TMI Blog2022 (2) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the respondent or in the impugned show cause notice that the criminal case in question is still pending. A circular is subordinate to the principle Act or Rules, it cannot override or restrict the application of specific provision enacted by legislature. A circular cannot travel beyond the scope of the powers conferred by the Act or the Rules. Circulars containing instructions or directions cannot curtail a statutory provision as aforesaid by prescribing a period of limitation where none has been provided by either the Act, 1961 or the Rules. The authority to issue instructions or directions by the Board stems from the second Explanation appended to Section 279 of the Act, 1961. It is well settled that the Explanation merely explains the main section and is not meant to carve out a particular exception to the contents of the main section. In the present case a specific limitation has been provided by para 7(ii) of the compounding guidelines contained in the circular dated 14.6.2019 in purported exercise of power under the second Explanation to Section 279(2) of the Act, 1961. The second Explanation merely enables the Board to issue instructions or directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice dated 16.11.2021 which is reproduced below: F.No.-CCIT/Alld./ITO(Hq.-Tech.)/Compounding(Pros.)/2021-22/3081 Date-16.11.2021 To, M/s G.P. Engineering Works R/o Kachhwa P.S. Kachhwa, Mirzapur Sir, Sub- Application for compounding of prosecution u/s 276C(1) of the I.T. Act in the case of M/s G.P. Engineering Works R/o Kachhwa, P.S. Kachhwa, Mirzapur relating to A.Y. 1990-91 for willful attempt to evade tax in accordance with the section 139(1) of the Income Tax Act, 1961-Regarding- Kindly refer to your application dated 22/04/2021 received in this office on 23/04/2021 on the subject mentioned above, for compounding of offence willful attempt to evade tax for A.Y. 1990-91. 2. After perusal of your aforesaid application, I am directed to state that it is noticed that prosecution was launched in your above mentioned case on 29.03.2000 and your application has been received on 23.04.2021 in this office. Thus you have filed compounding application after a delay of more than 20 years from the end of month in which complaint was filed. As per para 7(ii) of the compounding guidelines circulated vide F.No.285/08/2014-IT(Inv.V)/147 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6D, section 277, [section 277A] or section 278 except with the previous sanction of the [Principal Commissioner or] Commissioner or Commissioner (Appeals) or the appropriate authority: Provided that the [Principal Commissioner or] Chief Commissioner or, as the case may be, [Principal Director General or] Director General may issue such instructions or directions to the aforesaid income-tax authorities as he may deem fit for institution of proceedings under this sub-section. Explanation.- For the purposes of this section, appropriate authority shall have the same meaning as in clause (c) of section 269-UA.] [(1A) A person shall not be proceeded against for an offence under section 276C or section 277 in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him [section 270A or] under clause (iii) of sub-section (1) of section 271 has been reduced or waived by an order under section 273A.] [(2) Any offence under this Chapter may, either before or after the institution of proceedings, be compounded by the [Principal Chief Commissioner or] Chief Commissioner or a [Principal Director General or] Director General.] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons or directions by the Board stems from the second Explanation appended to Section 279 of the Act, 1961. It is well settled that the Explanation merely explains the main section and is not meant to carve out a particular exception to the contents of the main section (Sonia Bhatia Vs. State of U.P., (1981) 2 SCC 585 at page 597). The object of an Explanation to a statutory provision was elaborated by the Supreme Court in S. Sundaram Pillai Vs. V.R. Pattabiraman, (1985) 1 SCC 591, in which it was held as follows: 53. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is- (a) to explain the meaning and intendment of the Act itself, (b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve, (c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful, (d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax on the ground that there was inordinate delay of 9 years in filing of the application for compounding of offences by the assessee. While referring to para 8(vii) of the circular dated 23.12.2014, the Court observed that it did not stipulate a limitation period for filing the application for compounding. It gave a discretion to the competent authority to reject an application for compounding on certain grounds. Thus, the Court held that resort cannot be had to para 8 of the circular to prescribe a period of limitation for filing an application for compounding. The Court accordingly held as follows: 14. The Court finds nothing in Section 279 of the Act or the Explanation thereunder to permit the CBDT to prescribe such an onerous and irrational procedure which runs contrary to the very object of Section 279 of the Act. The CBDT cannot arrogate to itself, on the strength of Section 279 of the Act or the Explanation thereunder, the power to insist on a 'pre-deposit' of sorts of the compounding fee even without considering the application for compounding. Indeed Mr Kaushik was unable to deny the possibility, even if theoretical, of the application for compoundi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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