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TMI Blog2024 (7) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment proceedings were going on, the appellant could have very well filed the compounding application during this period. Here it has to be underlined that even though the penalty order under the Act was passed on 04.02.2002 and the same was confirmed by the CIT(A) on 10.12.2002, the appellant had not filed the compounding application even after that date. As further seen from the records that the appellant had not filed the compounding application even before 06.03.2019, the date on which the appellant was convicted by the Court, when he had ample time. Thus, for almost 20 years, he kept on dragging the issue. Therefore, this Court is of the considered view that it cannot be stated that the application for compounding was rejected on the sole ground that the appellant was convicted by the Court, but for multiple reasons. The default committed by the appellant has to be termed as wilful. The claim of the appellant that Circular No.25 of 2019 dated 09.09.2019 had intended to extend the benefit of compounding to all persons who had applied on or before 31.12.2019 is not correct, in view of the terms of the Guidelines and Circular mentioned aforesaid. In Umayal Ramanathan's case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the return of income was mentioned. According to the appellant, the Department disregarded the particulars given by him and passed an Assessment Order dated 27.03.2000 under Section 144 of the Act mainly stating that there is no proof of investment of shares in the year 1995 either in the books of accounts of the appellant or M/s. Sai Televisions Limited and that the source of funds for investment has also not been substantiated. 2.2. Aggrieved by the Assessment Order dated 27.03.2000, the appellant filed an appeal before the Commissioner of Income-tax (Appeals) and the same was dismissed. Further appeal preferred by the appellant before the Income-tax Appellate Tribunal also ended in dismissal. With regard to the penalty order passed by the Assessing Officer, the CIT (A) upheld the same on the ground that the appellant had not sufficiently substantiated that there was no concealment of income. 2.3. In the circumstances, on the basis of the sanction of the CIT, a complaint in EOCC No.184 of 2007 was filed before the Additional Chief Metropolitan Magistrate (Economic Offences-I), Egmore, Chennai, against the appellant under Sections 276C(1) and 277 of the Act and under Sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant / assessee. 3. The learned senior counsel appearing for the appellant submitted that the learned Judge ought to have seen that there was no occasion for the appellant to apply for compounding earlier. Since the window for seeking compounding was opened only under Circular No.25 of 2019 bearing F.No. 285/08/2014-IT(Inv.V)/350 dated 09.09.2019, which extended the timelines under Para 7 (ii) of Guidelines dated 14.06.2019 bearing F.No.285/08/2014- IT(Inv.V)/147, it is not correct on the part of the learned Judge to find fault with the appellant for not availing the concession for compounding. The learned Judge also erred in not following the judgments reported in (i) The Chairman, CBDT and Others vs. Umayal Ramanathan reported in 2009 SCC OnLine Mad 2911 (ii) R. Inbavalli vs. the Government of India, Ministry of Finance, Department of Revenue and others in W.P.No.24588 of 2016 dated 18.08.2016 and (iii) V.A.Haseeb and Company (Firm) vs. The Chief Commissioner of Income Tax TDS reported in 2016 SCC OnLine Mad 24131 . With regard to these three judgments, the learned Judge had given a finding that they arose under the 2008 Circular, but the fact is that the 2019 Circular wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohia vs. Chief Commissioner of Income Tax, wherein, in respect of the issue as to whether the non-cooperation of the party at the initial stage of the proceedings would dis-entitle him for relief in terms of guidelines 3 read with 4.4 (g) of the Circular in F. No. 285/90/2008-IT(Inv.)/12 dated 16.05.2008 issued by CBDT, it was held that it would have to be examined with reference to the well known canons of the principles of natural justice that no material could be relied against a person without affording him an opportunity to explain his position before taking any decision; (f) W.A. No. 1767 of 2022 dated 11.12.2023, in the case of The Principal Commissioner of Income Tax and others vs. K.M.Mammen, wherein taking note of the legislative intent of Section 279, the order rejecting the compounding application was set aside; (g) W.A. No. 1750 of 2022 dated 28.09.2022 in the case of CRN Investments Pvt Ltd vs. The Chief Commissioner of Income Tax, wherein, this Court, after considering a plethora of judgments and the revised guidelines, permitted the compounding application; (h) Footcandles Film Pvt.Ltd. vs. ITO, reported in 2022 SCC OnLine Bom 11768, wherein it was held that the gui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anting such immunity when the appellant stands convicted at the time of application. The process of deliberating on a compounding application is time consuming and reports from subordinate authorities are required to conclude the entitlements and fulfilment of conditions. 4.1. The learned senior standing counsel further submitted that the appellant is not entitled to the benefits of Circular No.25 dated 25.11.2019 in view of Para 4.1(ii) of the said Circular. The appellant is not entitled to compounding of offences in view of the conduct of the assessee in responding to the requisitions made by the Department for filing the return of income and calling for the details, but for the findings in the assessment proceedings, the unexplained investment of Rs. 10,00,000/- would have gone unnoticed and would have caused loss to the exchequer as the assessee did not file any return of income voluntarily offering the above said income. Thus, there was deliberate concealment of actual income by the assessee to evade taxes. The Trial Court has correctly convicted the assessee in respect of all the offences for which prosecution proceedings were initiated by the Department. The respondent has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the High Court of Punjab and Haryana in Punjab Rice Mills vs. Central Board of Direct Taxes, reported in (2011) 12 taxmann.com 225 (Punj. Har.); (d) Judgment of the High Court of Gujarat in Shree Sonal Gum Industries vs. Income-tax Officer, reported in (2000) 112 Taxman 509 (Gujarat); and (e) Judgment of the High Court of Delhi in Sangeetha Exports (P) Ltd. vs. Union of India, reported in (2008) 173 Taxman 21 (Delhi). 5. Heard the learned counsel for the appellant and the learned counsel for the Department and also perused the records carefully and meticulously. 6. It was submitted by the learned counsel for the assessee before the learned Judge that the order denying the benefit of compounding of offences under Section 279(2) of the Act solely on the ground of prior conviction of the appellant, cannot be countenanced in the light of the following decisions: (i) The Chairman, Central Board of Direct Taxes and others Vs. Umayal Ramanathan, MANU/TN/0829/2009, order dated 06.04.2009 in W.A.No.439 of 2023; (ii) R.Inbavalli Vs. The Government of India, Ministry of Finance, Department of Revenue and others, MANU/TN/1966/2016, order dated 18.08.2016 in W.P.No.24588 of 2016; (iii) V.A.Has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered and found to be distinguishable on facts. There was wilful attempt on the part of the assessee to conceal his income and evade tax and there was no cooperation by the assessee during the assessment proceedings which resulted in assessment being completed ex-parte under section 144 of IT Act. 10. The guidelines dated 14.06.2019 para 8.1 was also taken note of and it reads as follows:- 8.1 The following offences are generally not to be compounded: i. Category 'A' offence on more than three occasions. However, in exceptional circumstances compounding requested in more than three occasions can be considered only on the approval of the Committee referred to in para 10 of these Guidelines. The 'occasion' is defined in para 8.2. ii. Category 'B' offence 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant was also held guilty of the offence and accordingly punishment and fine were imposed on the appellant. The fact remains that the appellant had not filed any return of income voluntarily offering the above said income of Rs. 10,00,000/- at the relevant point of time. Thus, there was deliberate concealment of actual income by the assessee to evade taxes and deliberate filing of false return. Therefore, the RCC in the order dated 30.07.2022, rejected the claim of the assessee, observing in Paragraph Nos.16 to 21 as follows:- 16. On the merits of the case, the assessee had committed not one but multiple grave offences, which is exemplified by the elaborate contents of the conviction order passed by Additional Chief Metropolitan Magistrate, Economic Offences - 1, Egmore, Chennai - 600 008, in EOCC No.184 of 2007 dated 06.03.2019. The assessee did not file the return of income voluntarily before the due dates specified under section 139 the IT Act. There was no response to the notices under section 142 (1) calling for return of income and information with regard to investment made in shares, expenditure incurred on credit cards, etc. The assessment was completed under section 144 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ol of the assessee so as to consider his compounding petition sympathetically. The claim that the assessee paid all the taxes due voluntarily is technically incorrect as the major portion of the tax demand for the AY 1997-98 has been collected through adjustments of earlier year refunds. The assessee has been through out evasive and non-cooperative and expecting leniency at present was, according to the committee, a bygone or departed position and thus cannot be considered. 12. With regard to compounding of offences, Para 8(1)(iii) of the Guidelines dated 14.06.2019 and Para 4.1(ii) of Circular dated 09.09.2019 categorically states that such relaxation shall not be available in respect of an offence committed by the person who is already convicted by a Court of Law under the Direct Tax Law. With regard to the conduct of the appellant-assessee, it is seen that right from the year 1997 the conduct is not good. At each and every point of time, the appellant was dragging on the issue thus having mentality trying only to evade the taxes and not otherwise. The respondent also commented about the conduct of the appellant in not extending his co-operation right from filing of return of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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