2013 (7) TMI 770 - HC - Income Tax

Compounding of offences u/s 276CC review petition - the petitioner contended that there is no bar for considering the request of the assessee for compounding the offence even if the assessee had been convicted - a criminal appeal has also been filed against the order of conviction and it is still pending Held that - The assessee should have made a written request for the compounding of the offence in the prescribed pro forma as provided under the guidelines - the petitioner should also have satisfied the other conditions contained in the guidelines for the compounding of the offence - the guidelines prescribe that certain cases should not be compounded normally - it is for the assessee to show sufficient cause or reason to support his request for the compounding of the offence - court rejected the plea of the assessee for reviewing the order passed earlier and rejecting for the compounding of the offence u/s 276CC petition decided against assessee.

Summary

Issues:
1. Belated filing of income tax return for assessment year 1987-88
2. Disallowance of expenses in assessment order
3. Penalty levied under section 271(1)(a) of the Income-tax Act, 1961
4. Prosecution under section 276CC of the Act for willful failure to file return
5. Request for compounding the offense under section 276CC of the Act

Belated Filing of Income Tax Return:
The petitioner company filed a belated return of income for the assessment year 1987-88, showing taxable total income as Rs. 6,281 initially, later revised to Rs. 24,998. The fifth respondent computed taxable total income at Rs. 1,32,100 in the assessment order passed under section 143(3) of the Income-tax Act, 1961. The expenses claimed were disallowed due to lack of proper vouchers. An appeal was filed against this assessment order, and the taxable total income was subsequently revised to Rs. 91,230 and then to Rs. 55,600 by the first appellate authority and the fifth respondent, respectively.

Disallowance of Expenses in Assessment Order:
The expenses claimed by the petitioner were disallowed and added back in the computation of taxable total income for the assessment year 1987-88 due to lack of proper vouchers. The first appellate authority granted partial relief to the petitioner, resulting in a revision of the taxable total income to Rs. 91,230 and later to Rs. 55,600 by the fifth respondent.

Penalty under Section 271(1)(a) of the Income-tax Act:
The petitioner objected to the penalty proceedings initiated for the belated filing of the return of income for the assessment year 1987-88. The fifth respondent levied a penalty of Rs. 20,683 for the delay in filing the return, which was challenged by the petitioner through an appeal. The Commissioner of Income-tax (Appeals) I, Chennai, admitted the appeal and granted substantial relief to the petitioner.

Prosecution under Section 276CC of the Act:
The petitioner faced prosecution under section 276CC of the Act for willfully failing to file the return of income for the assessment year 1987-88 within the prescribed time. The prosecution was sanctioned, and a complaint was filed before the court. The petitioner applied for compounding the offense, willing to pay the compounding fee.

Request for Compounding the Offense:
The petitioner sought to compound the offense under section 276CC of the Act for the assessment year 1987-88. Various representations and petitions were made to the authorities, seeking compounding of the offense. The court directed the Chief Commissioner of Income-tax to consider and pass appropriate orders on the petitioner's request for compounding the offense. The impugned order rejecting the plea for reviewing the earlier decision was set aside, allowing the petitioner to submit an application for compounding within four weeks. The second respondent was directed to consider the application and pass appropriate orders expeditiously after a personal hearing.

This detailed analysis covers the issues related to the belated filing of income tax returns, disallowance of expenses, penalty levied under section 271(1)(a) of the Income-tax Act, prosecution under section 276CC of the Act, and the request for compounding the offense under section 276CC of the Act for the assessment year 1987-88 as per the judgment of the Madras High Court.