Gujarat H.C : The petitioners, by this application, have prayed that the order dt. 2nd Feb., 1994, passed by the Asstt. Director of Income-tax (Prosecution) II, Ahmedabad, vide Annexure ‘E’ calling upon the petitioner No. 1 to pay Rs. 47,658 as compounding fees, be quashed and set aside.

Counsel Appeared

K.A. Puj, for the Petitioners : Manish R. Bhatt, for the Respondent

JUDGMENT

B.C. PATEL, J. :

The petitioners, by this application, have prayed that the order dt. 2nd Feb., 1994, passed by the Asstt. Director of Income-tax (Prosecution) II, Ahmedabad, vide Annexure ‘E’ calling upon the petitioner No. 1 to pay Rs. 47,658 as compounding fees, be quashed and set aside. It appears from the record placed before us that for the years 1975, 1976 and 1977, the amount of tax was deducted. However, the same was not deposited in accordance with the provisions of the IT Act, 1961 (‘the Act’ for short). The petitioner No. 1 applied by letter dt. 17th April, 1989 (Annex. ‘B’), for compounding the offences, after the prosecution was launched under s. 276B of the Act. It appears that the Asstt. Director of Income-tax (Prosecution) accepted the request and by an order, dt. 2nd Feb., 1994, called upon the petitioner No. 1 to pay the compounding fees.

By the present application, it is also prayed to quash and set aside the sanction granted by the respondent No. 2 for filing criminal complaints against the petitioners, the same being ultra vires, illegal and void and further directing them not to proceed with the criminal complaints pending before the Addl. Chief Metropolitan Magistrate, Ahmedabad.

It is required to be noted that the petitioners moved the learned Single Judge by filing three different applications under s. 482 of the CrPC for quashing the proceedings, raising the contentions which are raised before us. Mr. Puj, the learned Advocate for the petitioners, fairly stated that he is not pressing the similar prayer made in this application, as different applications are preferred for quashing the proceedings. In our opinion, he has rightly not pressed the prayer made in this application as a substantive application is already pending before the Court and it will be open for him to raise all the contentions which are raised before us in this application.

So far as the compounding fees are concerned, Mr. Puj submitted that the amount of tax deducted is much less than the amount fixed for compounding the cases. In order (Annex. ‘E’), there is a reference that the compounding fees payable comes to Rs. 23,008, calculated at 5 per cent per month of the amount in default. Litigation expenses are also included. Considering these aspects, total amount of Rs. 47,658 was demanded. Our attention is drawn to a reported decision of the apex Court in the case of Y.P. Chawla & Ors. vs. M.P. Tiwari & Anr. (1992) 103 CTR (SC) 400 : (1992) 195 ITR 607 (SC) : TC 48R.1088. Sec. 279(2) of the IT Act, 1961 confers the power on the CIT to exercise the discretion in compounding offences. The CBDT has issued instructions from time to time. The

Explanation empowers the Board to issue orders, instructions or directions for the proper composition of offences under s. 279(2). Mr. Puj could not point out anything from the material on record that the CIT has failed to exercise his discretion under s. 279(2) of the Act in conformity with the instructions issued by the Board from time to time. If the powers are exercised in conformity with the directions issued by the CBDT, then, in absence of any material placed on the record, it would not be correct to say that the impugned order is bad in law and, hence, the application is required to be rejected. The application is, accordingly, rejected. Rule discharged with no order as to costs.

[Citation : 247 ITR 735]