Shri Bhagwan Dass Bansal And Anr v. Chief Commissioner Of Income Tax-1, Kolkata And Ors

OD 12 ORDER SHEET WPO 235 of 2020IN THE HIGH COURT AT CALCUTTACONSTITUTIONAL WRIT JURISDICTIONORIGINAL SIDE SHRI BHAGWAN DASS BANSAL AND ANR.VS CHIEF COMMISSIONER OF INCOME TAX-1, KOLKATA AND ORS. BEFORE: The Hon'ble JUSTICE MD. NIZAMUDDIN Date: 3[rd] February, 2023. Ms. Anupa Banerjee, Adv.…for the petitionerMr. Soumen Bhattacharjee, Adv.…for the respondents The Court: Heard learned advocates appearing for the parties. By this writ petition, petitioner has challenged the impugned order dated 13[th]January, 2020, rejecting the application of the petitioner for compounding of offence,under Section 276CC of the Income Tax Act, 1961, relating to assessment years 2012-13, 2013-14, 2014-15 and 2015-16. Grounds of challenge of order of rejection of theaforesaid application for compounding of offence is that the Chief Commissioner ofIncome Tax /respondent concerned has included some alleged dues pertaining to someother assessment years against which petitioners themselves have not prayed forcompounding of offence, if any, in the aforesaid application. Petitioners submit that theChief Commissioner concerned has enlarged the scope and ambit of the circular of theBoard dated 14[th] June, 2019, relating to offence under Section 276CC particularlyClause 7(iii) of the said circular which is hereunder : “7……………………. (iii) The person has paid the outstanding tax, interest (including interest u/s, 220of the Act), penalty and any other sum due, relating to the offence for which compounding has been sought before making the application. However, if any relateddemand is found outstanding on verification by the department, the same should beintimated to the applicant and if such demand including interest u/s 220 is paid within30 days of the intimation by the Department, then the compounding application wouldbe deemed to be valid.” It appears from plain reading of the aforesaid clause of the circular in questionthat the eligibility criteria under Section 276CC is that before making such applicationfor compounding of the aforesaid offence, an assessee will have to pay outstanding tax,interest (including interest u/s, 220 of the Act), penalty and any other sum due, “relatingto the offence for which compounding has been sought” and it further appears from theaforesaid clause of the circular in question that if any “related demand” is foundoutstanding on verification by the department, the same should be intimated to theassessee. Here legal question which arises is with regard to the expression of “relateddemand” that it can be enlarged to what extent? Can it include demand relating any yearor every assessment year which is not the part of the application against whichcompounding of the offence has been prayed for by the assessee petitioner in thisapplication. To my reading the scope of expression “related demand found outstanding”cannot be enlarged to the extent that the revenue can include any or every assessmentyear which is not the part of the assessment years for which application forcompounding of offence under Section 276CC of the Income Tax Act, 1961 has beenmade by an assessee/petitioner, for the reason that when the revenue itself has nottreated any outstanding due in respect of any other assessment year other than theyears involved in the application for compounding of offence and it has not initiated anyproceedings by treating the same as an offence and the assessee himself also has notprayed for compounding of the offence if any relating to those other unrelatedassessment years. Moreso, the aforesaid circular of the Board itself has used the expression ‘relating to offence’ and there is a specific column in serial nos. 9 and 10 inannexure I of the aforesaid circular which are quoted hereunder : “9. Whether the applicant has paid the amount of tax, interest, penalty and anyother sum due ‘relating to the offence’. 10. Whether the applicant undertakes to pay further tax, interest, penalty andany other amount as is found to be payable on verification of the record.” expression ‘relating to offence’ and there is a specific column in serial nos. 9 and 10 inannexure I of the aforesaid circular which are quoted hereunder : “9. Whether the applicant has paid the amount of tax, interest, penalty and anyother sum due ‘relating to the offence’. 10. Whether the applicant undertakes to pay further tax, interest, penalty andany other amount as is found to be payable on verification of the record.” On reading the contents of both the aforesaid serial numbers it appears to methat that the Board itself has asked the assessee to pay the tax, interest, penalty andany other sum due “relating to the offence” and serial no. 10 which has used expression“other amount” cannot be read in isolation of serial no. 9. Considering the facts and circumstances of the case and ambit and scope of theaforesaid circular of the Board, dated 14[th] June, 2019, in my considered view therespondent Chief Commissioner concerned was not justified in rejecting the aforesaidapplication of the petitioner under Section 276CC of the Income Tax Act, 1961, byenlarging the scope of the aforesaid circular by including other assessment years againstwhich petitioner himself has not asked for compounding of the same, if any, particularlywhen the revenue itself has also not initiated any penal proceeding relating to theassessment year which it intends to include in the aforesaid application forcompounding of offence. Accordingly in view of the discussion made above, the aforesaid impugned orderdated 13[th] January, 2020 rejecting the applications of the petitioner for compounding ofthe offence under Section 276CC of the Income Tax Act, 1961 relating to the assessmentyears referred in the said application, is not justifiable in law and the same is set asideand the matter is remanded back to the Chief Commissioner of Income Tax/ respondentconcerned to reconsider the applications in question filed by the petitioner by passing areasoned and speaking order after taking into consideration the discussion and observation made in this order, within a period of eight weeks from the date ofcommunication of this order. Needless to mention that before passing any order on the aforesaid application ofthe petitioners, opportunity of hearing should be afforded to them. With these observations and directions, this writ petition being WPO235 of 2020stands disposed of. TR/ (MD. NIZAMUDDIN, J.)