Income Tax Dept Initiates Criminal Prosecution without Considering Reply: Madras HC directs to dispose of Compounding Application Within 4 Weeks [Read Order]

The Madras High Court has directed the Income Tax Department to dispose of a compounding application filed by a petitioner within four weeks. The petitioner had approached the court after the Income Tax Department initiated criminal prosecution without considering their reply to a show-cause notice.

The counsel for the petitioner-assessee, M/s.Babu Rangasamy Associates argued that despite filing a reply to the show-cause notice issued by the second respondent, the Income Tax Department proceeded with criminal prosecution without taking the reply into account. Following this, the petitioner filed a petition to quash the prosecution, which was dismissed by the court on June 17, 2022. In that order, the court had directed the petitioner to file a compounding application with the appropriate authority.

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Complying with the court’s directive, the petitioner submitted the required compounding application to the first respondent on October 17, 2022. However, the application remained unattended by the authorities, prompting the petitioner to file another petition seeking relief.

During the hearing, despite the respondents being served notice and their names listed in the cause list, no representation was made on their behalf. After reviewing the materials on record, the High Court found that the compounding application had not been considered by the department.

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Thus, Justice Krishnan Ramasamy has instructed the Income Tax Department to process the compounding application on its merits and in accordance with the law, setting a strict four-week deadline for action.

To Read the full text of the Order CLICK HERE

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