TMI Blog2023 (7) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... elay in filing the application. Moreover, there is no restriction also on the number of applications that could be filed. The only requirement under sub-section (2) of Section 279 of the Act is that the complaint filed should be still pending which Mr. Suresh Kumar concurs with Mr. Walve, is still pending. Therefore, we dispose the petition with a direction to respondent no. 3 to consider and dispose petitioner s application dated 8th October 2015 within 8 weeks from today. Before passing any order which shall be a reasoned order dealing with every submission of petitioners, a notice of personal hearing shall be given which shall be communicated at least five working days in advance. - K.R. SHRIRAM FIRDOSH. P. POONIWALLA, JJ For the Petitioners : Mr. Sham Walve i/b Mr. Sameer Dalal and Mr. Hafeezur Rahman. For the Respondents : Mr. Suresh Kumar. (ORAL JUDGMENT PER K.R. SHRIRAM J.) : 1. Petitioner no. 1 is a Limited Liability Partnership firm. Petitioner nos. 2 and 3 are partners of petitioner no. 1. For the period of assessment year 2009-2010, petitioner no. 1 for various reasons did not deposit the TDS amount that it had deducted with the income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 278B of the Act. Matter was later transferred to Ballard Pier Court and then now it is at Mazgaon Court, Mumbai. 5. On 14th July 2014, petitioner no. 1 paid the entire compounding fees of Rs. 7,39,984/- as was indicated by respondent no. 3 during the personal hearing on 25th February 2013 and as indicated in the rejection order dated 17th July 2013. On 8th October 2015, petitioner filed a fresh compounding application (second application) before respondent no. 3 and also agreed to pay any further or additional compounding fees as may be directed. Almost three years later on 21st September 2018, petitioner received a letter dated 17th September 2018 annexing thereto copy of the order dated 17th July 2013. The letter dated 17th September 2018 reads as under: No:-CCIT(TDS)/Mum/HQ/Compounding matter/173/2018-19 Date: 17.09.2018 To, The Principal Officer, M/s. Sofitel Realty Pvt Ltd., Plot No. 1/838, Lady Jamshedji Road, Near Bank of Maharashtra, Mahim (W). Mumbai 400 016. Sir, Sub: Clarification and reply for the compounding of offences for A.Y. 2009-10-reg Ref: Your compounding application filed on 04.08.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mind since; a) there is no compounding application dated 4th August 2015, and b) how can an order of rejection be passed on 17th July 2013 when the application itself is dated 4th August 2015. Moreover, the order of 17th July 2013 refers to the first compounding application that petitioners had filed on 5th March 2012. It is, therefore, very clear that petitioners second compounding application dated 8th October 2015 has not been even considered or disposed. 8. In the affidavit in reply filed through one Shashi Shekhar Singh, Income Tax Officer (TDS)-2(2)(4) Mumbai, affirmed on 7th July 2023, it is stated that compounding application dated 8th October 2015 is barred by limitation of time as per the compounding guide lines dated 23rd December 2014 issued by respondent no. 4 where in paragraph 8(vii) it is provided that in respect of offences for which complaint had been filed with competent court 12 months prior to the receipt of the application for compounding, such offences generally not be compounded. According to affiant, since complaint had been filed on 20th August 2013 and the fresh compounding application dated 8th October 2015 was beyond the period of 12 months, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the authorized officer either before or after the institution of the proceedings. No limitation for submission or consideration of compounding application has been provided under sub-section (2) of section 279 of the Act, 1961. Therefore, the Central Board of Direct Taxes by a Guidelines can neither provide limitation for the purposes of sub-section (2) nor can restrict the operation of sub-section (2) of section 279 of the Act, 1961, in purported exercise of its power to issue Guidelines under the second Explanation appended to section 279 of the Act, 1961. It has not been disputed before us by the learned counsel for the respondent or in the impugned show cause notice that the criminal case in question is still pending. 10. A Guidelines is subordinate to the principle Act or Rules, it cannot override or restrict the application of specific provision enacted by legislature. A Guidelines cannot travel beyond the scope of the powers conferred by the Act or the Rules. Guideliness 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elhi High Court (enclosed as Annexure No. 5 to the writ petition), in response to the petitioner's application for compounding of offences under section 279(2) of the Act, 1961, he was sent a communication informing him the total compounding charges payable in his case which he was required to pay even for his application to be considered. This was purportedly in terms of a Guidelines dated 23-12-2013 issued by the Board containing guidelines for compounding of offence under clause 11(v). A writ petition was filed seeking quashing of the Guidelines dated 23-12- 2014 particularly the paragraph which set out the fee for compounding. In the reply filed to the writ petition, the Department, inter alia, stated that the compounding application under consideration was filed by the accused after about 10 years of filing the prosecution complaint; that para 8 (vii) of the revised guidelines for compounding dated 23-12-2014 provides that offences committed by a person for which prosecution complaint was filed by the Department with the competent court 12 months prior to receipt of the compounding application are generally not to be compounded. With that reply, the Department had also fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thodology and manner of composition of offences to clarify any obscurity or vagueness in the main provisions to make it consistent with the dominant object of bringing closure to such cases which may be pending interminably in our Court system. Such instructions or directions that are prescribed by the Explanation cannot take away a statutory right with which an assessee has been clothed, or set at naught the working of the provision of compounding of offences. 14. Considering the facts and circumstances of the case and the provisions of sub-section (2) of section 279 of the Act, 1961, the writ petition is allowed to the extent that compounding application of the petitioner cannot be rejected by the Income-tax Authority concerned on the ground of delay in filing the application. Accordingly, we also direct that compounding application of the petitioner shall be considered by the Income-tax Authority concerned in accordance with law. (emphasis supplied) 10. It will also be useful to reproduce paragraph 33 of the judgment of this court in Foot candles Film (P.) Ltd. Vs. Income Tax Officer (2023) 146 taxmann.com 304 (Bombay) , which reads as under: 33. Under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifies that the power to grant or refuse compounding is essentially discretionary and actually administrative. Therefore, the guidelines framed for its exercise under Section 279 are binding upon all Revenue Authorities including the Chief Commissioner. Learned counsel relied upon the Supreme Court decision in Asstt. CIT v. Velliappa Textiles Ltd. [2003] 263 ITR 550/132 Taxman 165 (SC) to highlight that compounding application cannot be concluded to as a matter of right but rather is subject to exercise of discretion. There is no quarrel with the proposition that power to accept a plea for compounding or refusal is essentially discretionary. The exercise, however, in each case is dependent upon the Authority who has to apply his or her mind judiciously to the circumstances of each case. The rejection of the petitioner's application in this case is entirely routed on the Chief Commissioner's understanding of the conditions of ineligibility of para 8(v) apply. In this Court's opinion, that view was based upon an erroneous understanding of law. Whilst guidelines no doubt are to be kept in mind specially while exercising jurisdiction, they cannot blind the authority from c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Board to issue orders, instructions or directions under this Act shall include and shall be deemed always to have included the power to issue instructions or directions (including instructions or directions to obtain the previous approval of the Board) to other income-tax authorities for the proper composition of offences under this section.... 13. The Supreme Court reversed the judgment of this Court on the facts of that case and held that the CBDT had the power to issue instruction to authorities, other than the Income Tax authorities, in the matter of compounding of offences. However, that judgment does not answer the principal question that arises for consideration in the present writ petition, viz., whether on the strength of the above Explanation to Section 279 of the Act the CBDT can issue instructions requiring an applicant seeking compounding of an offence, to pay upfront the compounding fee even before the application for compounding can be considered on merits? It would appear from para 11(v) of the impugned Guidelines dated 23rd December 2014 of the CBDT that where an applicant seeking compounding of the offences does not pay the compounding fee upfront, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
