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TMI Blog2018 (9) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... section 276C of the Act except with the previous sanction of the Principal Commissioner or Commissioner or Commissioner (Appeals) or the appropriate authority. Subsection (2) of section 279 provides that any offense under this chapter may, either before or after institution of the proceedings be compounded by the Principal Chief Commissioner or Chief Commissioner or Principal Director General or the Director General. In terms of such compounding powers, the CBDT has been issuing circulars for providing guidelines for compounding offenses under the Act. We are concerned with the latest guideline issued on 23.12.2014 issued by the CBDT. This circular contains detailed provisions and procedure for compounding offenses under the Act. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner had filed the return of income declaring total income of ₹ 17,18,090/and claimed refund of ₹ 6,68,460/. During the course of scrutiny assessment, the Assessing Officer objected to the assessee's claim of deduction for the provisions of income tax of a sum of ₹ 8.70 lakhs. The representative of the assessee accepted it as an error and agreed to such claim being disallowed. The Assessing Officer thereupon passed the order of assessment on 24.12.2010. He also instituted penalty proceedings. He passed an order of penalty under section 271(1)(c) of the Income Tax Act, 1961 ('the Act' for short) on 15.03.2013, in which, he imposed penalty at the rate of 100% of the tax sought to be evaded. He thus, levied pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08-09 5 Date of passing penalty order u/s 271(1)(c) of the Act and issue of demand notice 15/03/2013 6 Quantum of addition confirmed penalty 271(1)(c) of the Act 2,61,000/- 7 Amount of compounding fees: i) 100% of amount sought to be evaded as per para-12.2 of compounding guidelines. Rs.8,70,000/- (ii) Liability of Directors u/s 278B: 10% of compounding fees (Shri Trupti S Mistry who digitally signed the return of income) ₹ 87,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act pertains to willful attempt to evade tax, etc. Subsection (1) of which at the relevant time read as under: 276C . Wilful attempt to evade tax, etc. (1) If a person wilfully attempts in any manner whatsoever to evade any tax, penalty or interest chargeable or imposable under this Act, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Act, be punishable, (i) in a case where the amount sought to be evaded exceeds twentyfive hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount sought to be evaded. This para also starts with an expression Section 276C(1)Wilful attempt to evade tax etc. . The title of this para thus, is taken from the section itself and the compounding fee is to be computed at the rate of 100% of the amount sought to be evaded. Since this para does not contain any specification of the amount sought to be evaded , we may fall back on the statutory provisions in relation to which, this compounding fee is prescribed. Subsection (1) of section 276C, as noted, prescribes punishment for a person who willfully attempts in any manner to evade any tax, penalty or interest chargeable under the Act. This could be without prejudice to any penalty that may be imposable on him under any provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood in light of the provisions contained in section 276C(1) and in turn must be seen as amount sought to be evaded. 100% of tax sought to be evaded would be the basic compounding fees which in the present case would be ₹ 2,71,000/and not ₹ 8,70,000/as computed by the departmental authorities. The rest of the computation is consequential and automatic. The impugned communication dated 20.03.2018 is therefore set aside. The respondent shall carry out fresh computation of the petitioner's liability to pay compounding charges in terms of this order. We are informed that, to avoid any complication, the petitioner has under protest, paid up the entire amount of ₹ 10,49,000/as demanded by the department. Once such fresh com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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