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TMI Blog2023 (12) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... herein is entitled to the benefit of Section 279 (1A) of the Act. The revenue having failed to challenge the above order is bound by it. Ld' Judge had found that the Respondent herein was entitled to compound in terms of Section 279(1A) of the Act, which provides that the assessee would be entitled to compound if the penalty stood reduced or waived under Section 273A of the Act. Importantly, the Supreme Court in Prem Dass case [ 1999 (2) TMI 6 - SUPREME COURT] while construing Section 279(2) of the, Act had rejected the argument that the reduction of penalty by an appellate authority not being an order under Section 273A of the Act, the assessee/applicant would not be entitled to the benefit of Section 279(1A) of the Act and it was held that it may not be appropriate to adopt a literal construction of provisions of Section 279(1A) of the Act. Respondent would be entitled to the benefit of Section 279(1A) of the Act and the judgment of Supreme Court in Prem Dass case in view of reduction of penalty from 300% to 100% by the appellate authority, the failure of the appellant to challenge, in our view, would prove fatal, to any attempt by the revenue to contend to the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income Tax (I), Chennai, which was dismissed by the Commissioner (Appeals) vide order dated 30.03.2011. It was carried by way of appeal to the Tribunal. The appeal to the Tribunal also stood dismissed vide order dated 25.02.2013 on the premise that the foundation was created and duly signed by the respondent, who was found to be a beneficiary of the said Trust / Foundation. The order of the Tribunal is the subject matter of appeal in TCA. No. 252 of 2013, which is pending before this Court. (vi) In the meanwhile, vide order dated 21.03.2012, a maximum penalty at 300% of tax sought to be evaded under Section 271(1)(c) of the Act was imposed. Aggrieved by the levy of penalty, an appeal was preferred before the Commissioner (Appeals), who, vide order dated 25.03.2014 in ITA No.12/2012-13, reduced the penalty from 300% to 100% of the tax sought to be evaded. The penalty thus stood reduced from Rs. 2,07,82,020/- to Rs. 69,27,342/-. The respondent as well as the Revenue preferred further appeals against the above order of the Commissioner (Appeals). Both the appeals stood dismissed by the Tribunal vide common order dated 27.09.2017. In other words, the penalty, which was originall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have been put to loss. b) The evidence gathered in the instant case established major frauds inasmuch as funds have gone out of the country, but for the information obtained, the monies would have remained untaxed. c) The assessee / respondent herein has neither produced documents nor the account copy to disprove the contentions of the department. The attitude of the assessee / respondent herein was of total non-cooperation in the entire proceedings before Assessing Officer on this issue. d) On consideration of the above facts and circumstances, the RCC recommended that the Compounding Application of the Respondent herein deserves to be rejected in terms of Para 4.4(g) of the Circular dated 16.05.2008. iii) A contempt petition in Cont.P. No. 2079 of 2019 was filed on the ground of wilful and intentional disobedience of the order of the learned Judge dated 28.08.2019 in W.P. No. 3929 of 2014 and it was closed on the finding that there was no contempt, while observing that there was no positive direction in the order dated 28.08.2019 by the learned Judge and it was found that paragraph 8.6 of the said order, were mere passing comments. However, after finding so, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in the Contempt Petition and on giving the information, his role would end and thus, the Intra-Court appeal filed against the order of the learned Judge that there was no contempt, was held to be not maintainable. v) Pursuant to the above order of this Court, the 4th Appellant herein passed the order under Section 279(2) of the Act rejecting the compounding application vide order dated 30.08.2021 inter alia for the following reasons, as could be seen from the following extracts from the said order: a. .... b. The Compounding application of Shri K.M. Mammen filed on 9.3.2021 deserves to be rejected for the following reasons: i. The offence relating to undisclosed foreign bank accounts/asset is normally not to be compounded as specified in Para 8.1(x) of the guidelines dated 14.6.2019 and ii. The conduct of the assessee, nature and magnitude of offence warrants rejection of compounding petition as per Para 8.1 (xiii) of the guidelines dated 14.6.2019. c. Without prejudice to the above, the Committee unequivocally decided that even if the assessee's application were to be considered under CBDT compounding guidelines dated 16.05.2008, it still deserv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also an industrialist will serve no purpose. The petitioner entitled for buying a peace subject to his agreeing to pay the compounding fee that may be imposed by the fourth respondent. The petitioner has been sufficiently dealt for his past dalliances by the respondent. 45. In my view, this was a fit case for compounding the offence considering the age of the petitioner and considering the fact that the petitioner has paid the tax interest and penalty. 46. Therefore, I am inclined to set aside the impugned order passed by the fourth respondent and remit the case back to the fourth respondent to compound the case by fixing the compounding fee to be paid by the petitioner, if it has not been already paid by the petitioner. 47. Compounding fee, if it has not been already paid, shall be calculated by the fourth respondent and intimated to the petitioner within a period of sixty days from the date of receipt of a copy of this order. The petitioner shall thereafter pay the afore said amount. Subject to such payment within such time as may be prescribed, the case against the petitioner shall be treated as having compounded and settled. 3. The revenue is in appeal, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We say so, inasmuch as we find that the learned Judge in W.P. No. 3929 of 2014 even while remanding the matter, had made it clear that the judgment in Prem Dass case would apply to the respondent, and further, the respondent herein is entitled to the benefit of Section 279 (1A) of the Act. The revenue having failed to challenge the above order is bound by it. It may be relevant to extract the relevant portions of the learned Single Judge's order, which read as under: 8.4. Section 279 of the Income Tax Act, in explicit terms, is selfexplanatory to the effect that when the penalty imposed on the assessee is reduced under Section 273A, such an assessee cannot be proceeded against for offences under Sections 276C or 277. The term used in the Section is 'shall' and hence is required to be considered as mandatory in nature and would therefore imply that when the penalty imposed has been reduced or waived, the Assessee cannot be proceeded against for the alleged offences. 8.5. The Hon ble Supreme Court, in Prem Dass s case (supra) has reiterated this proposition as seen from the above extract. The Commissioner of Appeals, in his order dated 25.03.2014 in ITA, had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is per incuriam and the observation made therein is not the proper appraisal and cannot be relied upon. 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. (emphasis supplied) 6.1. A reading of the above observations of the learned Judge leave no room for any doubt, in our mind, that the learned Judge had found that the Respondent herein was entitled to compound in terms of Section 279(1A) of the Act, which provides that the assessee would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to the plain language of the order of the learned Judge in W.P. No. 3929 of 2014. Since the learned Judge in W.P.No.3929 of 2014 by order dated 28.08.2019 has conclusively found that the Respondent would be entitled to the benefit of Section 279(1A) of the Act and the judgment of Supreme Court in Prem Dass case in view of reduction of penalty from 300% to 100% by the appellate authority, the failure of the appellant to challenge, in our view, would prove fatal, to any attempt by the revenue to contend to the contrary. 8. The Writ Appeal in W.A. No. 967 of 2020 against the order of the learned Judge in Cont.P. No. 2079 of 2019 confined itself to the legality of observations/directions which traversed beyond the order in the Writ Petition in W.P.No.3929 of 2014 dated 28.08.2019. The Division Bench only examined the jurisdiction/authority of the learned Judge in contempt jurisdiction to issue directions which travelled beyond the order in the Writ Petition and found, it was impermissible rather in excess of jurisdiction. The Division Bench did not examine the scope of the observations/directions of the learned Judge in W.P. No. 3929 of 2014 dated 28.08.2019 while hearing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contrary in a contempt jurisdiction. This is in view of the settled law that a contempt jurisdiction is sui generis, inherent and is confined to examining whether there is wilful violation of the order of the Court and any attempt to examine the correctness or otherwise of the order stated to be in contempt would be in excess of its jurisdiction. It is trite law that in a contempt petition, the jurisdiction is limited viz., to examine whether there is a violation of the order of the court or otherwise. Under the guise of exercise of jurisdiction in contempt proceedings, the order / judgment of a Court cannot in any manner be diluted/watered down by issuing fresh directions. It may be relevant to refer to the following judgments: i) Jhareswar Prasad Paul v. Tarak Nath Ganguly, (2002) 5 SCC 352: 11. .... The contempt jurisdiction should be confined to the question whether there has been any deliberate disobedience of the order of the court and if the conduct of the party who is alleged to have committed such disobedience is contumacious. The court exercising contempt jurisdiction is not entitled to enter into questions which have not been dealt with and decided in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power available to the Court in other corrective jurisdictions like review or appeal is not trenched upon. No order or direction supplemental to what has been already expressed should be issued by the Court while exercising jurisdiction in the domain of the contempt law; such an exercise is more appropriate in other jurisdictions vested in the Court, as noticed above. The above principles would appear to be the cumulative outcome of the precedents cited at the Bar, namely, Jhareswar Prasad Paul v. Tarak Nath Ganguly[(2002) 5 SCC 352 : 2002 SCC (L S) 703], V.M. Manohar Prasad v. N. Ratnam Raju [(2004) 13 SCC 610 : 2006 SCC (L S) 907], Bihar Finance Service House ConstructionCoop. Society Ltd. v. Gautam Goswami [(2008) 5 SCC 339] and Union of India v. Subedar Devassy PV[(2006) 1 SCC 613] . 10. We do not propose to examine the correctness or otherwise of the observations / findings of the learned Judge in W.P. No. 3929 of 2014 dated 28.08.2019 insofar as the applicability of the Supreme Court in Prem Dass case and the interpretation of Section 279 (1A) of the Act which has attainted finality insofar as the appellants are concerned, in the absence of any appeal being preferred b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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