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1990 (11) TMI 140 - HC - Income Tax

Issues Involved:
1. Legality of the instructions issued by the Central Board of Direct Taxes (CBDT) u/s 119 of the Income-tax Act.
2. Powers of the Commissioner of Income-tax u/s 279(2) of the Income-tax Act to compound offences.

Summary:

1. Legality of the instructions issued by the Central Board of Direct Taxes (CBDT) u/s 119 of the Income-tax Act:
The petitioner challenged the instructions issued by the CBDT, specifically Instruction No. 1317 of 1980, which allegedly curtailed the powers of the Commissioner of Income-tax to compound offences u/s 279(2) of the Income-tax Act. The court observed that the instructions, particularly clauses (B), (C), and (D) and section 6, partially took away the discretion vested in the Commissioner by requiring the "previous approval of the Board before deciding to compound an offence." The court held that these instructions were in direct contravention of the statutory provisions and thus invalid. The court emphasized that executive instructions could not override or dilute statutory powers conferred by the Legislature.

2. Powers of the Commissioner of Income-tax u/s 279(2) of the Income-tax Act to compound offences:
The court analyzed section 279 of the Income-tax Act, which grants the Commissioner the authority to compound offences either before or after the institution of proceedings. The court noted that this power is discretionary and cannot be regulated or restricted by instructions from the CBDT. The court held that the instructions issued by the CBDT, which required the Commissioner to obtain prior approval from the Board before compounding an offence, effectively nullified the discretion granted to the Commissioner by the statute. The court concluded that the Commissioner must exercise his powers independently, without reference to the invalid instructions.

Conclusion:
The court allowed the petition, quashing the impugned instructions that curtailed the Commissioner's powers. It directed the Commissioner of Income-tax to consider the compounding of the alleged offence independently, as per the powers conferred by section 279(2) of the Act, without reference to the invalid instructions. The writ petition was disposed of with no order as to costs.

 

 

 

 

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