2022 (3) TMI 176 - HC - Income Tax

Compounding of the offence under Section 276CC read with Section 278E - compounding of the offences rejected on the ground that the application seeking compounding of the offences has not been filed within the stipulated time and that the petitioner already stood convicted by the learned Additional Chief Metropolitan Magistrate (Special Acts) Central, Tis Hazari Courts, Delhi - HELD THAT - For application has been filed beyond the period of limitation in view of the CBDT circular dated 09.09.2019, the said objection does not survive any further. As far as the conviction is concerned, in view of the order dated 03.12.2018 passed by the learned Special Judge, the said objection also no longer survives as the conviction has been set aside. As far as the Impugned Order dated 29.01.2020 dismissing the application seeking review is concerned, we find that the reason given is untenable in law. The conviction having been set aside by the learned Special Judge, application seeking compounding of the offence cannot be rejected on the ground that the petitioner has not been acquitted of the criminal charges. In fact, such application is premised on the fact that the petitioner is facing such criminal charge and not been acquitted thereof. Submissions of learned counsel for the respondents that on facts of the case the petitioner is not entitled to seek compounding of the offence, as the applications have been dismissed without considering the merit of the same, we refrain from expressing any opinion thereon. It shall be open to the respondent no.1 to consider the application filed by the petitioner seeking compounding of the offences on its own merit and in accordance with law. The Impugned Order are set aside. The respondent no.1 is directed to consider the application of the petitioner seeking compounding of the offence under Section 276CC read with Section 278E of the Act for the Assessment Years 2008-09 to 2013-14 on merit and in accordance with law.

Summary

Issues:
Challenge to rejection of compounding application under Income Tax Act, 1961 for Assessment Years 2008-09 to 2013-14; Review of rejection order dated 21.08.2018; Consideration of compounding application based on CBDT circular and setting aside of conviction.

Analysis:
The petitioner challenged the rejection of their compounding application under Section 276CC read with Section 278E of the Income Tax Act, 1961, for the Assessment Years 2008-09 to 2013-14. The respondent no.1 initially rejected the compounding request due to a delay in filing and the petitioner's prior conviction. However, an appeal was made, and the Special Judge set aside the conviction, directing a fresh trial based on new documents submitted by the petitioner.

The respondent no.1 subsequently rejected a review application on the grounds that the conviction was still pending adjudication, despite being set aside by the Special Judge. The petitioner relied on a CBDT circular to argue that the objection of delay in filing no longer applied, as the applications were submitted before the deadline. The petitioner contended that the rejection of the review application was unjustified since the conviction had been overturned by the Special Judge.

The High Court analyzed the grounds for rejection, noting that the delay objection was no longer valid based on the CBDT circular and that the conviction had been set aside by the Special Judge. The Court found the reason for rejecting the review application legally untenable, as the compounding request was based on the ongoing criminal charge, not on acquittal. The Court directed the respondent no.1 to reconsider the compounding application on its merits and in compliance with the law for the specified assessment years.

The Court refrained from expressing an opinion on the respondent's argument against the petitioner's entitlement to compounding, leaving it to the respondent to evaluate the application based on its merits. Ultimately, the High Court set aside the impugned orders dated 21.08.2018 and 29.01.2020, directing a fresh consideration of the compounding application under the Income Tax Act, 1961, for the relevant assessment years. The petition was disposed of without costs.