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Sports Infratech Pvt. Ltd. & Anr. Vs. Deputy Commissioner Of Income Tax (Hqrs)
January, 20th 2017
$~8
*      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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