Durgeshwari Hi-Rise & Farms } Pvt. Ltd. And Ors. } v. The Chief Commissioner Of } Income Tax (Tds) And Anr. }

IN THE HIGH COURT OF JUDICATURE AT BOMBAYCIVIL APPELLATE JURISDICTION WRIT PETITION NO. 10973 OF 2018 Durgeshwari HI-Rise & Farms}Pvt. Ltd. and Ors.}PetitionersversusThe Chief Commissioner of}Income Tax (TDS) and Anr.}Respondents Mr. Jas Sanghvi I/b. M/s. PDS Legal forthe petitioners. Mr. Suresh Kumar for respondent no. 1. CORAM :-S. C. DHARMADHIKARI &B. P. COLABAWALLA, JJ.DATE :- OCTOBER 23, 2018 P.C. :- 1.We have heard both sides. We have perused the affidavit inreply tendered on behalf of the respondents and affirmed by theChief Commissioner of Income Tax (TDS). 2.The essential facts in this petition are not disputed. It isevident from the essential facts that the relevant assessmentyear is 2009-10. The interest payment amounting toRs.61,90,068/- was made, but the tax deducted at source waswithheld on this interest amount. This amount is Rs.12,75,154/-.The due date of depositing the tax withheld was 7[th] July, 2008.The tax was deposited with the treasury on 29[th] September, 2009.Page 1 of 6 J.V.Salunke,PA There was a delay of 474 days. The interest was also paid for thisdelay in the sum of Rs.2,04,030/-. The petitioners have depositedin time with the treasury the tax deducted at source for all theassessment years except the year under consideration, namely,2009-10. Since there was this default, a requisition was served,copy of which is at Exhibit 'D' to the petition. Then, there was ashow cause notice, copy of which is at Exhibit 'X' dated 18[th]November, 2011 duly served and to which a reply was given on24[th] November, 2011, copy of which is at Exhibit 'F'. 3.The petitioners were served with another show cause noticecalling upon them to show cause as to why prosecution undersection 276B read with section 278B of the Income Tax Act, 1961should not be launched for delay in depositing the tax deducted atsource. Then, a show cause notice of 25[th] September, 2013followed, to which, on 7[th] October, 2013 reply was given to all theshow cause notices. 4.The essential argument was that the petitioners are nothabitual defaulters and the delay occurred on account of mistakeof accounting. It was due to wrong entry in the ledger accountwhich was subsequently pointed out by the tax auditor andrectified. The petitioners have stated that they have paid interestfor the delayed payment. That is why they prayed that noPage 2 of 6 J.V.Salunke,PA prosecution be initiated. The petitioners were served with a letterExhibit 'J', subsequent to which, an application for compoundingof offences was made. That application is dated 19[th] February,2014. Though the petitioners were served with letters ofintimation informing the date on which they should presentthemselves and seek relief in terms of the compoundingapplication, they could not depute a representative to remainpresent. 5.In the meanwhile, the group concern of the petitioners alsocommitted a similar default, but sought compounding of theoffences under section 276B read with section 278B of theIncome Tax Act, 1961 and those applications have been granted.The petitioners' applications were rejected on the ground thatnobody attended the proceedings on the date on which they werescheduled. 6.On 27[th] March, 2015, a criminal complaint was field in thecourt of Additional Chief Metropolitan Magistrate, Ballard Pier,Mumbai numbered as CC No. 102/SW/2015. The petitionersprayed that the ex-parte order having prejudiced them, relyingupon a Central Board of Direct Tax Circular, once again requestedthat the compounding application be decided afresh. That wasrejected without giving an opportunity and by treating it as a second application. Thus, the restoration request was treated asa fresh or second application for compounding of offences and itcame to be rejected on the ground of maintainability. 6.On 27[th] March, 2015, a criminal complaint was field in thecourt of Additional Chief Metropolitan Magistrate, Ballard Pier,Mumbai numbered as CC No. 102/SW/2015. The petitionersprayed that the ex-parte order having prejudiced them, relyingupon a Central Board of Direct Tax Circular, once again requestedthat the compounding application be decided afresh. That wasrejected without giving an opportunity and by treating it as a second application. Thus, the restoration request was treated asa fresh or second application for compounding of offences and itcame to be rejected on the ground of maintainability. 7.The third application was filed on 11[th] May, 2018. Thatapplication has been rejected on the ground that it is notmaintainable once the earlier applications have been rejected. 8.It is in these circumstances that the petitioners, by this petition, pray for the following two reliefs:- “a)this Hon'ble Court may be pleased to issue a Writ ofCertiorari or a writ in the nature of Certiorari or any otherappropriate writ, order or direction under Article 226 of theConstitution of India calling for the records of the Petitioners'case and after examining the legality and validity thereofquash and set aside the orders dated 21[st] May 2018, 31[st]October 2017 and 26[th] February 2015 passed by theRespondents. b)this Hon'ble Court may be pleased to issue a Writ ofMandamus or a writ in the nature of Mandamus or any otherappropriate writ, order or direction under Article 226 of theConstitution of India ordering and directing Respondents toaccept the compounding application dated 20[th] April 2018made by the Petitioners for compounding the offence undersection 276B r/w 278B of the Income-tax Act and furtherdirect the Respondents to withdraw the Criminal CaseNo.102/SW/2015 filed with the Chief Metropolitan Magistrate,Ballard Pier, Mumbai.” 9.Having gone through the petition and all the annexures and particularly the impugned letters/communications so also theaffidavit in reply, we do not find that the respondents have appliedtheir mind to the compounding applications by dealing with the merits thereof. The applications have been dismissed only on theground that nobody attended the proceedings when the firstapplication was being taken up and the subsequent freshapplications cannot be entertained as the first one was rejected.All this hardly indicates any application of mind. 10.It is in these circumstances and in facts peculiar to thiscase, without this order being treated as a precedent, we allow thewrit petition. We direct that the application for compounding theoffences made as early as on 20[th] February, 2014 (Exhibit 'K') beconsidered and a fresh order be passed thereon as expeditiouslyas possible and in any event within a period of two months fromthe date the petitioners pay the requisite fees on that application.The application shall be decided by a speaking order. Needless toclarify that on the date and time fixed for thisconsideration/hearing the petitioners must remain present ordepute their representative and if at the first availableopportunity of this nature the petitioners absent themselves, theywill not get any benefit of this order. Then, the prosecutionlaunched against them shall proceed on its own merits and inaccordance with law. 11.For a period of two months from today and in order toenable the petitioners to present themselves and point out that the compounding application deserves to be granted on merits,we direct that the concerned criminal court shall not proceedwith the criminal complaint. The writ petition is disposed of byclarifying that we have not examined the merits of thecompounding application and all contentions in relation theretoare kept open. (B. P. COLABAWALLA, J.) (S.C.DHARMADHIKARI, J.)