D. C. PATWARI, IRS Vs. K. M. MAMMEN

JUDGEMENT

(1.) This appeal by the Revenue is directed against that portion of the order passed in Cont.P.No.2079 of 2019 dated 31.01.2020, filed by the respondent herein to punish the appellants on the ground that they have wilfully violated the order and direction issued in W.P.No.3929 of 2014 dated 28.08.2019.

(2.) A brief prelude of the factual position would be necessary, before we examine the correctness of the stand taken by the Registry as regards the maintainability of this appeal. The respondent filed the writ petition in W.P.No.3929 of 2014 to quash the order passed by the first appellant dated 15.01.2014, under Section 279(2) of the Income Tax Act, 1961 (hereinafter referred to as "the I.T.Act") rejecting the petition filed by the respondent to compound the offence framed against him under Section 276C and Section 277 of the I.T.Act for the assessment year 2002-03.

(3.) It was alleged by the appellant-Department that when the respondent filed his return of income for the assessment year 2002-03, he has concealed an amount of Rs.2,26,38,372/- deposited in a foreign bank account and therefore, to be prosecuted for offence punishable under Section 276C of the I.T.Act. The respondent filed a petition under Section 279(1) of the I.T.Act for compounding the offence. The first appellant, after referring to the facts of the case and after hearing the Authorized Representative of the respondent, took note of the circular issued by the Central Board of Direct Taxes (CBDT) dated 16.05.2008, wherein guidelines have been laid down by the CBDT with regard to compounding of offence under the Direct Tax Laws. The first appellant, in his order dated 15.01.2014, while rejecting the compounding petition, observed that the respondent cannot claim, as a matter of right, that the offence should be compounded; Clause (g) of para 4.4 of the CBDT circular dated 16.05.2008, states that the first appellant may consider any other relevant ground for not accepting the compounding petition. Further, it was observed that the respondent had effected cross-border transactions and if not for the information received from a foreign Government, the Revenue would have been put to great loss. It was further observed that though the respondent may claim certain infirmity in the nature of the evidence on which the Department relies, the fact is that the signature of the respondent tallies with the signature in the document and this evidence establishes major fraud, insofar as funds have gone out of the country and if not for the information obtained, the monies would have remained untaxed. Further, the respondent in keeping funds abroad, that too, in countries where banking secrecy law shield the investment, is also to be regarded as anti-national activity. Further, the Income Tax Appellate Tribunal (ITAT) has upheld the orders passed by the Revenue, vide order dated 25.02.2013 and the matter is also under investigation by the Enforcement Directorate. The respondent cannot take advantage of the fact that the nature of the documents is not foolproof and accordingly, there is a case for compounding; the respondent has not produced the documents, nor the copies of the accounts to disprove the stand taken by the Department. Thus, considering the nature of the offence and the quantum of income involved, the first appellant held that it is not a fit case for compounding the offence committed and the respondent's case will fall under para 3, 4.4(b), 4.4(c) and 4.4(g) of the circular dated 16.05.2008 and therefore, the petition deserves to be rejected.