Madras H.C : Rejecting the plea of the petitioner for reviewing the order passed earlier, rejecting the request of the petitioner for the compounding of the offence, under Section 276CC

High Court Of Madras

V.G. Paneerdas And Co. P. Ltd. vs. Secretary, Central Board Of Direct Taxes And Others

Section 276CC

Asst. Year 1987-1988

M. Jaichandren, J.

Writ Petition No.19136 of 2012 and M.P.No.1 of 2012

22nd August, 2012

Counsel appeared

S. Sridhar for the Petitioner.: Ramaswamy for the Respondent

ORDER

Heard the learned counsel for the petitioner, as well as the learned counsels appearing on behalf of the respondents. It has been stated that the petitioner company had filed a belated return of income, on 26.3.1990, for the assessment year 1987-1988. The petitioner company had shown the taxable total income as Rs.6,281/-, which had been revised as Rs.24,998/-, at the time of the assessment. Acting on the revised statement of taxable total income, the fifth respondent had computed the taxable total income at Rs.1,32,100/-, in the assessment passed, under Section 143(3) of the Income Tax Act, 1961, on 23.12.1990. In the said assessment order the expenses claimed by the petitioner had been disallowed and added back in the computation of taxable total income, for want of proper vouchers.

It has been further stated that the petitioner had filed an appeal against the assessment order passed by the fifth respondent, before the Commissioner of Income Tax (Appeals) I, Chennai, on 22.2.1991, with a prayer to condone the delay in filing the said appeal. By an order, dated 26.6.1991, in I.T.A.No.257/1990-1991, the first Appellate Authority had condoned the delay in filing the appeal and had granted partial relief to the petitioner. The said order had been given effect to, by the fifth respondent, on 3.7.1991, and the taxable total income had been revised as Rs.91,230/-. Thereafter, the fifth respondent had passed another order, on 22.10.1991, determining the taxable total income of the petitioner as Rs.55,600/-, by granting the relief, as ordered by the first Appellate Authority.

It has been further stated that the Joint Commissioner of Income Tax, Special Range VII, Chennai, the assessing officer had passed another order, for the assessment year 1987-1988, determining the taxable total income as Rs.NIL, after adjustment of the carried forward losses of the earlier years. It has been further stated that the parallel penalty proceedings, initiated under Section 271(1)(a) of the Income Tax Act, 1961, for the belated filing of the return of income, for the assessment year 1987-1988, was objected to by the petitioner. The 5th respondent, on considering the objections filed by the petitioner, dated 4.11.1991, had proceeded to levy a penalty of Rs.20,683/-, for the delay in the filing of the return, by the petitioner, by an order, dated 20.1.1991.

It has been further stated that the appeal filed by the petitioner, belatedly, challenging the levy of penalty, under Section 271(1)(a) of the Income Tax Act, 1961, for the assessment year 19871988, had been admitted by the Commissioner of Income Tax (Appeals) I, Chennai, and on considering the reasonable cause shown by the petitioner the said authority had granted the substantial relief, in his order passed in I.T.A.No.226/1991-1992. The said order had been given effect to, by the fifth respondent, on 24.8.1992.

It has been further stated that, due to the default committed by the petitioner company, in the filing of the return of income, for the assessment year 1987-1988, as per the provisions of Section 139(1) of the Act, it had been issued with a show cause notice, under Section 276CC of the Act. In the said show cause notice the petitioner had been asked to show cause as to why it should not be prosecuted, along with its directors, for willfully failing to file its return of income within the time prescribed by the statute. The prosecution, under Section 276CC of the Act, for the assessment year 1987-1988, had been sanctioned by the third respondent, vide his order, dated 20.3.1991. Accordingly, a complaint for an offence under Section 276CC of the Income Tax Act, 1961, had been filed, by the 5th respondent, before the Court of the Additional Chief Metropolitan Magistrate, Economic Offences I, Egmore, Chennai, in E.O.C.C No.160/1991. While so, the petitioner had moved an application, dated 10.10.1997, before the second respondent, for the compounding of the offence, under Section 276CC of the Act. The petitioner had also filed a letter of willingness to pay the compounding fee of Rs.58,730/-. In the meantime, the trial Court had adjudicated the complaint filed by the fifth respondent, vide its judgment, dated 31.12.1998. An appeal had been filed challenging the judgment of the trial court, dated 31.12.1998, before Principal Sessions Court, Chennai, by way of a Criminal Appeal, in C.A.No.15 of 1999, and the said appeal is still pending on the file of the Sessions Court, Chennai. However, during the pendency of the said criminal appeal the petitioner had approached the Chief Commissioner of Income Tax, Chennai, the second respondent herein, on 3.4.2000, in terms of Section 279(2) of the Income Tax Act, 1961, for compounding the offence, relating to the assessment year 1987-1988. A reminder had also been submitted in the office of the Chief Commissioner of Income Tax, Chennai, on 4.10.2002, with regard to the compounding of the offence. Another letter, dated 10.10.2003, had also been submitted for the said purpose.

It had been further stated that a petition, in Crl.O.P.No.39229 of 2003, had been filed before this Court to direct the respondents, to consider the request of the petitioner for compounding the offence, as per its representation made on 4.10.2002. This Court had passed an order, dated 14.11.2003, stating that the second respondent therein may consider the representation made by the petitioner, on 4.10.2002, and pass suitable orders, in accordance with law. Thereafter, the petitioner had filed a writ petition, before this Court, in W.P.No.33770 of 2003, for issuing a direction, directing the Chief Commissioner of Income Tax, Chennai, to consider and dispose of the petition, filed by the petitioner, for compounding the offence. By its order, dated 21.11.2003, this Court had directed the Chief Commissioner of Income Tax to consider and pass appropriate orders on the representation submitted by the petitioner, in accordance with law. Pursuant to the said direction, the Joint Director of Income Tax (Prosecution), Chennai, had passed an order, on 30.12.2003, rejecting the request of the petitioner for compounding the offence stating that the petitioner was a habitual defaulter in filing the returns of income for the assessment years, from 1974 -1975 to 1990-1991. Thereafter, the petitioner had filed a review petition before the Chief Commissioner of Income Tax, Chennai, to review and to reconsider the request of the petitioner for compounding the offence. The said petition had been disposed of, on 16.9.2011, stating that, as per paragraph 4.4 of the guidelines, dated 16.5.2008, compounding cannot be done in cases where a conviction order had been passed. However, it had been learnt, by way of the information obtained, under the Right to Information Act, 2005, that a number of applications had been entertained for the compounding of the offences, after conviction orders had been passed. In such circumstances, the petitioner has preferred the present writ petition, before this Court, under Article 226 of the Constitution of India.

The learned counsel appearing on behalf of the petitioner had submitted, inter alia, that there is no bar for considering the request of the petitioner for compounding the offence, even if the petitioner had been convicted. The learned counsel had further submitted that a criminal appeal has also been filed against the order of conviction and it is still pending. While so, this Court may be pleased to direct the first respondent to entertain the request of the petitioner for compounding the offence, in view of the decision of a Division Bench of this Court, in Chairman, Central Board of Direct Taxes and Others Vs. Umayal Ramanathan, (2009) 313 ITR 59. No counter affidavit had been filed on behalf of the respondents. However, the learned counsel appearing on behalf of the respondents had submitted that the petitioner had not applied for the compounding of the offence, as per the revised guidelines issued by the office of the Central Board of Direct Taxes, Department of Revenue, Ministry of finance, Government of India, dated 16.5.2008, for the compounding of offences, under the provisions of the Direct Tax Laws. In fact, the assessee should have made a written request for the compounding of the offence, in the prescribed proforma, as provided under paragraph 4.4.1 of the said guidelines. The petitioner should also have satisfied the other conditions contained in the said guidelines, for the compounding of the offence. Even though the guidelines prescribe that certain cases should not be compounded, normally, it is for the petitioner to show sufficient cause or reason to support his request for the compounding of the offence, based on the request made by the petitioner.

In such circumstances, this Court finds it appropriate to set aside the impugned order of the second respondent, dated 16.9.2011, rejecting the plea of the petitioner for reviewing the order passed earlier, rejecting the request of the petitioner for the compounding of the offence, under Section 276CC of the Income Tax Act, 1961, relating to the assessment year 1987-1988. The petitioner is permitted to submit an appropriate application, before the second respondent, in the format prescribed in the guidelines issued by the Central Board of Direct Taxes, Department of Revenue, Ministry of finance, Government of India, dated 16.5.2008, for the compounding of the offence. The petitioner shall submit such an application, within a period of four weeks from the date of receipt of a copy of this order. On receipt of the application to be submitted by the petitioner the second respondent shall consider the same and pass appropriate orders thereon, on merits and in accordance with law, as expeditiously as possible, after giving an opportunity of personal hearing to the authorized representative of the petitioner. The writ petition is ordered accordingly. No costs.

[Citation : 352 ITR 77]