K. BALAKRISHNAN NAIR AND ANOTHER vs ASSISTANT COMMISSIONER OF Income Tax AND ANOTHER.

N. DHINAKAR J. - This miscellaneous case is to quash the proceedings in C.C. No. 95 of 1992 on the file of the Additional Chief Judicial Magistrate, Ernakulam. The petitioners are the second and third accused in the said C.C. and that they are the partners of a firm, which is shown as the first accused in the said complaint. The proceedings against the petitioners and the firm were instituted for offences under sections 276C and 277 of the Income Tax Act, 1961, on an allegation that the first accused, namely, the firm, and the petitioners who are the partners of the said firm have made an attempt to evade tax for the assessment year 1988-89.

Counsel for the petitioner submits that the Commissioner of Income- tax, by his order dated November 3, 1992, accorded sanction of prosecutes the petitioners and that the Commissioner violated the principle of natural justice, in that he did not issue any notice to the petitioners and her them before the said sanction order was passed. In support of his contention, learned counsel relied upon a decision in P.V. Pai, B.R. Shetty, Biyar Rubbers Pvt. Ltd. and Smt. Lasha B. Shetty Vs. R.L. Rinawma, Deputy Commissioner of Income Tax, . While dealing with section 279 of the Income Tax Act, the Karnataka High Court took the view that as far as compounding is concerned, the same may be made either before or after institution of the proceedings and, therefore, an assessee maybe anxious to offer composition even before prosecution to save himself from the "disgrace and ignominy of the prosecution". It was also held that simply because there was an opportunity to compound after the prosecution is launched, it does not necessarily follow that such opportunity should be denied before the prosecution is launched. Relying upon this decision counsel for the petitioners strenuously contended that had a notice been issued to them they would have offered to compound the offence and could have avoided the ignominy of facing a trial before the criminal court. With respect I am not able to agree with the said view expressed by the Karnataka High Court in the above decision. A reading of section 279 clearly shows that it is nowhere expected that the Commissioner before according sanction must issue a notice to the persons or persons concerned. Section 279 reads as follows :

"279(1). A person shall not be proceeded against for an offence u/s 275A, section 276, section 276A, section 276B, section, 276BB, section 276C, section 276CC, section 276D, section 277 or section 278, except with the previous sanction of the Commissioner or Commissioner (Appeals) or the appropriate authority."

If the intention of the Legislature was to enjoin a duty upon the Commissioner to issue a notice, then it could not have enacted sub- section (2) of section 279. Sub-section (2) reads as follows :

"(2) Any offence under this Chapter may, either before or after the institution of proceedings, be compounded by the Chief Commissioner or a Director-General."

The above sub-section shows that even after the institution of the proceedings, the offence can be compounded. The section nowhere prevents the persons from approaching the Commissioner to compound the offence. It is not as if a notice is a must for the persons to approach the Commissioner and seek the permission of the Commissioner to compound the offence.

The words in section 279 "before or after" show that a compounding can be done even after the institution of the proceedings and that the petitioner is not barred from compounding the offence. The above said words will also indicate that there was no need for the Commissioner to have issued a notice before passing an order of sanction.

Counsel for the petitioner also brought to my notice a judgment of the Supreme Court in C.B. Gautam Vs. Union of India and Others, . For his above argument the judgment of the Supreme Court is no way helpful to the cause of the petitioner. All that the Supreme Court has stated is that the courts have generally read into the provision of the relevant sections a requirement of giving a reasonable opportunity of being heard before an order is made which would have adverse civil consequences for the parties affected, and that would be particularly so in a case where the validity of the section would be open to serious challenge for want of such an opportunity. Here the validity of section is not questioned and adverse civil consequences to the parties will not be affected as section 279 itself takes care of the rights of the parties to compound the offence even after the proceedings were instituted.

As the accused are not prohibited from approaching the Commissioner even before the sanction is accorded, the petitioners could have very well approached the Commissioner and sought for compounding the offence. They, not having done it, cannot at this belated stage, say that natural justice was violated in that the Commissioner did not order any notice to them. No such notice is contemplated in the Act and the Act also does not prohibit persons from approaching the Commissioner for compounding the offence at a later stage.

Under these circumstances, I feel that this criminal miscellaneous case cannot be allowed and, accordingly, it is dismissed.