Delay in filing of application for compounding of offences is not valid ground for rejection of application for compounding of offences u/s 279
In the recent judgment passed by the Hon'ble High Court of Delhi, in the case of Vikram Singh v/s Union of India & Other where asseesee seeking the quashing of circular dated 23rd of Dec 2014 and in particular, para no.12 thereof which sets out the fee for compounding. In this case, assessee was filed application for compounding of offences under Section 275C(1), 276C(2) & 277 of the Act before CCIT, Delhi and this application was rejected by the department on the ground that "there is inordinate delay of 9 years in filing of application for compounding of offences by the assessee".
The department clarify that the rejection of the application for compounding was not on the ground of failure to pay the compounding fee, but on the ground of the delay in filing the application. The Prosecution complaint under sections 276C(1) & 276C(2) were filed before the criminal court and the charges have already been framed by the Court. Thus, the compounding application under consideration was filed by the accused after about 10 years of filing the prosecution complaint. Para 8(vii) of the Revised Guidelines for compounding dated 23.12.2014 provides that offences Committed by a person for which prosecution complaint was filed by the Department with the competent court 12 months prior to receipt of the compounding application are generally not to be compounded.
The aforesaid circular does not stipulate a limitation period for filing the application for compounding. According to circular para 8 (vii) which provide that "Offences committed by a person for which complaint was filed with the competent court 12 months prior to receipt of the application for compounding."
In other word circular para 8 (vii) is not prescribing a period of limitation for filing an application for compounding. It gives a discretion to the competent authority to reject an application for compounding on certain grounds. Again, it does not mean that every application, which involves an offence committed by a person, for which the complaint was filed to the competent court 12 months prior to the receipt of the application for compounding, will without anything further, be rejected. Hence, the resort cannot be had to para 8 of the circular to prescribe a period of limitation for filing an application for compounding.
Understandably, there is no limitation period for considering the application for compounding. The grounds on which an application may be considered, should not be confused with the limitation for filing such an application. The Court finds nothing in Section 279 of the Act or the Explanation thereunder to permit the CBDT to prescribe such an onerous and irrational procedure which runs contrary to the very object of Section 279 of the Act. The CBDT cannot arrogate to itself, on the strength of Section 279 of the Act or the Explanation thereunder, the power to insist on a 'pre-deposit' of sorts of the compounding fee even without considering the application for compounding. If that is the understanding of para 11(v) of the above Circular by the Department, then certainly it is undoubtedly ultra vires Section 279 of the Act.
The Court, accordingly, clarifies that , the Department cannot on the strength of para 11(v) of the Circular dated 23rd December 2014 of the CBDT reject an application for compounding either on the ground of limitation or on the ground that such application was not accompanied by the compounding fee or that the compounding fee was not paid prior to the application being considered on merits. The Court, directing the CCIT to consider afresh the Petitioner’s application for compounding of offence under Section 279 of the Act.
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