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TMI Blog2017 (4) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 2016, he was sent the following communication on 26th April, 2016: ".... Sub: Application for compounding of offences u/s 276C(1)/276C(2)/ 277 of the Income-tax Act, 1961 for the Block Period 01/04/1986 to 1/11/1996 in the case of Sh. Vikram Singh (AANPS8704R) - reg. Kindly refer to your application dated 1/4/2016 for compounding of offences u/s 276C(1)/ 276C(2)/277 of the Income Tax Act, 1961 on the above captioned subject. 2. On going through the above application, vide Column No. 9, wherein you have undertaken to pay the compounding charges, as shall be intimated by the Department. In this regard, it is informed to you that the total compounding charges of Rs. 69,67,699/- (excluding counsel's fee and litigation expense that will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, the present writ petition was filed on 20th July, 2016 seeking the quashing of the above circular dated 23rd December, 2014 and, in particular, para 12 thereof which sets out the fee for compounding. 4. In response to the notice issued in the present writ petition, a reply has been filed by the Department setting out the basis for calculation of the compounding charges. In para 8 of the said reply, it is stated as under: ".....8. That it is seen from the facts that the subject compounding application was filed before CCIT, Delhi-I on 1.4.2016. The Prosecution complaint under sections 276C(1) & 276C(2) were filed before the criminal court on 12.4.2006. The charges have already been framed by the Court. Thus, the compounding applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt court 12 months prior to receipt of the application for compounding". 8. The above clause is not one prescribing a period of limitation for filing an application for compounding. It gives a discretion to the competent authority to reject an application for compounding on certain grounds. Again, it does not mean that every application, which involves an offence committed by a person, for which the complaint was filed to the competent court 12 months prior to the receipt of the application for compounding, will without anything further, be rejected. In other words, resort cannot be had to para 8 of the circular to prescribe a period of limitation for filing an application for compounding. For instance, if there is an application for compo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 3rd November, 2016 for rejection of the Petitioner's application does not satisfy the criteria spelt out in the guidelines issued by the Department by its Circular dated 23rd December 2014. It has proceeded on a ground that is not available to the Department viz., that the application is inordinately delayed. Since there is no other reason given for the rejection of the application, the Court is unable to sustain the order dated 3rd November, 2016 of the CCIT by which the Petitioner's application for compounding was rejected. The said order is hereby set aside. The Petitioner's application for compounding will have to considered afresh by the CCIT. 11. That brings us back to the Petitioner's principal prayer regarding the validi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act the CBDT can issue instructions requiring an applicant seeking compounding of an offence, to pay upfront the compounding fee even before the application for compounding can be considered on merits? It would appear from para 11(v) of the impugned Circular dated 23rd December 2014 of the CBDT that where an applicant seeking compounding of the offences does not pay the compounding fee upfront, his application need not be considered at all. 14. The Court finds nothing in Section 279 of the Act or the Explanation thereunder to permit the CBDT to prescribe such an onerous and irrational procedure which runs contrary to the very object of Section 279 of the Act. The CBDT cannot arrogate to itself, on the strength of Section 279 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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