The Chief Commissioner Of Income Tax Income-Tax Office v. Umayal Ramanathan

IN THE HIGH COURT OF JUDICATURE AT MADRAS THE HONOURABLE MR. JUSTICE A. KULASEKARANandTHE HONOURABLE MR. JUSTICE B. RAJENDRAN 1. The Chairman Central Board of Direct Taxes North Block, Central Secretariat New Delhi – 110 001 2. The Chief Commissioner of Income Tax Income-Tax Office No.121, Nungambakkam High Road Chennai – 600 0343. The Joint Director of Income-Tax (Prosecution) Income Tax Office No.121, Nungambakkam High Road Chennai – 600 034.. Appellants/respondentsVersusUmayal Ramanathan.. Respondent/Petitioner Appeal under Clause 15 of Letters Patent against the Orderdated 29.11.2002 made in Writ Petition No. 33925 of 2002 on thefile of this Court. WP.33925 of 2002:- Writ Petition filed under Article 226 of theconstitution of India to issue a writ of certiorarifiedmandamus, calling for the records pertaining to the prosecutionproceedings in EOCC.No.637 of 1985 dated 2.8.2002 of the 3[rd]respondent and quash the same and direct the respondents topermit the petitioner to compound the offence under section 279(2) of the Income Tax Act. https://hcservices.ecourts.gov.in/hcservices/ (Judgment of the Court was delivered by A. KULASEKARAN, J) This appeal is directed against the order dated 29.11.2002made in W.P. No. 33925 of 2002 of the learned single Judgeallowing the writ petition filed by the respondent herein,which was filed challenging the order of the third appellantrefusing to exercise its power conferred under Section 279 (2)of The Income Tax Act, 1961, hereinafter referred to as Act tocompound the offence. 2.The facts involved in this case is that therespondent herein was prosecuted by the appellants for theoffence under Section 120-B, 420 read with Section 109 IPC andSection 278 of the Act before the learned Additional ChiefMetropolitan Magistrate (Economic Offences), Egmore, Madras inEO C.C. No. 637 of 1985 and by order dated 30.11.1998, thesaid Court convicted and sentenced the respondent herein toundergo rigorous imprisonment for six months and to pay a fineof Rs.5,000/- each under each of the offences under Section120B, 420 read with 109 of IPC and under Section 278 of theAct, in default to undergo simple imprisonment for threemonths. Challenging the said conviction and sentence imposedby the said Court, the respondent herein has filed an appeal inC.A. No. 250 of 1998 before the learned Principal SessionsJudge, Chennai, which is pending. Pending disposal of the saidappeal, the respondent has filed a petition under Section 279(2) of the Act before the third appellant on 09.04.2001 tocompound the offence and also expressed her willingness to paythe entire amount towards compounding fee. The said petitionwas rejected by the third appellant by proceedings dated02.08.2002 on the sole ground that already the criminal courtconvicted her, hence, the request for compounding the offenceis not acceptable. Aggrieved by the said order dated02.08.2002, the respondent herein has filed W.P. No. 33925 of2002, which was allowed by this Court on 29.11.2002 quashingthe said proceedings dated 02.08.2002 of the third appellantherein, in which para Nos. 2 and 3 are relevant, which areextracted hereunder:- "2.It is not in dispute that therespondents-department themselves in a casesimilarly placed, moved this Court seekingto invoke the powers conferred underSection 279 (2) of the Income Tax Act forcompounding offence while the matter waspending before this Court for revision andobtained leave of this Court to commuteoffence by exercising power conferred underhttps://hcservices.ecourts.gov.in/hcservices/Section 279 (2) of the Income Tax Act videorder dated 11.02.2000 in Crl.M.P. No. 984of 2000 in Crl.R.C. No. 588 of 1996, even though the respondent-accused therein wasalso convicted and whose conviction wassubsequently upheld by the Appellate Court. "2.It is not in dispute that therespondents-department themselves in a casesimilarly placed, moved this Court seekingto invoke the powers conferred underSection 279 (2) of the Income Tax Act forcompounding offence while the matter waspending before this Court for revision andobtained leave of this Court to commuteoffence by exercising power conferred underhttps://hcservices.ecourts.gov.in/hcservices/Section 279 (2) of the Income Tax Act videorder dated 11.02.2000 in Crl.M.P. No. 984of 2000 in Crl.R.C. No. 588 of 1996, even though the respondent-accused therein wasalso convicted and whose conviction wassubsequently upheld by the Appellate Court. 3.If that be so, the refusal of thethird respondent to consider the request ofthe petitioner to compound the offence inthe instant case, by exercising the powerconferred on him under Section 279 (2) ofthe Income Tax Act is arbitrary,unreasonableanddiscriminatoryandtherefore, I am obliged to quash theimpugned proceedings and direct therespondents to consider the representationof the petitioner for compounding theoffence said to have been committed by himin spite of his conviction and passappropriate orders on merits expeditiously,in any event within 60 days from today.Till then, the order of stay granted bythis Court in WMP No. 50161 of 2002 shallcontinue. This writ petition and W.M.P.No. 50161 of 2002 are disposed ofaccordingly. No costs." 3.Mr. Ramasamy, learned Senior Special PublicProsecutor appearing for the appellants submitted that therespondent has filed the petition for compounding the offenceon 09.04.2001 i.e., after the order of conviction and sentencepassed by the learned Additional Chief Metropolitan Magistrate(Economic Offences), Egmore, Madras in EO C.C. No. 637 of 1985dated 30.11.1998, hence, at that stage, seeking compounding ofthe offence was not permissible under Section 279 (2) of theAct; that on considering the above said factors, the thirdappellant has rightly refused to compound the offence soughtfor by the respondent and prayed for allowing this writ appeal. 4.Mr. Sasidharan, learned counsel appearing for therespondent submitted that Section 279 (2) of the Act isprovided to facilitate compounding of offence, either before orafter institution of the proceedings, considering the same, thelearned single Judge has rightly applied it and set aside theimpugned proceedings of the third appellant; that theappellants herein, in another case where the trial court hasconvicted a similarly placed assessee, whose appeal was alsodismissed, and pending revision, the said assessee has filed apetition for compounding the offence invoking Section 279 (2)of the Act and in that case the appellants accepted the plea ofthe said assessee and went to the extent of filing Crl.M.P. No.984 of 2000 in Crl.R.C. No. 588 of 1996 seeking leave of theCourt to permit them to entertain the application under Section279 (2) and ultimately compounded the offence, while so,https://hcservices.ecourts.gov.in/hcservices/adopting a different yardstick in the case of the respondentand refusing to compound the offence on the sole ground thatshe was convicted by the trial court is discriminatory, besides it is unsustainable in law and prayed for dismissal of the writappeal. it is unsustainable in law and prayed for dismissal of the writappeal. 5.This Court carefully considered the submission ofcounsel for both sides. The plea of the respondent is thatSection 279 (2) of the Act permits the appellants to compoundthe offence either before or after institution of theproceedings, which power is not exercised without any validreasons; that when similarly placed person was convicted andwhose conviction was confirmed by the appellate court andpending revision before this Court in Crl.R.C. No. 588 of 1996,the assessee has filed similar petition for compounding theoffence, which was entertained by the appellants afterobtaining leave by filing Crl.M.P. No. 984 of 2000 in Crl.R.C.No. 588 of 1996, while so, refusing the same relief to therespondent, where the trial court alone convicted her and theappeal is pending, is discriminatory. 7.It is evident from Section 279 (2) of the Act thatany offence under this Chapter may either before or after theinstitution of proceedings, be compounded by the ChiefCommissioner or a Director General. 8.The term 'proceedings' is not defined in the IncomeTax Act, 1961. The term 'proceedings' is a term of wideamplitude and comprehensive and generally speaking means aprescribed course of action for enforcing a legal right. It isnot a technical expression with a definite meaning attached toit, but one the ambit of whose meaning would be governed bystatute. In this context, it is useful to refer to the belowmentioned decisions of the Honourable Supreme Court. i)(Babu Lal vs. M/s. Hazari Lal Kishori Lal and others)AIR 1982 SC 818 wherein in Para-17, it was held thus:-“17. The word 'proceeding' is notdefined in the Act. Shorter OxfordDictionary defines it as “carrying of anaction at law, a legal action or process;any act done by authority of a Court oflaw; any step taken in a cause by eitherhttps://hcservices.ecourts.gov.in/hcservices/party”. The term 'proceeding' is a verycomprehensive term and generally speakingmeans a prescribed course of action for enforcing a legal right. It is not atechnical expression with a definitemeaning attached to it , but one the ambitof whose meaning would be governed bystatute. It indicates a prescribed mode inwhich judicial business is conducted. Theword 'proceeding' in S.22 includesexecution proceedings also. ii)(P.L. Kantha Rao and others vs. State of AndhraPradesh and others) AIR 1995 Supreme Court 807 wherein in ParaNo.3, it was held thus:-“3......Therefore,theterm'proceeding' in S.29 is a very wide term tomean a prescribed course of action toenforce the legal right. It indicates theprescribed mode in which the judicialbusiness is conducted. The execution is astep in the judicial process. It seeks toenforce the final order to realise theresult of the adjudication.....” 9.The term proceeding shall also include theproceedings at the appellate stage. In (Lachhman Dass Vs.Santokh Singh) (1995) 4 SCC 201 in para-7, it was held by theHonourable Supreme Curt thus:-“7......Precisely stated, an appealis a continuation of a suit or proceedingswherein the entire proceedings are againleft open for consideration by theappellate authorities which has the powerto review the entire evidence subject, ofcourse, to the prescribed statutorylimitations. But in the case of revisionwhatever powers the revisional authoritymay have, it has no power to reassess andreappreciate the evidence unless thestatute expressly confers on it that power.That limitation is implicit in the conceptof revision. In this view of the matter weare supported by a decision of this Courtin State of Kerala vs. K.M. Charia Abdullahand Co.” 10. In the case on hand, against the conviction andsentence passed by the trial court, on the complaint preferredby the appellants, the respondent has filed an appeal and thesame is pending, which is a prescribed course of action forenforcing a legal right. The said appeal is also a proceedingas contemplated under Section 279 (2) of the Act. https://hcservices.ecourts.gov.in/hcservices/11.For the discussions above, this Court is of theconsidered view that pending appeal, the appellants can verywell compound the offence sought for by the respondent, which they failed. It is not out of context to mention that inearlier occasion, the appellants have allowed the applicationfor compounding of offence filed by similarly placed assessee,who was convicted by trial court, his appeal was alsodismissed, he filed revision and in the said revision, theappellants have filed Crl.M.P. No. 984 of 2000 in Crl.R.C. No.588 of 1996 and obtained leave from the Court to consider it.While so, the appellants have refused to exercise such power inthe case on hand by misinterpreting Section 279 (2) of the Act,which is unfair. The learned single Judge considered the abovesaid facts and rightly set aside the order passed by the thirdappellant, hence, the writ appeal is dismissed. No Costs.Consequently, connected W.A.M.P. No. 540 of 2003 is closed. 12.In view of the fact that the respondent is aged about83 years, who has filed the petition for compounding as earlyas on 09.04.2001, which was rejected by the third appellant on02.08.2002, to meet the ends of justice, it is warranted todirect the parties as follows:-i)The respondent is permitted to pay the amountdemanded by the appellants for compounding of the offencewithin a period of four weeks from the date of receipt of acopy of this judgment ii)On such payment, the appellants are directed toreceive it, compound the offence and inform the same to thePrincipal Sessions Judge, Chennai where the appeal in C.A. No.250 of 1998 preferred by the respondent is pending, within aperiod of six weeks thereafter 13.It is needless to mention that on receipt of suchintimation from the appellants or the respondent, the saidCourt shall dispose of the said C.A. No. 250 of 1998 pendingbefore it in accordance with law expeditiously. Sd/Asst.Registrar /true copy/ To 1. The Chairman Central Board of Direct Taxes North Block, Central Secretariat New Delhi – 110 001 2. The Chief Commissioner of Income Tax Income-Tax Officehttps://hcservices.ecourts.gov.in/hcservices/ No.121, Nungambakkam High Road Chennai – 600 034 3. The Joint Director of Income-Tax (Prosecution) Income Tax Office No.121, Nungambakkam High Road Chennai – 600 034 (Prosecution) Income Tax Office No.121, Nungambakkam High Road Chennai – 600 034 4. The Principal Sessions Judge, Chennai. + 1 cc to Mr. A. Sasidharan, Advocate CCSR 12825 RSM(CO)SR/21.4.2009 WA No. 439 of 2003