Benefit of Compounding of Offences under Income Tax Act cannot be denied on ground that Assessee has not been Acquitted of Criminal Charges: Delhi HC [Read Order]

A two-judge bench of the Delhi High Court has held that the application seeking compounding of the offence under the Income Tax Act, 1961 cannot be rejected on the ground that the petitioner has not been acquitted of the criminal charges.

The petitioner, Jai Singh Goel was charged with an offence for not filing income tax returns and the application filed by him seeking compounding of the offence under Section 276CC read with Section 278E of the Income Tax Act, 1961 was rejected by the authorities. The petitioner challenged these orders before the High Court.

The Revenue pleaded that the application seeking compounding of the offences has not been filed within the stipulated time and that the petitioner already stood convicted vide order dated 19.02.2018 passed by the learned Additional Chief Metropolitan Magistrate.

The counsel for the petitioner submits that the Central Board of Direct Taxes vide Circular No.25/2019 dated 09.09.2019 has given one time concession relaxing the period of 12 months from the filing of the complaint as limitation for filing of the applications seeking compounding as prescribed in para 8(vii) of the Guidelines for Compounding of Offences under Direct Tax Laws, 2014 dated 23.12.2014 or in view of para 7(ii) of the Guidelines for Compounding of Offences under Direct Tax Laws, 2019 dated 14.06.2019, provided such application is filed on or before 31.12.2019 and the offence is not one which is generally/normally not compoundable.

Justices Navin Chawla and Manmohan found that the ground of limitation will not survive in view of the CBDT circular dated 09.09.2019.

“As far as the conviction is concerned, in view of the order dated 03.12.2018 passed by the learned Special Judge, the said objection also no longer survives as the conviction has been set aside,” the bench observed.

While quashing the impugned orders, the bench opined that the reason given is untenable in law.

“The conviction having been set aside by the learned Special Judge, application seeking compounding of the offence cannot be rejected on the ground that the petitioner has not been acquitted of the criminal charges. In fact, such application is premised on the fact that the petitioner is facing such criminal charge and not been acquitted thereof,” the bench concluded.

Advocates Mr. Satyen Sethi and Mr.Arta Trana Panda appeared for the petitioners.

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