M/S SHIVALIK INFRASTRUCTURE AND DEVELOPERS PVT LTD AND ORS vs. DEPUTY COMMISSIONER OF INCOME TAX

Facts

The petitioners, M/s Shivalik Infrastructure and Developers Pvt Ltd and others, and M/s Shiwalik Site Planners Pvt. Ltd. and others, filed petitions before the High Court of Punjab & Haryana at Chandigarh. They sought to quash criminal complaints filed against them in the Court of Chief Judicial Magistrate, Chandigarh. The complaints were filed under Section 276C(2) read with Sections 277 and 278(b) of the Income Tax Act, 1961. The grounds for seeking quashing were that the petitioners were ready to pay the defaulted amount. The respondent is the Deputy Commissioner of Income Tax, Circle-6(1), Mohali. A reply was filed indicating that while some amount had been paid, an outstanding amount remained.

Held

The High Court disposed of both petitions. The Court directed the competent authority to take a decision on any application filed by the petitioners for compounding of the offences. The learned trial court was requested to adjourn the case for a period of one month. The judgment does not explicitly state a finding on whether the criminal complaints were liable to be quashed, but rather facilitates a procedural step towards potential resolution through compounding. The principle derived is that courts may facilitate the process of compounding of offences under the Income Tax Act by directing authorities to consider applications within a stipulated timeframe, especially when no objection is raised by the revenue.

Key Issues

1. Whether the criminal complaints filed under Section 276C(2) read with Sections 277 and 278(b) of the Income Tax Act, 1961, are liable to be quashed on the ground that the petitioners are ready to pay the defaulted amount? (Question of law and fact). Assessee's Contention: The petitioners argued that the criminal complaints should be quashed because they are prepared to pay the outstanding defaulted amount. They further submitted that they are ready to make an application to the competent authority, the Principal Chief Commissioner, Income Tax, Chandigarh, for compounding of the offences and requested a direction for this authority to decide the application within one month. Revenue's Contention: The learned counsel for the respondent (Income Tax Department) did not raise any objection to the petitioners' request.