TMI Blog2022 (9) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... ces in which the material information pertaining to prior conviction was not disclosed in the petition. After considering the reply filed by the petitioner, respondent No. 1 has passed a reasoned order rejecting the compounding application of the petitioner. No infirmity in the impugned order passed by respondent No. 1 in exercise of his jurisdiction. The petitioner has not disputed the binding nature of the CBDT Guidelines, 2019 and in fact, in the judgment of K.M. Mammen [ 2022 (6) TMI 30 - MADRAS HIGH COURT ] relied upon by the petitioner itself, the Court had noted that CBDT Guidelines, 2019 issued under Section 279 of the Act are strictly binding on the authorities. The Court therein observed that the 2019 Guidelines are in fact, intended to guide the officers to bring a closure of cases, where there are extenuating circumstances for compounding offences on application filed under Section 279 (2) - SeeSangeeta Exports (P.) Ltd. [ 2008 (4) TMI 307 - DELHI HIGH COURT ] The facts of the present case are similar to the case of Anil Batra [ 2011 (7) TMI 332 - DELHI HIGH COURT ] the petitioner in the said case i.e. the assessee was a repeat defaulter and had been successfully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of default received from the department. The details regarding due date of filing of the Income Tax Return ( ITR ) for the respective assessment years and the last date for payment of TDS in respect of each relevant assessment years are set out in the petition as under: Sr.No. AY Due date of filing the return of income u/s 139(1) of the Act Latest date on which tax deducted was deposited Date of filing the return 1. 2014-15 30-11-2014 16-10-2014 30-11-2014 2. 2015-16 30-09-2015 30-09-2015 30-09-2015 3. 2017-18 31-10-2017 24-05-2017 31-10-2017 The petitioner states that the TDS was deposited along with the interest payable on the delayed payment for the relevant financial years. The said fact is not disputed by the department. 4. The department issued a show cause notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fences committed by a person for which conviction order has been passed by a court of law under Direct Taxes Laws are normally not be compounded. 7. The petitioner furnished a reply dated 22nd November, 2021 to the aforesaid notice, explaining the reasons for non-mentioning of the conviction for the FYs 2009-10, 2010-11 and 2011-12. In this reply, it was stated that the order of conviction is under challenge before the Supreme Court in Special Leave Petition ( SLP ), being SLP (Crl.) No. 1576/2019, wherein the Supreme Court by its order dated 18th February, 2019, has stayed the operation of the order of conviction. It was further stated that the compounding application filed before the respondent No. 1 pertained to compounding of the FYs 2013-14, 2014-15 and 2016-17, which are entirely different from the Financial Years, which are the subject matters of the conviction orders pending before the Supreme Court, being FYs 2009-10, 2010-11 and 2011-12. 8. The respondent No. 1, after considering the aforesaid reply of the petitioner concluded that the petitioner No. 1 has misrepresented facts by not disclosing the existence of the order convicting the petitioner No. 1 for default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly rejected the compounding application on the ground of conviction for FYs 2009-10, 2010-11 and 2011-12: (i) Chairman, Central Board of Direct Taxes v. Smt. Umayal Ramanathan reported in [2009] 313 ITR 59 (Madras) [06-04-2009]; (ii) K.M. Mammen v. Principal Commissioner of Incometax reported in [2022] 139 taxmann.com 57 (Madras); (iii) V.A. Haseeb Co. (Firm) v. Chief Commissioner of Income-tax, TDS Chennai reported in [2016] 75 taxmann.com 57 (Madras); (iv) The Government of India, Ministry of Finance, Department of Revenue, (Central Board of Direct Taxes) Another. v. R. Inbavalli reported in [2018] 400 ITR 352 (Mad). 13. The petitioner has further relied upon the following judgments to contend the pendency of SLP against the conviction for FYs 200910, 2010-11 and 2011-12 is a continuation of the original proceeding and therefore until the SLP is decided finally, the petitioner herein cannot be held to be a convict for the purpose of Para 8.1 (iii) of the CBDT Guidelines, 2019: (i) Babu Lal Vs. Hazari Lal Kishori Lal and Ors. in Special Leave to Appeal (Civil) No. 7771 of 1981, decided on 29th January, 1982; (ii) P.L. Kantha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Madras High Court in each of the four judgments relied upon by the Petitioner for this proposition. 16.1. In the judgment of Smt. Umayal Ramanathan (supra), the Division Bench of the Madras High Court adjudicated upon the eligibility of an assessee who has been convicted to seek compounding of the said offence under Section 279(2) of the Act, during the pendency of the appeal against the said conviction. The department had contended that an application for compounding under section 279(2) of the Act could be maintained either before or after institution of proceedings and not after the assessee has been convicted by the criminal Court. The Madras High Court rejected the contention of the department and held that an assessee is eligible to apply for compounding of the offences to the department, during the pendency of an appeal from the said conviction. The Court interpreted the expression proceedings as it appears in Section 279(2) of the Act and held that during the pendency of appeal arising from a conviction, an application filed by assessee for compounding the offences may be entertained by the department. Section 279(2) of the Act reads as follows: 279 (2) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the same assessment years for which the assessee had been convicted. The Court upon examination of the file of the department found that all authorities below had uniformly recommended the case of the assessee for consideration of compounding, in view of her age, illness and circumstances encountered by her during the relevant period. 16.3.1. The Division Bench of the Madras High Court held that the power of compounding is exercisable by competent authority, even while an appeal against conviction of assessee is pending. Since, the only reason for rejecting the assessee s compounding application was assessee's conviction, the Court held that the clause 4.4 (f) of the CBDT Guidelines, dated 16th May 2008 (then in force), which enlisted that if a conviction order has been passed by the criminal Court, the prosecution complaint should normally not be compounded cannot come in the way of the competent authority to consider the compounding application of the assessee, following the precedent of Smt. Umayal Ramanathan (supra). 16.4. In the case of K.M. Mammen (supra), the Single Judge of the Madras High Court was concerned with the dismissal of the application of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court are not placed on record. The petitioner No. 1 has placed on record the orders of the trial Court and appellate Court pertaining to its conviction for default for the FY 2011-12. The order passed by the High Court dismissed three (3) revision petitions presumably against the orders of conviction for the aforesaid three financial years. 21. Upon inquiry to the petitioner with respect to the steps taken by the petitioner for compounding the said conviction for FY 2009-10, 2010-11 and 2011-12, the petitioner states that he has not filed any application for compounding of the said offences. 22. It is noted that though, the complaint under Sections 276B and 278B of the Act was instituted on 11th March, 2016, for defaults committed in FY 2011-12 and a show cause notice for the said default was issued by department on 28th July, 2014, the petitioner No. 1 yet again committed default in depositing of TDS for the subsequent FYs 2013-14, 2014-15 and 2016-17. Details of notices issued for defaults of FYs 2009-10 and 2010-11 are not on record. 23. The petitioner herein therefore continued to default in deposit of TDS, despite having received a show cause notice dated 28th July, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the precise purpose for which he seeks suspension of the conviction and obtain a general order of stay and then contend that the disqualification has ceased to operate. 28. The SLP is pending and the said petitions may either be allowed or dismissed. There is no presumption that the petitions will be allowed in favour of petitioners. Further from a perusal of the stay order dated 18th February, 2019, passed in the SLP, it is not evident that the Supreme Court was made aware of the subsequent defaults of the petitioner or the disqualification which attaches to the petitioner while seeking compounding for subsequent years under the applicable CBDT guidelines for compounding. Thus, the stay of the order dated 15th October, 2018, by the Supreme Court, cannot be urged by the petitioner for contending that it is not a convict for the purpose of eligibility under the CBDT guidelines, 2019. Therefore, for the petitioner to contend that the competent authority must not concern itself with the orders of conviction for FYs 2009-10, 2010-11 and 2011-12 within the parameter of para 8.1 (iii) of the CBDT Guidelines, 2019 while considering the compounding application for the subsequent assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the petitioner. 33. We do not find any infirmity in the impugned order passed by respondent No. 1 in exercise of his jurisdiction. The petitioner has not disputed the binding nature of the CBDT Guidelines, 2019 and in fact, in the judgment of K.M. Mammen (supra), relied upon by the petitioner itself, the Court had noted that CBDT Guidelines, 2019 issued under Section 279 of the Act are strictly binding on the authorities. The Court therein observed that the 2019 Guidelines are in fact, intended to guide the officers to bring a closure of cases, where there are extenuating circumstances for compounding offences on application filed under Section 279 (2) of the Act. This was also the view taken by the learned predecessor Division Bench of this Court in Sangeeta Exports (P.) Ltd. v. Union of India reported in [2008] 173 Taxman 21 (Delhi), wherein, this Court has observed as under : 28. As clear from the facts of the case, the Central Board of Direct Taxes has rejected the application for compounding, hence the Chief Commissioner of Income-tax is rejecting the application of the petitioners for compounding. Reading section 297(2) of the Act along with the Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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