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Issues:
1. Right to be heard before rejection of application for compounding under section 279(2) of the Income-tax Act, 1961. 2. Authority of the Central Board of Direct Taxes to issue orders for compounding offences. 3. Requirement of prior approval for compounding offences. 4. Discretionary power of Chief Commissioner or Director-General for compounding offences. 5. Obligation to hear the applicant for compounding. Analysis: 1. The judgment addresses the contention that a person has a right to be heard before the rejection of their application for compounding under section 279(2) of the Income-tax Act, 1961. The Explanation under section 279(3) outlines the power of the Central Board of Direct Taxes to issue orders for the proper composition of offences. The petitioner sought to compound offences under various sections of the Income-tax Act and the Indian Penal Code after prosecution was launched following a search in their premises. 2. The Central Board's approval is necessary for compounding offences, and the petitioner had agreed to pay the compounding fee. However, the Central Board declined to permit compounding, leading to the rejection of the petitioner's request. The judgment emphasizes that the Central Board's role in compounding offences is indirect, and there is no obligation for the Board to hear the applicant for compounding, as per the scheme and purpose of section 279. 3. The discretion to compound offences lies with the Chief Commissioner or Director-General, subject to obtaining prior approval from the Central Board. The judgment clarifies that compounding after prosecution is launched is an exception, not the rule. The authority to compound offences at a high level indicates that it is not a routine procedure but requires careful consideration of the facts and circumstances of each case. 4. The judgment highlights that the prosecution, once initiated, continues before the court, providing the accused with legal protections. Compounding offences to end prosecution is a discretionary power vested in higher authorities, emphasizing that compounding is not automatic but based on the assessment of the Chief Commissioner, Director-General, and the Central Board. 5. The petitioner contended that the Central Board had a duty to hear the applicant before rejecting the compounding application. However, the judgment concludes that there is no inherent right for the applicant to be heard by the Central Board. The decision references a previous case to distinguish the obligation to hear in different contexts, emphasizing that the purpose of section 279(2) is to enable the Revenue to accept compounding fees instead of prosecuting offenders, with the Central Board's role being indirect. Ultimately, the writ petitions were dismissed, and no costs were awarded.
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