T.K.SUNDARESHAN vs. PRINCIPAL COMMISSIONER OF INCOME TAX,

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WP(C)/15031/2020HC KeralaKLHC01038070202023 November 2021Author: HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS5 pages
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What did the High Court hold?

The High Court of Kerala held that the writ petition could be disposed of by directing the respondents to consider and pass appropriate orders on the compounding application in a time-bound manner. The Court issued a specific direction to the 3rd respondent (Director General of Income Tax (Investigation)) to consider and pass appropriate orders on the petitioner's application filed under Section 279 of the Income Tax Act, 1961, within a period of five months from the date of receipt of a copy of the judgment. This consideration is to be after affording an opportunity of hearing to the petitioner. Furthermore, the Court ordered that the criminal prosecution against the petitioner before the Additional Chief Magistrate (E.O.), Ernakulam, shall stand stayed until such orders are passed on the compounding application. The principle established is that the authorities must act expeditiously on compounding applications, and the court can intervene to ensure timely disposal and stay proceedings pending such decision.

What were the facts?

The petitioner, T.K. Sundareshan, aged 64, is facing criminal prosecution under the Income Tax Act, 1961, for alleged offences under Sections 276C(1) and 277. He submitted an application for compounding of these offences on November 26, 2019, under Section 279 of the Act. The petitioner approached the High Court of Kerala seeking a direction for the respondents to consider and pass orders on his compounding application in a time-bound manner, citing that the application was filed over two years prior and that the respondent's own guidelines stipulate a six-month period for consideration. The respondents are the Principal Commissioner of Income Tax, Deputy Commissioner of Income Tax, and Director General of Income Tax (Investigation).

What were the issues?

1. Whether the High Court should issue a writ of mandamus directing the respondents to consider and pass appropriate orders on the petitioner's compounding application filed under Section 279 of the Income Tax Act, 1961, within a specified time frame? (Question of law and procedure) Assessee's Contention: The petitioner argued that his compounding application, filed on November 26, 2019, has been pending for an unreasonable period. He relied on the respondents' own guidelines which suggest a six-month period for considering such applications, and therefore, sought a direction for early disposal. Revenue's Contention: The judgment records that the learned Standing Counsel appearing for the respondents was heard, but does not detail any specific arguments or contentions raised by the revenue.

Which sections of the Income-tax Act were involved?

Section 276C(1),Section 277,Section 279

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Heard together (2 matters)

WP(C) NO. 15031 OF 2020
W.P.(C)No.15031 of 2021

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 23RD DAY OF NOVEMBER 2021 / 2ND AGRAHAYANA, 1943 WP(C) NO. 15031 OF 2020 PETITIONER/S: T.K.SUNDARESHAN AGED 64 YEARS S/O.KUNJUKRISHNAN, 'ASWATHY', SIVAN KOVIL ROAD, PUNALUR, KOLLAM-691305. BY ADVS. SIVASHANKAR PANICKER SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT SRI.RENOY VINCENT RESPONDENT/S: 1 PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, 5TH FLOOR, KANDAMKULATHY TOWERS, M.G.ROAD, ERNAKULAM-682011. 2 DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, 4TH FLOOR, AAYAKAR BHAVAN, KOWDIAR, THIRUVANANTHAPURAM-695003. 3 DIRECTOR GENERAL OF INCOME TAX (INVESTIGATION), ARYA BHANGI PINNACLE, S.A.ROAD, ELAMKULAM, ERNAKULAM- 682020. BY ADV SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 23.11.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 15031 OF 2020 2 BECHU KURIAN THOMAS, J. =============================== W.P.(C)No.15031 of 2021 ----------------------------------------------------- Dated this the 23rd day of November, 2021

JUDGMENT Petitioner is facing criminal prosecution under the Income Tax Act, 1961 for the offences under Sections 276C(1) and 277. He had filed an application for compounding of the offences as provided under Section 279 of the Act, copy of which is produced as Ext.P25. Petitioner confines his prayer for a direction to consider and pass appropriate orders in a time bound manner on the compounding application, since according to the petitioner, the same was filed as early as on 26.11.2019. 2. Adv.Shivshankar R panicker, learned Counsel for the petitioner submits that, even as per the guidelines issued by the respondents, the application for compounding is to be considered within a period of six months and therefore, he seeks for a direction for an early disposal.

3.

I have heard Adv.Shivshankar R Panicker, learned Counsel for the petitioner as well as Sri.Jose Joseph, learned Standing Counsel appearing for the respondents.

WP(C) NO. 15031 OF 2020 3

4.

Having regard to the circumstances pointed out, I am of the view that the writ petition can be disposed of directing the respondents to consider and pass appropriate orders on the compounding application in a time bound manner.

5.

Accordingly, there will be a direction to the 3rd respondent to consider and pass appropriate orders on Ext.P25 application filed by the petitioner under Section 279 of the Income Tax Act, 1961, within a period of five months from the date of receipt of a coy of this judgment, after affording an opportunity of hearing to the petitioner. Till such orders are passed, criminal prosecution against the petitioner before the Additional Chief Magistrate (E.O.), Ernakulam, shall stand stayed. The writ petition is disposed of accordingly. BECHU KURIAN THOMAS

JUDGE jm/

WP(C) NO. 15031 OF 2020 4

Appendix — schedule of exhibits
APPENDIX OF WP(C) 15031/2020 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2010-11. EXHIBIT P2 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2011-12. EXHIBIT P3 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2012-13. EXHIBIT P4 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2013-14. EXHIBIT P5 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2014-15. EXHIBIT P6 TRUE COPY OF THE ASSESSMENT ORDER DATED 30.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2015-16. EXHIBIT P7 TRUE COPY OF THE ASSESSMENT ORDER DATED 31.12.2017 PASSED BY THE RESPONDENT NO.2 FOR THE AY 2016-17. EXHIBIT P8 TRUE COPY OF THE ORDER DATED 23.8.2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)- III, KOCHI. EXHIBIT P9 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2010-11. EXHIBIT P10 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2011-12. EXHIBIT P11 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2012-13. EXHIBIT P12 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2013-14. EXHIBIT P13 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2014-15. WP(C) NO. 15031 OF 2020 5 EXHIBIT P14 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2015-16. EXHIBIT P15 TRUE COPY OF THE PROCEEDINGS OF THE RESPONDENT NO.2 DATED 1.10.2018 GIVING EFFECT TO CIT (APPEALS) ORDER FOR THE AY 2016-17. EXHIBIT P16 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2010- 11. EXHIBIT P17 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2011- 12. EXHIBIT P18 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2012- 13. EXHIBIT P19 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2013- 14. EXHIBIT P20 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2014- 15. EXHIBIT P21 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2015- 16. EXHIBIT P22 TRUE COPY OF THE PENALTY ORDER DATED 16.7.2019 PASSED BY THE 2ND RESPONDENT FOR THE AY 2016- 17. EXHIBIT P23 TRUE COPY OF THE COMPOUNDING APPLICATION DATED 10.10.2019 SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT NO.1. EXHIBIT P24 TRUE COPY OF THE LETTER DATED 21.11.2019 ISSUED FROM THE OFFICE OF THE RESPONDENT NO.1 TO THE PETITIONER. EXHIBIT P25 TRUE COPY OF THE COMPOUNDING APPLICATION DATED 26.11.2019 SUBMITTED BY THE PETITIONER BEFORE THE RESPONDENT NO.3. EXHIBIT P26 TRUE COPY OF THE PROCEEDINGS SHEET OF THE 14 PROSECUTION CASE INITIATED AGAINST THE PETITIONER BEFORE THE ACJM (EO), ERNAKULAM.

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