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TMI Blog2023 (12) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... Contempt Petition / Appeal. It may thus be necessary to give a broad overview of the history of the litigation so far under the following heads: a. Assessment and Appellate Proceedings; b. Criminal Proceedings; c. Writ and Contempt Proceedings a. Assessment and Appellate Proceedings: (i) The respondent herein is an individual aged about 72 years and the Chairman and Managing Director of MRF Limited. He was assessed to tax with PAN AAEMP0314R. (ii) For the Assessment Year 2002-03, the assessee filed the return of income on 29.07.2002 declaring a total income of Rs. 45,48,850/- and the same was processed under Section 143(1) of the Act. (iii) Whileso, the assessing officer allegedly received information that the respondent had transferred through LGT Bank Liechenstein, substantial sums of Euro currencies in favour of Webster Foundation, a Trust, in which the respondent is stated to be one of the direct beneficiaries, apart from his father and brother. (iv) The assessment was sought to be reopened and notice under Section 148 of the Act for the assessment year 2002-03 was issued proposing to bring to tax income which has allegedly escaped assessment. The re-asssessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019, vide order dated 06.03.2019, it was declined. Importantly, reliance was placed by the respondent herein on the decision of the Hon'ble Supreme Court in Prem Dass v. ITO, (1999) 5 SCC 241 to contend that in view of the reduction of penalty from 300% to 100%, no prosecution can be launched or continued, which was however distinguished by the learned Judge, while disposing the Criminal Original Petition. The matter was challenged before the Apex Court and an order of stay of operation of the order dated 28.02.2019 passed by the learned Judge in Crl.O.P.No. 9065 of 2011 was granted by the Apex Court. c. Writ and Contempt Proceedings: i) The respondent filed a Writ Petition in W.P.No.3929 of 2014 before this Court challenging the order dated 15.01.2014, whereby the petition for compounding under Section 279(2) of the Act stood rejected. This Court found that in view of the reduction of penalty from 300% of the tax evaded to 100%, the decision in Prem Dass case would apply. Further, it was found that the respondent would be entitled to the benefit of Section 279(1A) of the Act. ii) Pursuant to the above directions of this Court in W.P. No. 3929 of 2014, the 4th Appellant her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication was entertained after the new guideline came into force. Also for the same reason, it cannot be construed that the respondents committed contempt of this court since the order did not specify the same." iv) A Writ Appeal in W.A.No. 967 of 2020 was filed by the revenue against the order of the learned Judge in Cont. P. No. 2079 of 2019 dated 13.01.2020 insofar as the learned Judge after finding that the Contempt Petition had no merits, proceeded to direct the authority to re-examine the application filed by the respondent herein, in the light of the fresh circular dated 14.06.2019, which provides for a more liberal policy. The Division Bench of this court found that the learned Judge directing the application to be considered in line with the subsequent circular was unsustainable inasmuch as the issue as to whether the previous or the later circular should be applied, was never an issue in W.P.No.3929 of 2014. In view thereof, the Division Bench was pleased to set aside the observations in Paragraphs 32-40 in the order of Contempt Petition No. 2079 of 2019, while granting liberty to file a fresh compounding application/petition to the respondent herein. The assessee / respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . " vi) Aggrieved by the above order of rejection, the respondent herien filed a Writ Petition in W.P. No.23800 of 2021 dated 13.04.2022 wherein the learned Judge had allowed the Writ Petition, finding that the case was fit for compounding inter alia for the following reasons: "41. Earlier, the petitioner faced, adjudication proceeding both under Section 148 and penalty proceeding under Section 279(2) of the Income Tax Act, 1961. The petitioner has paid the tax interest and the penalty imposed on him. Though, the petitioner has paid the penalty, the petitioner has filed an appeal against order of CIT (Appeals) confirming imposition of penalty to the extent of 100% of the tax. The Department is also in appeal as mentioned above. 42. The 2019 Circular which has been pressed against the petitioner in the impugned order makes it clear that there is fair amount of discretion vested with the fourth respondent. Even in the case covered by para 8, the phrase used is "offence normally not to be compounded". Thus, even these cases can be compounded. 43. In Prem Dass Vs. ITO, (1999) 5 SCC 241, the Hon'ble Supreme Court accepted the contention of the assessee that legislative intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Govindan, (2001) 251 ITR 78. 4. To the contrary, it is submitted by the learned counsel for the Respondent herein that the learned Judge in W.P. No. 3929 of 2014 had found that in view of the reduction in penalty from 300% to 100%, the respondent would be entitled to the benefit of Sections 279 (1A) of the Act. Further, it was also observed that there cannot be any impediment for the Department to compound the offence under Sections 276 and 276C of the Act. The learned Judge after making the above observations, which are conclusive of the respondent's right to compound, directed the Committee to dispose the applications in the light of the observations made and pass appropriate orders in accordance with law. It is thus submitted that the above order of the learned Judge does not give any room/discretion to the appellants to reject the compounding application. 4.1. It is further submitted that the above order of the learned Judge in W.P.No.3929 of 2014 has not been challenged by the revenue and has thus attained finality. That the above order in Writ jurisdiction not having been challenged, cannot be watered down in a Contempt proceedings. 5. Heard both sides. Perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educing 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. 8.7. The learned Standing counsel for the respondents made a faint attempt by placing reliance on paragraph 19 of the dismissal order dated 28.02.2019 passed in Crl.O.P.No.9065 of 2011 and submitted that Prem Dass's case (supra) 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." 9. As observed earlier, Section 279 (1A) is selfexplanatory 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has not been reduced or waived by an order under Section 273A. We do not agree with the aforesaid literal interpretation of the provisions of Section 279(1A) of the Act, when we find that the Commissioner of Income Tax(Appeal) has reduced the penalty. Further the tribunal has totally set aside the order, imposing penalty could not have been lost sight of by the High Court while considering the question whether the order of acquittal passed by the Sessions Judge has to be interfered with or not, particularly, when the gravamen of indictment relates to filing of incorrect return and making wrong verification of the statements filed in support of the return, resulting in initiation of penalty proceedings. Bearing in mind the legislative intent engrafted under Section 279(1A) of the Income Tax Act and the conclusion of the learned Sessions Judge, on appreciation of evidence not having been reversed by the High Court and the grounds of acquittal passed by the Sessions Judge not having been examined by the High Court, we have no hesitation to come to the conclusion that the High Court was not justified in interfering with an order of acquittal." 7. The observation in the contempt proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition was dismissed as being devoid of merit and now we have come to a conclusion that the direction could not have been issued by the Contempt Court, which was beyond the scope of the contempt petition. Bearing this in mind, we are inclined to give liberty to the respondent to file a fresh petition for compounding in which, he may canvass all issues available to him on law as well as on facts and orders and directions which according to them are in their favour as well as the decisions which he chooses to rely upon." 8.1. The above observation of the Division Bench in W.A. No. 967 of 2020 clearly indicates that the scope and purport of the observations in W.P. No. 3929 of 2014 were not examined in the above Writ Appeal. We had dealt with the order in the Contempt Petition and the order in appeal against the same in W.A. No. 967 of 2020 only to allay any apprehension rather ensure that the Division Bench has not in any manner touched on the observation/direction of the learned Judge in W.P. No. 3929 of 2014 insofar as it deals with the entitlement of the respondent herein to compound under section 279 (2) of the Act in respect of the offence under Sections 276C and Section 277 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isms which are sometimes levelled against the courts exercising contempt of court jurisdiction "that it has exceeded its powers in granting substantive relief and issuing a direction regarding the same without proper adjudication of the dispute" in its entirety can be avoided. This will also avoid multiplicity of proceedings because the party which is prejudicially affected by the judgment or order passed in the contempt proceeding and granting relief and issuing fresh directions is likely to challenge that order and that may give rise to another round of litigation arising from a proceeding which is intended to maintain the majesty and image of courts." ii) Sudhir Vasudeva v. M. George Ravishekaran , (2014) 3 SCC 373 : "19...... The Courts must not, therefore, travel beyond the four corners of the order which is alleged to have been flouted or enter into questions that have not been dealt with or decided in the judgment or the order violation of which is alleged. Only such directions which are explicit in a judgment or order or are plainly self-evident ought to be taken into account for the purpose of consideration as to whether there has been any disobedience or wilful violat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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