contempt of Courts Act, 1971, if an order of punishment had been passed. The Court, after examining the arguments, concluded that the appellant could not maintain an appeal under Section 19 of the 1971 Act, as the contempt petition was dismissed without any punishment being imposed. The Court held that the appellant, acting as an informant, did not have the right to file an appeal against the refusal to initiate contempt proceedings, as established in the decision of Om Prakash Jaiswal vs. D.K.Mittal & Anr.

2. Interpretation and Application of Section 19 of the Contempt of Courts Act, 1971:
The Court elaborated on the scope of Section 19, emphasizing that an appeal under this section is maintainable only if a punishment order is passed. The Court referred to precedents, including J.S.Parihar vs. Ganpat Duggar & Ors. and Ashok Kumar & Ors. vs. Depinder Singh Dhesi & Ors., to reinforce that an appeal under Section 19 is not permissible when the contempt petition is dismissed without imposing punishment. The appellant's reliance on Tamil Nadu Mercantile Bank Shareholders Welfare Association (2) was found inapplicable due to differing factual circumstances.

3. Rejection of the Appellant's Compounding Petition:
The appellant's compounding petition under Section 279 of the Income Tax Act, 1961, was initially rejected by the first respondent on 15.01.2014, citing cross-border transactions, major fraud, and non-cooperation by the appellant. The Writ Court set aside this order and remanded the matter back to the Committee under CBDT guidelines, allowing the appellant to submit a fresh petition. However, the fresh compounding petition dated 10.09.2019 was again rejected by the first respondent on 06.11.2019 for similar reasons, including the appellant's non-cooperation and the substantial evidence of fraud.

4. Alleged Wilful Disobedience by the Respondents:
The appellant filed Contempt Petition No.2079 of 2019, alleging wilful disobedience of the Writ Court's order dated 28.02.2019. The Court, in its order dated 31.01.2020, found no merit in the contempt petition, stating that the learned Single Judge's directions were to pass appropriate orders in accordance with law, without any positive direction to allow the compounding petition. The Court observed that the appellant's role as an informant ended once the information was placed before the Court, and the appellant could not claim to be an aggrieved party entitled to maintain an appeal.

Conclusion:
The intra-court appeal filed by the appellant was dismissed as not maintainable. The Court upheld the Registry's objection, emphasizing that the appellant, as an informant, could not maintain an appeal under Section 19 of the Contempt of Courts Act, 1971, or under Clause 15 of the Letters Patent. The Court reiterated that the appellant's role terminated with the submission of information to the Court, and no further right to appeal existed in the absence of an order imposing punishment for contempt.