P.soundarya v. The Chief Commissioner Ofincome Tax, Chennai-Iichennai-34

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 16.7.2007CORAM THE HON'BLE MR. JUSTICE S.MANIKUMAR W.P.No.13950 of 2007 P.Soundarya ... Petitioner vs 1. The Chief Commissioner ofIncome Tax, Chennai-IIChennai-34. 2. The Additional Director ofIncome Tax (Prosecution),Chennai-34. ... Respondents Petition filed under Article 226 of the constitution of India to issue a Writ of CertiorarifiedMandamus praying for the relief as stated therein. For Petitioner : Ms.Jebi Mather Hisham For Respondent : Mr.Muralikumaran SCGSC (IT)O R D E R Writ petition is for a Certiorarified Mandamus calling for the records comprised in the proceedingsof the second respondent dated 20.12.2006 as communicated by the first respondent by order dated1.2.2007 in EOCC No.36/1984 and quash the same and consequently direct the first respondent toconsider the representations of the petitioner for compounding or withdrawal of the offences underthe IPC in the light of the spirit behind the orders of the Supreme Court dated 9.10.2006 in CriminalM.P.No.10302 of 2006 in Criminal Appeal No.969 of 2000 and the order of this Court dated21.4.2006 in W.P.No.11191 of 2006 and for further orders. 2. Brief facts leading to the writ petition are as follows:- The petitioner had filed an application under Section 230-A(1) of the Income Tax Act on 12.5.1983for issue of a certificate in her favour for settling the property bearing door No.20, First CrossStreet, Lake Area, Nungambakkam, Chennai, in the name of her minor son retaining life interest inthe said property and declared the sale consideration of the said property at Rs.2,40,000/=. The saiddeclaration was assumed by the I.T. Department to be patently false and has been made to use thesame as a genuine evidence in the proceedings before the Income Tax authorities which is a judicialproceedings. The department held that the issue of certificate as required by the petitioner wouldentitle her to register the settlement deed as if the property was acquired for Rs.2,40,000/= asagainst the real value of Rs.5,70,000/= and that there would be evasion of Income Tax on thebalance sale consideration of Rs.3,30,000/=. 3. In those circumstances, the Income Tax Department filed a complaint against the petitionerpunishable under Section 193 of the Income Tax Act r/w. Section 136 of the Income Tax Act r/w.Sections 420 and 511 IPC and also u/s.276-C[1] and 277 of the Income Tax Act. The EconomicOffences Court, in EOCC No.36 of 1984 found that the petitioner was guilty, both under theprovisions of the Income Tax Act and offences under Indian Penal Code and convicted the petitioner by its judgment dated 6.11.1989. The judgment of the trial court was also confirmed by the PrincipalSessions Judge, City Civil Court, Madras, by judgment dated 19.8.1986 in Criminal Appeal.No.248 of1989. 4. Aggrieved by the same, the petitioner filed a criminal revision petition in Crl.R.C.No.648 of 1998and this Court by order dated 3.2.2000 acquitted the petitioner of offences under the Income TaxAct, however, found the petitioner guilty of the offences under Indian Penal Code. The petitioner hasmoved to the Supreme Court in C.A.No.969 of 2000 and the same is pending disposal. 5. As the petitioner was acquitted of the offences under the Income Tax Act, she made arepresentation dated 27.1.2006 to the first respondent and sought withdrawing of the prosecution ofthe offences under Section 420 and 511 IPC, in terms of guidelines of the Central Board of DirectTaxes. Since the representation was pending for a considerable time, the petitioner filedW.P.No.11191 of 2006 and this Court, by order dated 21.4.2006, directed the first respondent todispose of the petitioner's representation dated 27.1.2006 and her reminder dated 3.4.2006 in termsof the guidelines issued by the first respondent in F.No.285/161/190-I.T.(Inv.) dated 30.9.1984within a period of eight weeks from the date of receipt of the further representation from thepetitioner, strictly in accordance with law and on merits. 5. As the petitioner was acquitted of the offences under the Income Tax Act, she made arepresentation dated 27.1.2006 to the first respondent and sought withdrawing of the prosecution ofthe offences under Section 420 and 511 IPC, in terms of guidelines of the Central Board of DirectTaxes. Since the representation was pending for a considerable time, the petitioner filedW.P.No.11191 of 2006 and this Court, by order dated 21.4.2006, directed the first respondent todispose of the petitioner's representation dated 27.1.2006 and her reminder dated 3.4.2006 in termsof the guidelines issued by the first respondent in F.No.285/161/190-I.T.(Inv.) dated 30.9.1984within a period of eight weeks from the date of receipt of the further representation from thepetitioner, strictly in accordance with law and on merits. 6. Pursuant to the above said order, the second respondent, by his order dated 20.6.2006 turneddown the request of the petitioner on the following ground:- "Only when the case is compounded under the Income Tax At, the complaints under the I.P.C. Arewithdrawn ......... Since the matter is subjudice and is pending before the Hon'ble Supreme Court,your petition cannot be entertained. You can raise all the contentions before the Supreme Court ofIndia where the S.L.P.is pending against the order of this Madras High Court." On receipt of the order dated 20.6.2006, the petitioner moved the Supreme Court in M.P.No.10302of 2006 in Criminal Appeal No.969 of 2000 for appropriate directions. The Supreme Court, takingnote of the order dated 20.6.2006, passed an interim order dated 9.10.2006 clarifying that thependency of Criminal Appeal preferred before the Supreme Court shall not come in the way of thedepartment from considering the petition for compounding or withdrawal of the prosecution inaccordance with law. 7. Pursuant to the direction of the Supreme Court, the representation of the petitioner wasconsidered and by order dated 01.02.2007, the first respondent has rejected the request as follows:"The Department has already rejected your earlier petitioner for compounding of theoffences/withdrawal of prosecution. A copy of the latest communication sent to you by Speed Post on20.12.2006 is enclosed for your ready perusal.Unless the circumstances, I am of the considered opinion that it will serve no purpose in grantingpersonal hearing to you. You are therefore advised to advance your arguments before the Hon'bleSupreme Court where your appeal is pending." Aggrieved by the same, the petitioner has filed the present writ petition. 8. Learned counsel for the petitioner submitted that though a personal hearing was sought for, thesecond respondent has refused to provide sufficient opportunity to place all the materials andtherefore, it amounted to violation of natural justice. She further submitted that CBDT guidelineswere not considered in proper perspective by the authority while rejecting the request forcompounding. 9. In the instant case, while considering the representation of the petitioner on merits, the authorityfound that under the provisions of the Income Tax Act, compounding is not permissible in cases ofIPC offence. The authority who examined the matter afresh has found that it is not a fit case forwithdrawal of prosecution under the IPC offences. 10. Section 279 of the Income Tax Act deals with the prosecution of a person, at the instance ofChief Commissioner or Commissioner of Income Tax. As per Section 279(2) of the Income Tax Act,any offence under this Chapter may either before or after initiation of proceedings, be compoundedby the Chief Commissioner or Director General. In The Assistant Commissioner (CT)-II v. VelliappaTextiles reported in 2003(ii) SCC 405, the Supreme court held that compounding of offence is not aright of the accused nor is it his unilateral act, it can only be done with the consent of theauthorities, viz., the Chief Commissioner or Director General. 10. Section 279 of the Income Tax Act deals with the prosecution of a person, at the instance ofChief Commissioner or Commissioner of Income Tax. As per Section 279(2) of the Income Tax Act,any offence under this Chapter may either before or after initiation of proceedings, be compoundedby the Chief Commissioner or Director General. In The Assistant Commissioner (CT)-II v. VelliappaTextiles reported in 2003(ii) SCC 405, the Supreme court held that compounding of offence is not aright of the accused nor is it his unilateral act, it can only be done with the consent of theauthorities, viz., the Chief Commissioner or Director General. 11. In Concise Oxford Dictionary in Law, the meaning for the word "compound" is given as: (a)condone a liability or offence in exchange for money etc., (b) forbear from prosecuting (a felony)from private motives, and Law come to terms with a person, for foregoing a claim etc., for anoffence. For the expression "Compounding" in Ramanathan Aiyar's Law Lexicon, is "Arranging,Coming to terms, condone for money; arranging with the creditor to his satisfaction. For theexpression "compounding felony of offence", the the meaning given is "Compounding an offence isdefined to be "the offence of taking a reward for forbearing to prosecute a felony; as where the partyrobbed takes his goods again or other amends upon an agreement not to prosecute." The meaningdeduced from the word "compounding" from the above Dictionaries is "arranging or coming toterms, which means, it is not unilateral act. 12. Whenever a person makes an offer for compounding, he has no right to insist upon bilateralagreement. Even if there is any initiative by the offender, the complainant may not agree forarrangement or settlement of the offence, for which, the prosecution was launched. In case, wherethe complainant refuses or does not agree for coming to terms, the Court under Article 226 of theConstitution of India issue a Mandamus and compel him to come for settlement. Under suchcircumstances, it is not necessary to issue notice or provide an opportunity to the offender. 13. In view of the above, I do not see that the reasons stated in the impugned order are contrary tothe decision of the Supreme Court or the CBDT guidlines. Hence, this writ petition fails and thesame is dismissed. No costs. Consequently, M.P.Nos.1 and 2 of 2007 are also dismissed. skm 16.7.2007Note to Office: Issue on 28.02.2008Index: YesTo1. The Chief Commissioner of Income Tax, Chennai-IIChennai-34. 2. The Additional Director of Income Tax (Prosecution),Chennai-34.S. MANIKUMAR, J.skm 16.07.2007