No Limitation filing Application for Compounding of Offence contrary to Section 279(2) of Income Tax Act: Madras HC [Read Order]

The Madras High Court observed that there is no limitation filing application for compounding of offence contrary to Section 279(2) of the Income Tax Act, 1961.

Notices were issued to the petitioner and its directors by the third respondent to prosecute the petitioner for failure to pay the TDS. The third respondent therefore issued Show Cause Notice to the petitioner for the offence punishable under Section 276B read with Section 278B of the Income Tax Act, 1961 for belated payment of interest and late fee on TDS. The petitioner replied to the Show Cause Notice stating that the petitioner was not able to pay TDS amount within the stipulated time due to financial circumstances.

The Senior Standing Counsel for the respondents submitted that the petitioner was having high income and had deliberately failed to pay tax that was deducted for the respective Assessment Years 2014-2015 and 2015-2016. It was submitted that the impugned Common Order does not call for any interference, as the petitioner was negligent and had not paid TDS and also did not attend the personal hearing and that the petitioner was also given a prior notice regarding the proposal to obtain sanction for prosecuting the petitioner.

It was submitted that the petitioner was issued with Show Cause Notices by the third respondent respectively and thereafter the petitioner was also called for hearing. However, the petitioner failed to appear and therefore it is in the background, the decision was taken to obtain sanction for prosecuting the petitioner.

A Single Bench of Justice C Saravanan observed that “There cannot be any restriction/limitation for filing application for compounding of offence contrary to Section 279(2) of the Income Tax Act, 1961. There is also no useful purpose in prosecuting an assessee who may otherwise deserve to compound the offence. This is also not a case where the petitioner has been convicted of the offence in E.O.C.C.Nos.193 and 194 of 2018 and had filed the applications for compounding of the offence thereafter under Section 279(2) of the Income Tax Act, 1961.”

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