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TMI Blog2021 (3) TMI 1127X X X X Extracts X X X X X X X X Extracts X X X X ..... "the I.T.Act") rejecting the petition filed by the respondent to compound the offence framed against him under Section 276C and Section 277 of the I.T.Act for the assessment year 2002-03. 3.It was alleged by the appellant-Department that when the respondent filed his return of income for the assessment year 2002-03, he has concealed an amount of Rs. 2,26,38,372/- deposited in a foreign bank account and therefore, to be prosecuted for offence punishable under Section 276C of the I.T.Act. The respondent filed a petition under Section 279(1) of the I.T.Act for compounding the offence. The first appellant, after referring to the facts of the case and after hearing the Authorized Representative of the respondent, took note of the circular issued by the Central Board of Direct Taxes (CBDT) dated 16.05.2008, wherein guidelines have been laid down by the CBDT with regard to compounding of offence under the Direct Tax Laws. The first appellant, in his order dated 15.01.2014, while rejecting the compounding petition, observed that the respondent cannot claim, as a matter of right, that the offence should be compounded; Clause (g) of para 4.4 of the CBDT circular dated 16.05.2008, states tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation made therein is not the proper appraisal and cannot be relied on. In this regard, the Court referred to the decisions of the Hon'ble Supreme Court in Prem Dass vs. ITO [(1999) 5 SCC 241]. Ultimately, the writ petition was disposed of by order dated 28.08.2019, and the operative portion of the order reads as follows:- "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 copy of this order, the Committee shall consider the same, in the light of the observations made in this order and pass appropriate orders in accordance with law within a period of 60 days there from. The Writ Petition stands allowed accordingly." 5.In terms of the above, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt found that there is no merit in the contempt petition. The following observation has been made by the Court in support of its conclusion:- "29.Though the learned Single Judge has given categorical findings that there was no impediment on the part of the Department to compound offence under Section 279(1A) of the Income Tax Act, 1961, yet, in the operative portion of the order, the learned Single Judge has directed the the respondent to pass appropriate orders in accordance with law. The relevant portion of Section 279(1A) of the Income Tax Act, 1961 reads as under:- "Section 279. Prosecution to be at the instance of Chief Commissioner or Commissioner:- 1................................... (1A) A person shall not be proceeded against for an offence under section 276C or section 277 in relation to the assessment for an assessment year in respect of which the penalty imposed or imposable on him under clause (iii) of sub- section (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 appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 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. ............... 37.The respondents shall also consider the age of the petitioner and his status in society while deciding the case of the petitioner. The fact that petitioner has been subjected 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 reexamined 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( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Senior counsel for Mr.S.Ashok Kumar, learned counsel for the respondent. 2. This appeal has been filed by the Department, challenging the order and direction issued by the learned Single Bench dated 31.01.2020 in Contempt Petition No.2079 of 2019. 3. It is submitted by the learned counsel for the appellants that though the learned Single Bench found that the Department has not violated the order and direction issued in W.P.No.3929 of 2014 dated 28.08.2019, committed an error in issuing directions to the Department to consider the application already filed by the respondent for compounding of the offence by applying the new guidelines issued by the Central Board of Direct Taxes ['CBDT' for brevity] Vide Circular dated 14.06.2019. It is pointed out by the learned Senior Standing counsel that such directions issued by the learned Single Bench is beyond the scope of the Contempt Petition and is beyond jurisdiction. Further, it is pointed out that the offence case registered against the respondent cannot be compounded even under the new guidelines and this aspect has been considered by the concerned committee after the order and direction issued in W.P.No.3929 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning this appeal. However, what we have expressed in this order is only a prima facie view and it is open to the parties to advance their submissions, when the appeal is taken up for hearing. For the above reasons, the writ appeal is admitted and the order and direction issued by the learned Single Bench in Paragraph Nos.37, 38 and 39 shall remain stayed till the disposal of the appeal. List for further directions on 03.12.2020." 12.The learned Senior Counsel appearing for the respondent would submit that the learned Contempt Court having held that there is no merit in the contempt petition, took note of the liberalized policy of the Central Government, which was notified, vide circular dated 14.06.2019, and issued direction to the authorities to re-consider the respondent's application for compounding the offence and by this appeal, the Revenue seeks to set aside such direction thereby, leaving the respondent remediless. As held in J.S.Parihar (supra), the Court having found that no case has been made out to initiate contempt proceedings, was not right in issuing further directions and the Revenue is right in their submission that these directions were beyond the scope of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the contempt petition. There appears to be no pleadings to the said effect. Consequently, the Revenue had no opportunity to put forth their stand. Thus, we are fully convinced that no such direction could have been issued by the learned Contempt Court after having held that there is no merit in the contempt petition. 17.In the light of the above, we are to necessarily set aside the direction issued by the Court in paragraphs 37 to 40 of the impugned order and all the observations, which were made by the Court in paragraphs 32 to 36, which have led to issuance of the impugned directions. Having held so, we need to take note of the submissions of the learned Senior Counsel for the respondent that the respondent should not be left without a remedy because his contempt petition was dismissed as being devoid of merit and now we have come to a conclusion that the direction could not have been issued by the Contempt Court, which was beyond the scope of the contempt petition. Bearing this in mind, we are inclined to give liberty to the respondent to file a fresh petition for compounding in which, he may canvass all issues available to him on law as well as on facts and orders and d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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