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TMI Blog2024 (1) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... issued the notice dated 10.01.2020 calling upon the petitioner to furnish various details and information and to offer an explanation as to why prosecution under Section 276B of the Act should not be initiated against the petitioner in view of the failure to pay the tax deducted at source to the credit to the Central Government. The petitioner, by reply dated 27.01.2020 tendered the explanation as to why the prosecution should not be initiated under Section 276B of the Act as the petitioner paid the entire TDS liability along with interest and late filing fees in respect of delay in depositing the TDS for the year under consideration. It was further contended that it was not the case of failure of deposit TDS, but merely a case of delay in depositing TDS due sever liquidity problems and huge past losses. It was also submitted that the petitioner never had any intention to avoid payment of TDS, but the petitioner was prevented by reasonable causes from not depositing the TDS to the credit of Central Government. It was submitted that there was a total accumulated loss of more than 321 crores in past four years and therefore, the petitioner could not deposit the TDS. 4. The petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned only on the prior approval of the committee comprising of three officers of region concerned namely Principal CCIT, CCIT, Principal DGIT and DGIT having jurisdiction over the case and two other officers of the rank of Principal CCIT, CCIT, Principal DGIT and DGIT constituted by the Principal CCIT of the region. It was, therefore, submitted that as per para 10 of the guidelines, the impugned order passed by the Chief Commissioner of Income Tax (TDS) for compounding of offence of more than Rs. 10,00,000/- in case of the petitioner is contrary to para 10 of the guidelines of compounding. 7. It was further submitted that the case of the petitioner is covered by the provisions of Section 278AA of the Act dealing with the punishment not to be imposed in certain cases. It was further submitted that the reasons assigned in the impugned order on the ground that the petitioner has availed compounding for assessment years 2013-2014, 2014-2015, and 2016-2017 on three occasions on 21.05.2018, 16.06.2018 and therefore, as per para 8.1 of the guidelines of compounding 2019 category A offence under Section 276B of the Act are not generally compounded of more than three occasions. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected by the Competent Authority through speaking order." 9. It was submitted that petitioner has been consistently making in default in payment of tax deducted at source to the credit of the Central Government within prescribed time and therefore, such habit of the petitioner has been found to be a ground for rejecting the application for compounding as per the guidelines for compound of offences 2019. It was, therefore, submitted that the no interference be made in the impugned order as the petitioner cannot be said to have reasonable cause in absence of any explanation other than financial hardships is prevented it for performing its statutory duty of depositing public money in the government account within the prescribed time limit. It was submitted that the petitioner cannot be allowed to keep TDS collected by it for enhancing the working capital on habitual basis and later take advantage of compounding. It was, therefore, submitted that there is clear violation of the provisions of Section 276B of the Act and therefore, the petitioner is liable to be prosecuted for the default committed in not depositing the TDS within prescribed time limit without any reasonable cause. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility Conditions for Compounding All the following conditions should be satisfied for considering compounding of an offence: i. An application is made to the Pr. CCIT/CCIT/Pr. DGIT/DGIT having jurisdiction over the case for compounding of the offence(s) in the prescribed format (Annexure-1) in the form of an affidavit on a stamp paper of Rs.100/-. ii. The compounding application may be filed suo-moto at any time after the offence(s) is committed irrespective of whether it comes to the notice of the Department or not. However, no application of compounding can be filed after the end of 12 months from the end of the month in which prosecution complaint, if any, has been filed in the court of law in respect of the offence for which compounding is sought. iii. The person has paid the outstanding tax, interest (including interest u/s. 220 of the Act), penalty and any other sum due, relating to the offence for which compounding has been sought before making the application. However, if any related demand is found outstanding on verification by the Department, the same should be intimated to the applicant and if such demand including interest u/s 220 is paid within 30 days of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner as the petitioner committed default of failure to pay the tax deducted at source to the credit of the Central Government within prescribed time limit on the same ground, for which such offence was committed for earlier assessment years 2013-2014, 2015-2016 and 2016-2017. Therefore, the respondent-Assessing Officer could not have held that the petitioner has failed to furnish convincing reason for its default of failure to pay TDS to the credit of the Central Government within prescribed time limit except financial hardships. The financial hardships also remained was the cause for the offences committed for earlier assessment years, which were permitted to be compounded. It is true that the petitioner has committed default continuously for five years for non depositing the TDS and for which, the petitioner is liable for compounding charges para 12 of the guidelines. 19. The respondent authority therefore ought to have considered the case of the petitioner in terms of para 8.3 of the guidelines by putting stringent conditions for compounding the offence for the year under consideration after following the prescribed procedure of approval as para 10 of the guidelines. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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