Mr. Rudra Prasad Kar, Advocate v. Principal Chief Commissioner Of Income Tax, Bhubaneswar & Another..……. Opp. Parties

IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.7903 of 2023 M/s. Jas Apparels and Footwear Pvt. Ltd. ..……. Petitioner Mr. Rudra Prasad Kar, Advocate -Versus- Principal Chief Commissioner of Income Tax, Bhubaneswar & another..……. Opp. Parties Mr. S.S. Mohapatra, Senior Standing Counsel, Income Tax CORAM: Order No. 01. JUSTICE S. TALAPATRA JUSTICE SAVITRI RATHO ORDER 20.03.2023 1.This matter is taken up through Hybrid mode. 2.Heard Mr. R.P. Kar, learned counsel appearing for the petitioner and also Mr. S.S. Mohapatra, learned Senior Standing Counsel, Income Tax for the revenue. 3.By means of this writ petition, the order dated 10.11.2022 passed by the Principal Chief Commissioner of Income Tax, Bhubaneswar, the opposite party No.1, rejecting the compounding application of the petitioner without affording opportunity of hearing, has been challenged. 4.Mr. Kar, learned counsel for the petitioner, has stated that the petitioner had failed to deposit the Tax Deducted at Source (TDS) for the assessment year 2013-14 within the prescribed period as per Section-200 of the Income Tax Act read with Rule-30 of the Income Tax Rules, 1962. The petitioner however deposited the TDS with interest later on. But for the delayed payment, the Additional Chief Judicial Magistrate, Special Court, Cuttack on 22.08.2017 has taken cognizance of the offence punishable under Section-276B of the Income Tax Act at the instance of the revenue. 5.The petitioner filed an application for compounding of the offence on 25.11.2021. But the Principal Chief Commissioner of Income Tax declined to accept the prayer for compounding the offence punishable under Section-276D of the Income Tax Act for not depositing the TDS within the prescribed time for the assessment year 2013-14. Hence, the Special Public Prosecutor, Income Tax was directed to launch prosecution. 6.Mr. Kar, learned counsel has stated that the offence under Section-276B does not fall under the category of the offences normally not to be compounded. 7.Sub-section (2) of Section-279 of the Income Tax Act provides that any offence under the said Chapter may after institution of the proceeding, be compounded by the Principal Chief Commissioner or the Chief Commissioner or a Principal Director General or Director General, Income Tax Department. 8.In this case, the Principal Chief Commissioner, I.T. has declined to compound the offence of delayed payment of the tax deducted at the source. 9.Mr. Kar, learned counsel has submitted that in a similar case in Kanungo Institute of Diabetes Specialities Pvt. Ltd., Bhubaneswar vs. Principal Chief Commissioner of Income Tax, Bhubaneswar and another (the order dated 09.02.2023 in W.P.(C) No.3678 of 2023) this Court had occasion to observe as follows: 7.Sub-section (2) of Section-279 of the Income Tax Act provides that any offence under the said Chapter may after institution of the proceeding, be compounded by the Principal Chief Commissioner or the Chief Commissioner or a Principal Director General or Director General, Income Tax Department. 8.In this case, the Principal Chief Commissioner, I.T. has declined to compound the offence of delayed payment of the tax deducted at the source. 9.Mr. Kar, learned counsel has submitted that in a similar case in Kanungo Institute of Diabetes Specialities Pvt. Ltd., Bhubaneswar vs. Principal Chief Commissioner of Income Tax, Bhubaneswar and another (the order dated 09.02.2023 in W.P.(C) No.3678 of 2023) this Court had occasion to observe as follows: “The impugned order notes that the restriction regarding limitation could be relaxed in deserving cases while the application is filed beyond 12 months, but before 24 months from the end of the month in which the complaint was filed. What was perhaps not noted is that the said CBDT guidelines dated 14[th] June 2019 stood automatically further modified as far as the period of limitation is concerned, by the orders of the Supreme Court of India on 8[th] March 2021 and 23[rd] September 2021 in Miscellaneous Application No.665 of 2021 in SMW (C) No.3 of 2020 (In Re: Cognizance For Extension of Limitation) in the wake of the COVID-19 pandemic.” limitation could be relaxed in deserving cases while the application is filed beyond 12 months, but before 24 months from the end of the month in which the complaint was filed. What was perhaps not noted is that the said CBDT guidelines dated 14[th] June 2019 stood automatically further modified as far as the period of limitation is concerned, by the orders of the Supreme Court of India on 8[th] March 2021 and 23[rd] September 2021 in Miscellaneous Application No.665 of 2021 in SMW (C) No.3 of 2020 (In Re: Cognizance For Extension of Limitation) in the wake of the COVID-19 pandemic.” 10. The said decision of the apex court, as referred to in Kanungo Institute of Diabetes Specialities Pvt. Ltd.(supra) might not have been known to the petitioner. Even the Principal Chief Commissioner of Income Tax, while deciding the application for compounding the offence, as stated before, did not consider the general waiver granted by the Supreme Court of India in the wake of the COVID-19 pandemic. 11.In those orders, the apex Court has observed, inter alia as follows: “(1)The order dated 23.03.2022 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 & 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. 27.04.2021 & 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. (2)Consequently, the balance period of the limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.” remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.” 12.It has been further observed for clarification as follows: (2)Consequently, the balance period of the limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.” remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022.” 12.It has been further observed for clarification as follows: “(III)In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. (IV)It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996. Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996. Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings.” 13.In Kanungo Institute of Diabetes Specialties Pvt. Ltd. (supra) it has been observed that for purpose of compounding the offence under Section 276D of the Income Tax Act, the waiver of limitation would apply. 14.In view of the above, this Court is not inclined to take any contrary view. 15.As corollary, the impugned order dated 10.11.2022 passed by the Principal Chief Commissioner of Income Tax by rejecting the compounding application stands set-aside. 16.The petitioner’s application for compounding the said offence is directed to be considered again by the Principal Chief Commissioner of Income Tax in accordance with law including the general waiver of limitation as declared in Re. Cognizance for Extension of Limitation. 17.This matter will be placed before the Principal Chief Commissioner of Income Tax on 6[th] July, 2023 at 11 A.M. when the petitioner will appear either in person or through an authorized representative. On hearing the petitioner, appropriate and reasoned order on merit will be passed by the Principal Chief Commissioner of Income Tax within a period of one month from 06.07.2023. Subhasis 18.It is made abundantly clear that this Court has not expressed any opinion on merit of the matter. 19.In the above terms, this writ petition is disposed of. 20.Urgent certified copy of this order be granted as per rules. (S. Talapatra) Judge (Savitri Ratho) Judge