$~41 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of Decision : 12.12.2024 + W.P.(C) 16701/2024 & CM APPL. 70662/2024 SUMIT BHARANA .....Petitioner Through: Mr. Tanmay Nagar, Mr. Surinder Sinha & Ms. Shamli Verma, Advocates.

versus UNION OF INDIA & ORS. .....Respondents Through: Ms Saroj Bidawat, SPC for UOI.

Mr Ruchir Bhatia, SSC, Mr Anant Mann, JSC and Mr Abhishek Anand, Advocate. CORAM:

HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE TUSHAR RAO GEDELA VIBHU BAKHRU, ACJ. (ORAL

1. The petitioner has filed the present petition, inter alia, impugning an order dated 28.05.2024 (hereafter the impugned order) rejecting the petitioner’s application for compounding of the offences under Section 276B and 278B of the Income Tax Act, 1961 (hereafter the Act).

2. The petitioner states that he was a director of the respondent no.5 company at the material time. He had received the show cause notice dated 30.06.2016 under Section 2(35) of the Act for the financial year (FY) 2012- 13 and 2013-14, calling upon the petitioner to show cause as to why he should not be considered as the principal officer of the respondent no.5 company and the prosecution under Section 276B of the Act not be launched against him for defaults in depositing the Tax Deducted at Source (TDS).

Signature Not Verified Digitally Signed W.P. (C) 16701/2024 Page 1 of 4

3. The petitioner responded to the said show cause notice inter alia, asserting that the respondent no.5 company had deposited the TDS for the FY 2012-13.

4. The concerned Income Tax Authority passed an order dated 12.07.2016 declaring the petitioner to be the principal officer of respondent no.5 company for FY 2012-13 and 2013-14. Thereafter, the respondents initiated the proceedings for prosecuting the petitioner for default in depositing the TDS for the relevant period.

5. On 18.10.2016, the CC No.541060/2016 captioned Income Tax Officer v. M/s Adel Landmarks Limited & Others was filed before the learned ACMM and summons were issued to the respondent no.5 as well as the petitioner in the said case. In the meanwhile, the proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC) commenced in respect of respondent no.5 before the National Company Law Tribunal (NCLT). On 03.02.2019, the learned ACMM (Special Court) framed the charges under Section 276B read with Section 278B and 278E of the Act against the petitioner and respondent no.5. However, thereafter the proceedings in respect of the respondent no.5 were stayed pursuant to the moratorium under the IBC.

6. The petitioner filed an application for compounding of the offences, however the said application was rejected by the impugned order.

7. A plain reading of the impugned order indicates that the same was rejected as the main accused (respondent no.5 – M/s Adel Landmark Limited) had not filed any application for the compounding of the offences Signature Not Verified Digitally Signed W.P. (C) 16701/2024 Page 2 of 4 before the competent authority [Chief Commissioner of Income Tax (TDS)] as the said authority was of the view that the petitioner’s application for compounding could not be considered on a stand alone basis.

8. The Central Board of Direct Taxes (CBDT) has recently, on 17.10.2024, issued fresh guidelines for compounding of the offences under the Act. It is relevant to refer to paragraph no.11 of the said guidelines, which are reproduced below:-

“11. Co-accused and Abettor-Section 278B (Offences by companies) and Section 278C (Offences by Hindu undivided families)

11.1 Where an offence under this Act has been committed by a Company or HUF as defined in section 278B or 278C of the Act, an application for compounding may be filed separately or conjointly by the main accused i.e., Company, or HUF and/or any of the person(s) deemed to be guilty of the offence under section 278B or 278C of the Act, to be referred as “Co-accused” for the purpose of compounding under these guidelines. The Competent Authority may decide the application accordingly sub