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TMI Blog2020 (2) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... bjected to the prosecution from 2011 is itself also an adequate punishment. This factor also should be kept in mind by the respondents while disposing the case. If the petitioner has no other cases against him, the respondents shall consider compounding application for compounding the offence favourably in favour of the petitioner subject to payment of appropriate compounding fees by the petitioner. I am therefore of the view that the impugned order is liable to be quashed and the application filed by the petitioner should be re-examined by the respondents in the light of the liberalised policy of Central Board of Direct Taxes in its clarification dated 14.06.2019, Section 279(1A) and other facts mentioned herein. Petitioner s case deserves to be considered by the respondents in the light of the liberalised policy since the petitioner s application was entertained after the new guideline came into force. Also for the same reason, it cannot be construed that the respondents committed contempt of this court since the order did not specify the same. The respondents shall pass appropriate orders within a period of three months from the date of receipt of a copy of this order in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nes. An assessee cannot claim, as a matter of right that his offence has to be compounded. Factors, such as conduct of the assessee, nature and magnitude of the offence and facts and circumstances of each offence need to be considered while dealing with such a request. Offences under Indian Penal Code cannot be compounded. They can, however, be withdrawn. 4. Eligibility conditions for consideration of a case for compounding The following conditions should be satisfied before considering a case for compounding:- 4.1 XXXXX 4.2 XXXXX 4.3 XXXXX 4.4.Cases not be compounded:- Notwithstanding anything contained in the guidelines, the following cases should normally not be compounded:- a) In case of a non-technical offence, offences other than the first offence as defined in para 8 below. b) Offences involving major fraud or scam or misappropriation of government funds or public property. c) Offences committed by an assessee linked to any Anti-national/ terrorist activity and cases being investigated by CBI, police, enforcement directorate or any other Central Govt. agencies, as per information available with the Income tax department. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.4 (b), (c) and (g) of the impugned Circular, the petition deserves to be rejected. 5.Since the compounding application was dismissed by then the Director General of Income-tax (Investigation) 1st respondent herein, the petitioner filed W.P.No.3929 of 2014 to quash the said order dated 15.01.2014 of the 1st respondent and to direct the respondents 1, 4 and 5 therein who are the respondents herein to compound the offence in accordance with law. 6.By an order dated 28.08.2019, the learned Single Judge of this Court has passed the aforesaid writ petition with the following observations:- 10. In the light of the above observations, the impugned order passed by the first respondent herein under Section 279 (2) of the Income Tax Act, 1961 dated 15.01.2014 is set aside and the matter is remanded back to the Committee prescribed under the CBDT Guideline No.7.1 (c) dated 16.05.2008. The petitioner is granted liberty to place a copy of this order along with afresh compounding petition under Section 279 of the Income Tax Act, before the Committee, within a period of 30 days from the date of receipt of a copy of this order. On receipt of the aforesaid application along with a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 was recorded from the assessee by the Assessing Officer on 10.11.2009. Some of the intercepts are reproduced here under: Q.17 There is a Trust by name M/s. Webster Foundation. Are you reminded of anything when you hear it. Ans: I am not aware of such Trust or Foundation. Nothin comes to my mind. Further in the sworn statement, assessee also stated that Ans-18: The signature appears to be mine but I have never signed any such document. Ans-21: I am not aware of the existence of Webster Foundation. 5.3 The above replies by the assessee clearly show that the assessee gave false statement under oath before the Assessing Officer. The information about the foreign bank account of the assessee was authentic since the same was received from the Govt. of Germany. Thus it is clear that the assessee was hindering the course of investigation and gave false information. 5.4 The mens rea being the offence, committed by the assessee, is clear and this stand is supported by the fact that the CIT (A) confirmed the penalty order under section 271(1)(c) of the Income Tax Act, though the penalty was restricted to 100% instead of 300% of the tax sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on the part of the Department to compound the offences under Sections 276C and 277 of the Act. 11.The learned Single Judge of this Court while passing the order, has relied on the decision of the Hon ble Supreme Court in Prem Dass Vs. Income Tax Officer , 1999 (5) SCC 241, wherein, the Hon ble Supreme Court has held as follows:- 5. To attract the provisions of Section 277 the prosecution is required to establish that the accused made a statement in any verification under the Act which he either knows or believes to be false, or does not believe to be true. The relevant part of Sections 276-C and 277 are extracted hereunder for better appreciation of the point in issue: 276-C. (1) If a person willfully 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,- *** 277. If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court has superintendence can ignore the law declared by this court and pass order in direct violation of its order. In this Connection, the learned Senior Counsel placed reliance on the decision of the Hon ble Supreme Court in East India Commercial Company Limited, Calcutta and Another Vs. Collector of Customs, Calcutta , AIR 1962 SC 1893. 14.The learned Senior Counsel for the petitioner further submitted that there is willful disobedience of a specific order of this Court and it undermines the authority, majesty and dignity of this court. In this case, there is deliberate and mala fide deviations by the respondent while rejecting the compounding application of the petitioner despite the following observations in para 8.6 of the order of the learned Single Judge in W.P.No.3929 of 2014. He therefore submits that the respondents are liable to be punished for violating the order no undermining the majesty and dignity of this court for not complying with the order dated 28.08.2019 in W.P.No.3929 of 2014. In this connection, he relies on the decision of the Hon ble Supreme Court in Shri Baradakanta Mishra Ex-Commissioner of Endowments Vs. Shri Bhimsen Dixit , 1973 1 SCC 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words have to be chosen very carefully so as not to give room for controversy . The principle is that if the language in a judgment is plain and unambiguous and can be reasonably interpreted in only one way it has to be understood in that sense, and any involved principle of artificial construction has to be avoided. Further, if there be any doubt about the decision, the entire judgment has to be considered, and a stray sentence or a casual remark cannot be treated as a decision. 19.Opposing the contempt petitioner and issue of statutory notice, Mr.A.P.Srinivas, the learned Senior Standing Counsel for the respondents vehemently defends the impugned order. He submits that the order of the learned Single Judge of this Court in W.P.No.3929 of 2014 dated 28.08.2019 has been fully complied with the passing of impugned order. He further submits that as per the decision of the Hon ble Supreme Court in J.S.Parihar Vs. Ganpat Duggar and Others , (1996) 6 SCC 291, once the order has been complied, it is not open to the petitioner to move an application for contempt. 20.The learned Senior Standing Counsel for the respondents further submits that as per the decision of the Hon bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... karan and Others , order dated 06.06.2011 passed by this Court in Cont.P.No.1563 of 2010. vi. N.Ramadas and etc. Vs. Dr.C.A.Mohamed Abdul Huq and Another , order dated 12.01.2015 passed by this Court in Cont.A.Nos.1 and 3 of 2013. vii. Ashok Kumar and Others Vs. Depinder Singh Dhesi and Others , (2019) 8 SCC 280. 23.The learned Senior Standing Counsel for the respondents further submits that even otherwise to invoke the contempt jurisdiction, there should be willful disobedience of the orders of this Court and since the order of the learned Single Judge itself has directed the respondent to pass appropriate orders keeping in mind the observations contained therein, it follows that the respondent had to pass appropriate order. 24.I have considered the arguments advanced by the learned Senior Counsel for the petitioner and the learned Senior Standing Counsel for the respondents. 25.There are no disputes in the facts of the present case. The petitioner an income tax assessee had suffered adverse orders pursuant to the proceedings initiated under Section 148 read with Section 147 of the Income Tax Act, 1961, which culminated in order against the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posable on him under clause (iii) of subsection (1) of section 271 has been reduced or waived by an order under section 273A.] 2 ... 3 30.In the light of the said direction, the petitioner filed a fresh compounding application on 09.09.2019 before the respondents, which was disposed by the respondents vide impugned order dated 06.11.2019. 31.In my view, though the learned Single Judge has clarified the portion yet he has directed the respondents to pass order keeping in mind the observations made in the order. There is no positive direction in the said order. In case, the learned Single Judge had taken a view that application for compounding the offences was to be allowed, the learned Single Judge would have quashed the order dated 15.01.2014 and allowed the Writ Petition as prayed. The learned Single Judge has merely made passing comment in para 8.6, which is reproduced below:- 8.6. The only objection to such a proposition from the Department is that the order passed by the Tribunal, reducing the penalty, has been challenged in Tax Case Appeal before this Court. It is not the case of the Department that this Court had stayed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me vii 276CCC Failure to furnish returns of income in search cases in block assessment scheme viii 276DD (Prior to 1.04.1989) - Failure to comply with the provisions of section 269SS ix 276E (Prior to 1.04.1989) - Failure to comply with the provisions of section 269 T x 277 False statement III verification etc. with reference to Category 'A' offences xi 278 Abetment of false return etc. with reference to Category 'A' offences 6.2 Category 'B' Offences punishable under the following sections are included III Category'B': S.No Section Description / Heading of Section i 276A Failure to comply with the provision of sections 178(1) and 178(3 ) ii 276AA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence other than the first offence(s) as defined in Para 8.2 for the purpose of these Guidelines. iii. Offences committed by a person for which he was convicted by a court of law under Direct Taxes Laws. iv. Any offence in respect of which, the compounding application has already been rejected, except in the cases where benefit of rectification is available in these Guidelines. v. The cases of a person as main accused where it is proved that he has enabled others in tax evasion such as, through entities used to launder money or generate bogus invoices of sale/purchase without actual business, or by providing accommodation entries in any other manner as prescribed in section 277 A of the Act. vi. Offences committed by a person who, as a result of investigation conducted by any Central or State Agency and as per information available with the Pr. CCIT/CCITIPr. DGITIDGIT concerned, has been found involved, in any manner, in anti-national/terrorist activity. vii.Offences committed by a person who was convicted by a court of law for an offence under any law, other than the Direct Taxes Laws, for which the prescribed punishment was imprisonment for two years or mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fence is to be determined separately with reference to each section ofthe Act under which it is committed. 8.3 Notwithstanding anything contained in these Guidelines, the Finance Minister may relax restrictions in Para 8.1 above for compounding of an offence in a deserving case, on consideration of a report from the Board on the petition of an applicant . 35.Though, the above guideline was to apply for fresh applications filed after 17.06.2019, nevertheless the guidelines reflect the policy of the Central Board of Direct Taxes. It would be unfair to discriminate between the applicants whose applications were already pending and those applicants whose applications were filed thereafter. Even on 20.12.2019 20.01.2020 when the case was argued before this Court, there was no mention made about the latest CBDT Circular dated 14.06.2019. The new guideline appears to be more liberal. Indeed, it was also incumbent on the part of the petitioner and the respondent to have brought it to the attention of this Court when W.P.No.3929 of 2014 was taken up for hearing. 36.As per Section 279(1A) of the Income Tax Act, 1961, a person shall not be proceeded against for an offence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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