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TMI Blog2022 (9) TMI 554X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 further seeks a direction to respondent No. 1 to accept its application dated 20th March, 2021, filed on 22nd March, 2021, for compounding of the offences. Facts 2. Briefly stated, the facts of the case are that the petitioner No. 1, who was under an obligation to deduct income tax on payments made by it during the course of business, deducted the income tax but the same was deposited belatedly with the Income Tax Department ('the department'). It is stated by the petitioner that however the deposit of TDS did not cross the due date of filing of return of income in the concerned relevant FYs i.e. 2013-14, 2014-15 and 2016-17. 3. The petitioner further states that the deposit of TDS was made prior to any notice of default received from the department. The details regarding due date of filing of the Income Tax Return ('ITR') for the respective assessment years and the last date for payment of TDS in respect of each relevant assessment years are set out in the petition as under: Sr.No. AY Due date of filing the return of income u/s 139(1) of the Act Latest date on which tax deducted was deposited Date of filing the return 1. 2014-15 30-11-2014 16-10-2014 30-11-2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stated 'No'. However, as per information available in this office, conviction orders for FYs.2009-10, 2010-11 & 2011-12 have already been passed by the Hon'ble Court in your case. Therefore, wrong information has been provided by you. b. As per para 8.1(iii) of the. Compounding Guidelines dated 14.06.2019, Offences committed by a person for which conviction order has been passed by a court of law under Direct Taxes Laws are normally not be compounded." 7. The petitioner furnished a reply dated 22nd November, 2021 to the aforesaid notice, explaining the reasons for non-mentioning of the conviction for the FYs 2009-10, 2010-11 and 2011-12. In this reply, it was stated that the order of conviction is under challenge before the Supreme Court in Special Leave Petition ('SLP'), being SLP (Crl.) No. 1576/2019, wherein the Supreme Court by its order dated 18th February, 2019, has stayed the operation of the order of conviction. It was further stated that the compounding application filed before the respondent No. 1 pertained to compounding of the FYs 2013-14, 2014-15 and 2016-17, which are entirely different from the Financial Years, which are the subject matters of the convic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e information provided by the petitioner No. 1 in Column No. 18 of the application was not false and respondent No. 1 has erred in holding otherwise. 12. The learned counsel for the petitioner has relied upon the following judgments of the Madras High Court to contend that the respondent No. 1 wrongly rejected the compounding application on the ground of conviction for FYs 2009-10, 2010-11 and 2011-12: (i) Chairman, Central Board of Direct Taxes v. Smt. Umayal Ramanathan reported in [2009] 313 ITR 59 (Madras) [06-04-2009]; (ii) K.M. Mammen v. Principal Commissioner of Incometax reported in [2022] 139 taxmann.com 57 (Madras); (iii) V.A. Haseeb & Co. (Firm) v. Chief Commissioner of Income-tax, TDS Chennai reported in [2016] 75 taxmann.com 57 (Madras); (iv) The Government of India, Ministry of Finance, Department of Revenue, (Central Board of Direct Taxes) & Another. v. R. Inbavalli reported in [2018] 400 ITR 352 (Mad). 13. The petitioner has further relied upon the following judgments to contend the pendency of SLP against the conviction for FYs 200910, 2010-11 and 2011-12 is a continuation of the original proceeding and therefore until the SLP is decided finally, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP, he cannot be treated as a 'convict' and the same should have no bearing for deciding its application filed on 22nd January, 2021. 16. In this view of above, it would be relevant to consider the facts which were in consideration before the Madras High Court in each of the four judgments relied upon by the Petitioner for this proposition. 16.1. In the judgment of Smt. Umayal Ramanathan (supra), the Division Bench of the Madras High Court adjudicated upon the eligibility of an assessee who has been convicted to seek compounding of the said offence under Section 279(2) of the Act, during the pendency of the appeal against the said conviction. The department had contended that an application for compounding under section 279(2) of the Act could be maintained either before or after institution of proceedings and not after the assessee has been convicted by the criminal Court. The Madras High Court rejected the contention of the department and held that an assessee is eligible to apply for compounding of the offences to the department, during the pendency of an appeal from the said conviction. The Court interpreted the expression 'proceedings' as it appears in Section 279(2) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Commissioner Income Tax after her conviction by the criminal Court and during the pendency of the appeal. In the Court of appeal the sentence of the assessee had been suspended. The application for compounding pertained to the same assessment years for which the assessee had been convicted. The Court upon examination of the file of the department found that all authorities below had uniformly recommended the case of the assessee for consideration of compounding, in view of her age, illness and circumstances encountered by her during the relevant period. 16.3.1. The Division Bench of the Madras High Court held that the power of compounding is exercisable by competent authority, even while an appeal against conviction of assessee is pending. Since, the only reason for rejecting the assessee's compounding application was assessee's conviction, the Court held that the clause 4.4 (f) of the CBDT Guidelines, dated 16th May 2008 (then in force), which enlisted that if a conviction order has been passed by the criminal Court, the prosecution complaint should normally not be compounded cannot come in the way of the competent authority to consider the compounding application of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 1576/2019 is still pending before the Supreme Court. 20. The petitioner No. 1 has also been convicted for default in deposit for FY 2009-10 and 2010-11, however the order of the trial Court and appellate Court are not placed on record. The petitioner No. 1 has placed on record the orders of the trial Court and appellate Court pertaining to its conviction for default for the FY 2011-12. The order passed by the High Court dismissed three (3) revision petitions presumably against the orders of conviction for the aforesaid three financial years. 21. Upon inquiry to the petitioner with respect to the steps taken by the petitioner for compounding the said conviction for FY 2009-10, 2010-11 and 2011-12, the petitioner states that he has not filed any application for compounding of the said offences. 22. It is noted that though, the complaint under Sections 276B and 278B of the Act was instituted on 11th March, 2016, for defaults committed in FY 2011-12 and a show cause notice for the said default was issued by department on 28th July, 2014, the petitioner No. 1 yet again committed default in depositing of TDS for the subsequent FYs 2013-14, 2014-15 and 2016-17. Details of notices is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r with reasons in writing. The aggrieved cannot suppress the precise purpose for which he seeks suspension of the conviction and obtain a general order of stay and then contend that the disqualification has ceased to operate. 28. The SLP is pending and the said petitions may either be allowed or dismissed. There is no presumption that the petitions will be allowed in favour of petitioners. Further from a perusal of the stay order dated 18th February, 2019, passed in the SLP, it is not evident that the Supreme Court was made aware of the subsequent defaults of the petitioner or the disqualification which attaches to the petitioner while seeking compounding for subsequent years under the applicable CBDT guidelines for compounding. Thus, the stay of the order dated 15th October, 2018, by the Supreme Court, cannot be urged by the petitioner for contending that it is not a convict for the purpose of eligibility under the CBDT guidelines, 2019. Therefore, for the petitioner to contend that the competent authority must not concern itself with the orders of conviction for FYs 2009-10, 2010-11 and 2011-12 within the parameter of para 8.1 (iii) of the CBDT Guidelines, 2019 while considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting the compounding application of the petitioner. 33. We do not find any infirmity in the impugned order passed by respondent No. 1 in exercise of his jurisdiction. The petitioner has not disputed the binding nature of the CBDT Guidelines, 2019 and in fact, in the judgment of K.M. Mammen (supra), relied upon by the petitioner itself, the Court had noted that CBDT Guidelines, 2019 issued under Section 279 of the Act are strictly binding on the authorities. The Court therein observed that the 2019 Guidelines are in fact, intended to guide the officers to bring a closure of cases, where there are extenuating circumstances for compounding offences on application filed under Section 279 (2) of the Act. This was also the view taken by the learned predecessor Division Bench of this Court in Sangeeta Exports (P.) Ltd. v. Union of India reported in [2008] 173 Taxman 21 (Delhi), wherein, this Court has observed as under : "28. As clear from the facts of the case, the Central Board of Direct Taxes has rejected the application for compounding, hence the Chief Commissioner of Income-tax is rejecting the application of the petitioners for compounding. Reading section 297(2) of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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