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TMI Blog2019 (9) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... y may not suffice to deny such a benefit. In view of these subsequent developments, there cannot now be any impediment on the part of the Department to compound the offences under Sections 276C and 277 of the Act. The learned Standing counsel for the respondents made a faint attempt by placing reliance on paragraph 19 of the dismissal order [ 2019 (3) TMI 1638 - MADRAS HIGH COURT] and submitted that Prem Dass's case [ 1999 (2) TMI 6 - SUPREME COURT] has been distinguished and held to be not applicable to the present case. Hence the learned Standing counsel would submit that, since the order of reduction of penalty was not passed under Section 273B of the Act, Section 279 (1A) of the Act is not applicable to the petitioner. As observed earlier, Section 279 (1A) is self-explanatory and the Hon'ble Supreme Court in Prem Dass s case (supra) has further clarified that the assessee cannot be proceeded against for an offence when the penalty imposed on him has been reduced. Under Article 141 of the Constitution of India, the law declared by the Hon'ble Supreme Court shall be binding on all Courts, which includes the High Courts. As such, the decision in Prem Dass s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of Section 147 of the Income Tax Act, 1961. The petitioner gave a reply to the said notice on 13.04.2009, based on which a sworn statement was recorded under Section 131 of the Act on 16.11.2009. The assessment order came to be passed thereafter on 29.12.2009. The petitioner had paid the tax for a sum of Indian ₹ 1,28,15,546/-. After about a year, a show cause notice was issued by the Commissioner on 28.01.2011 for alleged commission of offences under Section 276C and 277 of the Act to which, the petitioner had given a reply on 17.02.2011. After obtaining the sanction for prosecution on 24.03.2011, a complaint was filed in E.O.C.C.No.121 of 2011 for offences under Section 276C and 277 of the Income Tax Act, 1961. c) In this background, the petitioner had filed a petition on 28.03.2011 under Section 279 (2) of the Act, for compounding the offences in the criminal complaint. The first respondent herein, had dismissed the same by an order dated 15.01.2014, which is under challenge in the present Writ Petition. d) Pursuant to the impugned order of the DGIT, the Commissioner of Income Tax, Appeals had reduced the penalty levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Guidelines, such non-satisfaction would entitle the DGIT to pass the impugned order. B) Reduction of penalty will not be a ground to quash the impugned order and the decision in Prem Dass's case (supra) is not applicable to the present case since the order passed under Section 273A of the Act, reducing the penalty has not become final since the Department has filed a Tax Case Appeal against the ITAT order in a Tax Case Appeal and therefore the benefit under Section 279 cannot be claimed by the petitioner. C) The Madras High Court has directed the trial court to decide the authenticity of the documents relied upon by the petitioner in its order in Crl.O.P.No.9065 of 2011 and hence there is no infirmity. D E) The legality of the notice issued under Section 148 of the Act has been seized by the Hon ble Division Bench of this Court in TCA.No.252 of 2013. Since the Tax Case Appeal and the criminal case are independent to each other, it cannot be said that the notice is without jurisdiction. As per the Economic Offences (Inapplicability of limitation) Act, there is no limitation for launching such types of cases and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal offence under Section 276C (1) of the Act is concerned, it is his submission that the conditions prescribed in paragraph 4 of the Guidelines were not fulfilled and since Guideline No. 5.1 prescribes that all conditions prescribed in paragraph 4 should be satisfied before a non-technical offence is considered for compounding, the DGIT was well within its powers in passing the impugned orders. Above all, the impugned order was rejected in the preliminary stage itself and therefore, there was no necessity for the Committee to consider the compounding application. 8.4. I am not in agreement with such submission for more than one reason. When the revised Guidelines confers jurisdiction on the Committee for compounding non-technical offences, the reasoning of the Department that the application came to be rejected in the preliminary stage itself and hence the Committee need not be approached, is not founded on any legal principle. In order to exercise its jurisdiction, the DGIT must be vested with powers to handle the compounding application from the inception itself. This goes without saying that even if the DGIT is of the view that the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) so as to require any income-tax authority to make a particular assessment or to dispose of a particular case in a particular manner; or b) so as to interfere with the discretion of the [***][Commissioner (Appeals)] in the exercise of his appellate functions. 8.8. The Hon ble Apex Court in the case of Catholic Syrian bank Ltd V. Commissioner of Income Tax, Thrissur reported in 2012 (3) SCC 784 had held that the circulars can be issued by the Board to explain or tone down the rigours of law and that the circulars cannot be ignored. The relevant portion of the said order reads as follows: 23. Now, we shall proceed to examine the effect of the circulars which are in force and are issued by the Central Board of Direct Taxes (for short, `the Board') in exercise of the power vested in it under Section 119 of the Act. Circulars can be issued by the Board to explain or tone down the rigours of law and to ensure fair enforcement of its provisions. These circulars have the force of law and are binding on the income tax authorities, though they cannot be enforced adversely against the assessee. Normally, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.3. In the case of Prem Dass (supra), the Hon'ble Supreme Court was of the view that the assessee cannot be proceeded against for the offences, when the Commissioner (Appeals) has reduced the penalty. The relevant portion of the order reads as follows: 10. We also find sufficient force in the contention of Mr. Salve that the legislative mandate in Section 279(1A) of the Income Tax Act has not been borne in mind by the High Court while interfering with an order of acquittal. Mr. Shukla, no doubt has indicated that the said provision will have no application as the penalty imposed has not been reduced or waived by an order under Section 273A. We do not agree with the aforesaid literal interpretation of the provisions of Section 279(1A) of the Act, when we find that the Commissioner of Income Tax(Appeal) has reduced the penalty. Further the tribunal has totally set aside the order, imposing penalty could not have been lost sight of by the High Court while considering the question whether the order of acquittal passed by the Sessions Judge has to be interfered with or not, particularly, when the gravamen of indictment relates to filing of incorrect retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese subsequent developments, there cannot now be any impediment on the part of the Department to compound the offences under Sections 276C and 277 of the Act. 9.7. The learned Standing counsel for the respondents made a faint attempt by placing reliance on paragraph 19 of the dismissal order dated 28.02.2019 passed in Crl.O.P.No.9065 of 2011 and submitted that Prem Dass's case (supra) has been distinguished and held to be not applicable to the present case. Hence the learned Standing counsel would submit that, since the order of reduction of penalty was not passed under Section 273B of the Act, Section 279 (1A) of the Act is not applicable to the petitioner. 9.8. As observed earlier, Section 279 (1A) is self-explanatory and the Hon'ble Supreme Court in Prem Dass s case (supra) has further clarified that the assessee cannot be proceeded against for an offence when the penalty imposed on him has been reduced. Under Article 141 of the Constitution of India, the law declared by the Hon'ble Supreme Court shall be binding on all Courts, which includes the High Courts. As such, the decision in Prem Dass s case (supra) would be binding on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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