SHREE SONAL GUM INDUSTRIES vs INCOME TAX OFFICER

Patel, J.

The petitioners, by this application, have prayed that the order, dated 2-2-1994, passed by the Assistant Director of Income Tax (Prosecution) 11, Ahmedabad, vide Annexure ''E'' calling upon the petitioner No. 1 to pay Rs. 47,658 as compounding fees, be quashed and set aside. It appears from the record placed before us that for the years 1975, 1976 and 1977, the amount of tax was deducted. However, the same was not deposited in accordance with the provisions of the Income Tax Act, 1961 (hererinafter referred to as ''the Act"). The petitioner No. 1 applied by letter dated 17-4-1989 (Annexure `B''), for compounding the offences, after the prosecution was launched u/s 276B of the Act. It appears that the Assistant Director of Income Tax (Prosecution) accepted the request and by an order dated 2-2-1994 called upon the petitioner No. 1 to pay the compounding fees.

By the present application, it is also prayed to quash and set aside the sanction granted by the respondent No. 2 for filing criminal complaints against the petitioners, the same being ultra vires, illegal and void and further directing them not to proceed with the criminal complaints pending before the Addl. Chief Metropolitan Magistrate, Ahmedabad.

It is required to be noted that the petitioners moved the learned Single Judge by filing three different applications u/s 482 of the Code of Criminal Procedure for quashing the proceedings, raising the contentions which are raised before us. Mr. Puj, the learned advocate for the petitioners, fairly stated that he is not pressing the similar prayer made in this application, as different applications are preferred for quashing the proceedings. In our opinion, he has rightly not pressed the prayer made in this application as a substantive application is already pending before the court and it will be open for him to raise all the contentions which are raised before us in this application.

So far as, the compounding fees are concerned, Mr. Puj submitted that the amount of tax deducted is much less than the amount fixed for compounding the cases. In order (Annexure ''E''), there is a reference that the compounding fees payable comes to Rs. 23,008, calculated at 5 per cent per month of the amount in default. Litigation expenses are also included. Considering these aspects, total amount of Rs. 47,658 was demanded. Our attention is drawn to a reported decision of the Apex Court in the case of Y.P. Chawla and others Vs. M.P. Tiwari and another, Section 279(2) of the Act confers the power on the Commissioner to exercise the discretion in compounding offences. The Central Board of Direct Taxes has issued instructions from time to time. The Explanation empowers the Board to issue orders, instructions or directions for the proper composition of offences u/s 279(2). Mr. Puj could not point out anything from the material on record that the Commissioner has failed to exercise his discretion u/s 279(2) in conformity with the instructions issued by the Board from time to time. If the powers are exercised in conformity with the directions issued by the Central Board of Direct Taxes, then, in absence of any material placed on the record, it would not be correct to say that the impugned order is bad in law and, hence, the application is required to be rejected. The application is, accordingly, rejected. Rule discharged with no order as to costs.