Conviction for an offense does not mean that application for compounding of offense is not maintainable

Relevant Extract of the Judgment

3. The abovesaid order was passed under Section 279 (2) of the Income Tax Act, 1961 (hereinafter, referred to as ‘the Act’), whereby the Chief Commissioner of Income Tax TDS has rejected the petitioner’s Application for compounding the offence committed by the petitioner under Section 276 B (at 5% per month for the period of default) and under Section 276 B read with Section 278 B (at 10% of the main offence) of the Act, for the assessment year 1983-84.

4. From the statement of facts, which is appended as Annexure-A to the impugned order, the Chief Commissioner has perused the guidelines given by CBDT, dated 16.05.2008, and stated that, considering the nature, magnitude and conduct of the assessee, and that Non Bailable Warrant was issued to the assessee, and the assessee has been convicted by the Criminal Court, and when there is conviction by the competent Criminal Court, the question of compounding the offence does not arise. Accordingly, the Chief Commissioner rejected the Application.

5. To decide the correctness of the impugned order, it would be necessary to take note of the following facts:-

i) The petitioner/Firm consists of two Partners, viz., M/s.V.Mohammed Athaullah. and his son M/s.Mohammed  Anwarullah. The petitioner paid interest to its depositors without deducting TDS for the years 1981-82, 1983-84 and 1984-85, and for the failure to deduct TDS and remit it to the Government of India, which was criminal offence under Sections 276 B and 278 B of the Act, 24 complaints were filed against i) the Firm/accused No.1, and its partners, viz., ii) Mohammed Athaullah/accused 2, and iii) V.Mohammed Anwarullah/accused No.3 before the Additional Chief Metropolitan Magistrate, Economic Offences-I, Chennai, in E.O.C.C.No.268 to 291/1997, by the Income Tax Officer, Headquarters, Chennai. During the course of trial, accused No.2, Mohammed Athaullah died, and charges against him stood abated.

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