2019 (8) TMI 298 - HC - Income Tax

Compounding application - demand notices are issued without an order being passed in terms of Ext.P1 judgment - HELD THAT - A statement has been placed on record on behalf of the respondents in both the writ petitions stating that before Ext.P1 judgment was brought to the notice of the authority, action had already been initiated by issuing the demand notices. It is stated that in the light of the directions contained in Ext.P1, the issue will be reconsidered with notice to the petitioner and after hearing the petitioner also. Having considered the contentions advanced, the demand notices which are issued without reference to Ext.P1 judgment cannot survive. Ext.P2 are accordingly set aside. The respondents shall consider the applications preferred by the petitioner for compounding, subject to maintainability as directed in Ext.P1 within a period of three months from the date of receipt of a copy of this judgment. Needless to say, as directed in Ext.P1, coercive proceedings against the petitioner shall be deferred until the compounding applications are duly considered and disposed of. The petitioner shall produce a copy of this judgment along with a copy of the writ petitions before the first respondent for compliance.

Summary

Issues: Challenge to demand notices issued without considering compounding application as per court's previous judgment.

Analysis:
The writ petitions were filed to challenge Ext.P2 and Ext.P3, seeking direction for the first respondent to consider the compounding application after hearing the petitioner. The petitioner argued that the demand notices were issued without following the court's previous judgment, Ext.P1, which directed consideration of the compounding application after notice and hearing. The court heard both parties and noted that actions were initiated before bringing Ext.P1 to the authority's notice. The court held that demand notices issued without reference to Ext.P1 judgment were not valid. Consequently, Ext.P2 and Ext.P3 were set aside, directing the respondents to reconsider the compounding applications within three months from the judgment's date. Coercive proceedings against the petitioner were ordered to be deferred until the compounding applications were duly considered and disposed of. The petitioner was instructed to provide a copy of the judgment and writ petitions to the first respondent for compliance. The writ petitions were granted accordingly.