VIKRAM SINGH Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner challenges the imposition, legality and validity of compounding fee - a fee charged under the Income Tax Act , 1961 (for short,'the Act'), to compound offences committed by assessees. Challenge has been primarily raised to the legality of the quantum of compounding fee, as prescribed by guidelines issued by the Central Board of Direct Taxes (for short, 'CBDT') dated 23rd December, 2014 and seeks quashing of the same as being arbitrary and unfair. The petitioner further seeks setting aside of the compounding fee of Rs.69,75,949/- imposed upon him for compounding of offences under the Act.

(2.) A search and seizure operation was carried out at the petitioner's residence and office in New Delhi. Pursuant to the said operation, notices dated 19th March, 1997 were issued under Section 158BC of the Act. In response to the notices, the petitioner filed block assessment returns on 28th May, 1997 disclosing NIL undisclosed income. The Assessing Officer (for short, 'the AO') passed a block assessment order dated 28th November, 1997, under Section 158BA of the Act holding that the petitioner had earned undisclosed income of Rs.30,15,158/- during the block assessment period.

(3.) The block assessment order was challenged in appeal before the Income Tax Appellate Tribunal (for short, 'ITAT') registered as IT(SS)375/DEL/97. No stay was granted. During the pendency of the appeal before the ITAT, prosecution proceedings were initiated against the petitioner under Sections 276C(1) , 276C(2) and 277 of Act for wilful evasion of tax, wilful failure to pay tax, false verification etc., The complaint registered as case No.23 of 2004 was filed before the ACMM, Special Act s (Central Government), Delhi. After pre-charge evidence, charges were framed against the petitioner on 21st April, 2010 for wilful evasion of tax and interest payable under the Act, as also for failure to pay the tax demand in spite of notice under Section 221 of the Act having been received. Another charge against the petitioner was that he had made a false verification of his block return declaring NIL undisclosed income. Order for framing of charge was passed on 25th January, 2010. Charges were framed on 21st April, 2010.