2011 (2) TMI 354 - HC - Income Tax

Compounding offence u/s 279(2) - Held that - there is provision for compounding of offence is not a ground for issue mandamus to compound the offence - It is not the case of the petitioners that the impugned order is mala fide or perverse - Discretionary powers of a statutory authority can be interfered with only on the ground of factual or legal mala fides or perversity - Admittedly the petitioners stand convicted - Even though after conviction also, power can be exercised to compound the offence, but this by itself cannot be a ground for issue of mandamus sought in the petition - Neither any legal right of the petitioner is shown to have been infringed nor it is shown that the concerned authority has acted illegally - Hence, the petition is dismissed.

Summary

Issues:
Petition seeking quashing of order rejecting application for compounding of offence under Income-tax Act, 1961.

Analysis:
The petitioners sought to quash an order rejecting their application for compounding of an offence under the Income-tax Act, 1961. The petitioners had been convicted for alleged wilful concealment of income, and their appeal was pending in the Appellate Court. The trial court had convicted the petitioners after the declared income was not accepted. Subsequently, the petitioners applied for compounding of the offence to the Chief Commissioner of Income-tax, Chandigarh, which was rejected based on an earlier order and the conviction. The petitioners argued that since the offence could be compounded even after conviction, the rejection was against the law.

The court analyzed Section 279(2) of the Act, which allows for the compounding of offences by the Chief Commissioner. It was noted that the mere provision for compounding of the offence does not automatically warrant the issuance of a mandamus to compound the offence. The court emphasized that discretionary powers of a statutory authority can only be interfered with on grounds of factual or legal mala fides or perversity. In this case, the petitioners were already convicted, and while the power to compound the offence could be exercised even after conviction, this alone was not sufficient to compel the authority to do so. The court highlighted that neither a legal right of the petitioner was infringed nor was it demonstrated that the authority acted illegally. Consequently, the petition was dismissed.