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2009 Supreme(Mad) 1013
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE A. KULASEKARAN & THE HONOURABLE MR. JUSTICE B. RAJENDRAN
The Chairman Central Board of Direct Taxes North Block, Central Secretariat New Delhi & Others
Versus
Umayal Ramanathan
Writ Appeal No.439 of 2003 and W.A.M.P.No.540 of 2003
Decided on: 06-04-2009
For the Appellants : K. Ramasamy Senior Special Public Prosecutor.
For the Respondent:Sasidharan, Advocate.
The central legal point established in the judgment is that the power to compound offences under Section 279 (2) of the Income Tax Act can be exercised even during the pendency of an appeal, and the refusal to compound the offence in a discriminatory manner is unsustainable in law.
Headnote:
Income Tax Act - Compounding of Offence - Section 279 (2) - Summary of Acts and Sections: The court discussed the application of Section 279 (2) of the Income Tax Act, 1961, which permits compounding of offences either before or after the institution of proceedings. The court highlighted the wide amplitude of the term 'proceedings' and its inclusion of appellate proceedings, emphasizing that compounding could be allowed even during the pendency of an appeal. The court also noted a previous instance where a similarly placed individual's request for compounding was accepted by the appellants, despite a conviction and pending appeal. The court found the refusal to compound the offence in the present case to be discriminatory and unsustainable in law, ultimately dismissing the writ appeal and directing the appellants to receive the compounding fee and inform the appellate court accordingly.
Fact of the Case:
The respondent was convicted and sentenced for offences under Section 120-B, 420 read with Section 109 IPC and Section 278 of the Income Tax Act. The respondent filed a petition under Section 279 (2) of the Act to compound the offence after the conviction, which was rejected by the third appellant. The respondent then filed a writ petition, which was allowed by the court, quashing the rejection of the compounding request.
Finding of the Court:
The court found the refusal to compound the offence to be discriminatory and unsustainable in law, ultimately dismissing the writ appeal and directing the appellants to receive the compounding fee and inform the appellate court accordingly.
Issues: The main issue was the refusal to compound the offence under Section 279 (2) of the Income Tax Act, which the court found to be discriminatory and unsustainable in law.
Ratio Decidendi: The court emphasized the wide amplitude of the term 'proceedings' and its inclusion of appellate proceedings, highlighting that compounding could be allowed even during the pendency of an appeal. The court also noted a previous instance where a similarly placed individual's request for compounding was accepted by the appellants, despite a conviction and pending appeal.
Final Decision: The writ appeal was dismissed, and the appellants were directed to receive the compounding fee and inform the appellate court accordingly.
A. Kulasekaran, J.
1. This appeal is directed against the order dated 211. 2002 made in W.P. No. 33925 of 2002 of the learned single Judge allowing the writ petition filed by the respondent herein, which was filed challenging the order of the third appellant refusing to exercise its power conferred under Section 279 (2) of The Income Tax Act, 1961, hereinafter referred to as Act to compound the offence.
2. The facts involved in this case is that the respondent herein was prosecuted by the appellants for the offence under Section 120-B, 420 read with Section 109 IPC and Section 278 of the Act before the learned Additional Chief Metropolitan Magistrate (Economic Offences), Egmore, Madras in EO C.C. No. 637 of 1985 and by order dated 30.11.1998, the said Court convicted and sentenced the respondent herein to undergo rigorous imprisonment for six months and to pay a fine of Rs.5,000/- each under each of the offences under Section 120B, 420 read with 109 of IPC and under Section 278 of the Act, in default to undergo simple imprisonment for three months. Challenging the said conviction and sentence imposed by the said Court, the respondent herein has filed an appeal in C.A. No. 250 of 1998 before the learned Principal Sessions Judge, Chennai, which is pending. Pending disposal of the said appeal, the respondent has filed a petition under Section 279 (2) of the Act before the third appellant on 09.04.2001 to compound the offence and also expressed her willingness to pay the entire amount towards compounding fee. The said petition was rejected by the third appellant by proceedings dated 02.08.2002 on the sole ground that already the criminal court convicted her, hence, the request for compounding the offence is not acceptable. Aggrieved by the said order dated 02.08.2002, the respondent herein has filed W.P. No. 33925 of 2002, which was allowed by this Court on 211. 2002 quashing the said proceedings dated 02.08.2002 of the third appellant herein, in which para Nos. 2 and 3 are relevant, which are extracted hereunder:-
"2. It is not in dispute that the respondents-department themselves in a case similarly placed, moved this Court seeking to invoke the powers conferred under Section 279 (2) of the Income Tax Act for compounding offence while the matter was pending before this Court for revision and obtained leave of this Court to commute offence by exercising power conferred under Section 279 (2) of the Income Tax Act vide order dated 11.02.2000 in Crl.M.P. No. 984 of 2000 in Crl.R.C. No. 588 of 1996, even though the respondent-accused therein was also convicted and whose conviction was subsequently upheld by the Appellate Court.
3. If that be so, the refusal of the third respondent to consider the request of the petitioner to compound the offence in the instant case, by exercising the power conferred on him under Section 279 (2) of the Income Tax Act is arbitrary, unreasonable and discriminatory and therefore, I am obliged to quash the impugned proceedings and direct the respondents to consider the representation of the petitioner for compounding the offence said to have been committed by him in spite of his conviction and pass appropriate orders on merits expeditiously, in any event within 60 days from today. Till then, the order of stay granted by this Court in WMP No. 50161 of 2002 shall continue. This writ petition and W.M.P. No. 50161 of 2002 are disposed of accordingly. No costs."
3. Mr. Ramasamy, learned Senior Special Public Prosecutor appearing for the appellants submitted that the respondent has filed the petition for compounding the offence on 09.04.2001 i.e., after the order of conviction and sentence passed by the learned Additional Chief Metropolitan Magistrate (Economic Offences), Egmore, Madras in EO C.C. No. 637 of 1985 dated 30.11.1998, hence, at that stage, seeking compounding of the offence was not permissible under Section 279 (2) of the Act; that on considering the above said factors, the third appella
