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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgement Delivered on : 03.01.2017
+ W.P.(C) 3397/2016
SPORTS INFRATECH PVT. LTD. & ANR ..... Petitioners
Through: Mr. Aditya Nayyar, Adv.
Versus
DEPUTY COMMISSIONER OF INCOME
TAX(HQRS) ..... Respondent
Through: Mr. Sanjay Kumar and Mr. Dileep
Shivpuri, Advs.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE NAJMI WAZIRI
S. RAVINDRA BHAT (ORAL)
1. The petitioner is aggrieved by an order of the Chief
Commissioner of Income Tax under Section 279(2) of the Income
Tax Act, 1961 rejecting its application whereby relief of
compounding of the offence under Section 276B had been sought.
2. Facts are not denied; the petitioner had omitted to deposit
amounts deducted as tax, from the sums payable under various
contracts. These contracts were entered into by it, towards services
rendered in connection with the Commonwealth Games, 2010. The
amount in question i.e. the delayed payment was to the tune of
Rs.70,06,803/-. The petitioner was proceeded with and apparently a
complaint for the offence prescribed under Section 276B was filed. It
W.P.(C) 3397/2016 Page 1 of 7
was in these circumstances that the petitioner sought for compounding
of the offence under Section 279(2). Its application was rejected; by
the impugned order. The Chief Commissioner inter alia reasoned as
follows:
"The case is not found to be fit for
compounding as the applicant does not fulfil criteria
no. 13 of application proforma. In the applicant's
case the CBI has conducted search operations on
the premises on 08.04.2011 and as a consequence of
this the company was black listed by the Central
Public Works Department and Delhi Development
Authority. Opportuniies of being heard were
provided by the A.O. and by the undersigned before
deciding the application &facts on record have been
considered carefully. The applicant does not fulfil
the eligibility conditions for consideration of its case
for compounding as per para 8(v) of Board's
guidelines dated 3.12.2014. Hence, the
compounding application is not acceptable which is
rejected hereby."
3. The Chief Commissioner appears to have formed the opinion
that the compounding was not permissible in view of the guidelines
issued by the Central Board for Direct Taxes imposed especially in
view of para 8(v) thereof. For convenience it would be necessary to
extract para 7 and para 8 of the said guidelines which are as follows:
"7. Eligibility Conditions for compounding:
The following conditions should be satisfied for
considering compounding of an offence:-
i. The person makes an application to. the
CCIT/DGIT having jurisdiction over the
case for compounding of the offence(s) in
W.P.(C) 3397/2016 Page 2 of 7
the prescribed format.
ii. The person has paid the outstanding tax,
interest, penalty and any other sum due,
relating to the offence for which
compounding has been sought.
iii. The person undertakes to pay the
compounding charges including the
compounding fee, the prosecution
establishment expenses and the litigation
expenses including counsel's fee, if any,
determined and communicated by the
CCIT/DGIT concerned.
iv. The person undertakes to withdraw appeal
filed by him, if any, in case the same has a
bearing on the offence sought to be
compounded. In case such appeal has mixed
grounds, some of which may not be related
to the offence under consideration, the
undertaking may be taken for appropriate
modification in grounds of such appeal.
8. Offences generally not to be compounded:
i. A Category 'A' offences sought to be
compounded by an applicant in whose case
compounding was allowed in the past, in an
offence under the same section for which the
present compounding has been requested, on
3 occasions or more.
ii. A Category 'B' offence other than the first
offence as defined herein below:
First offence means offence under any
of the Direct Tax Laws committed
prior to (a) the date of issue of any
show-cause notice for prosecution or
(b) any intimation relating to
W.P.(C) 3397/2016 Page 3 of 7
prosecution by the Department to the
person concerned or (c) launching of
any prosecution, whichever is earlier;
OR
Offence not detected by the
department but voluntarily disclosed
by a person prior to the filing of the
application for compounding of
offence in the case under any Direct
Tax Acts. For this purpose, offence is
relevant if it is committed by the same
entity. The first offence is to be
determined separately with reference
to each section of the Act under which
it is committed.
iii. Offences committed by a person who, as a
result of investigation conducted by any
Central or State agency and as per
information available with the CCIT/DGIT
concerned, has been found involved, in any
manner, in anti-national /terrorist activity.
iv. Offences committed by a person who, was
convicted by a court of law for an offence
under any law, other than the Direct Taxes
Law, for which the prescribed punishment
was imprisonment for two years or more,
with or without fine, and which has a
bearing on the offence sought to be
compounded.
V. Offences committed by a person which, as
per information available with the CCIT /
DGIT concerned, have a bearing on a case
under investigation (at any stage including
enquiry, filing of FIR/ Complaint) by
Enforcement Directorate, CBI, Lokpal,
Lakayukta or any other Central or State
W.P.(C) 3397/2016 Page 4 of 7
agency."
4. The petitioner contends that the view taken by the Chief
Commissioner cannot be sustained for the reasons that the ongoing
investigations have culminated in a closure report. In support of this
contention, reliance is placed upon the letter from Superintendent of
Police, CBI's letter of 11.08.2015, written to it. That letter reads as
follows:
"11.8.2015
To,
The Director,
Sports Infratech Pvt. Ltd.
204, OI
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