The assessee filed a contempt petition before the court on the ground that the Director General (Investigation) had wilfully neglected the directions issued by the court in its order dated February 28, 2019. The court dismissed the contempt petition on the ground that there was no merit in the contempt petition by an order dated January 31, 2020 but directed that the application for compounding of offences filed by the assessee was to be re-examined by the Department based on the liberalised policy of the Central Board of Direct Taxes in its clarification dated June 14, 2019, section 279(1A) and other facts mentioned therein. On appeal, allowing the appeal the Court held that having held that there was no merit in the contempt petition the directions issued by the court were beyond its scope of jurisdiction while considering the contempt petition. With regard to the effect and applicability of the circular issued by the Central Board of Direct Taxes dated June 14, 2019, which came into effect from June 17, 2019 admittedly the circular was not in vogue when the assessee filed his first application under section 279(2). The court while testing the correctness of the order dated January 15, 2014 had examined the correctness of the circular or guidelines which were in vogue when the order was passed which was the circular dated May 16, 2008. The court had in the order in question stated that neither the respondent nor the Department had brought to the notice of the court about the fresh circular dated June 14, 2019, when the writ petition was heard in August, 2019 (filed in 2014). The effective date of the circular referred to by the court was June 17, 2019 and these issues neither directly nor indirectly arose for consideration in the contempt petition and there were no pleadings to that effect. Consequently the Department had no opportunity to put forth its submissions. Therefore, the directions were set aside. Liberty was granted to the assessee to file a fresh application for compounding of offences and put forth all his contentions. (AY.2002-03)
D. C. Patwari v. K. M. Mammen (2022) 445 ITR 254/ 215 DTR 25 (Mad.)(HC) Editorial: Decision of the single judge in K. M. Mammen v. D. C. Patwari (2022) 445 ITR 234 / 215 DTR 25/ 327 CTR 158 (Mad.)(HC) affirmed.
S. 276C : Offences and prosecutions-Wilful attempt to evade tax-Rejection of application for compounding of offences-Contempt proceedings-Directions Issued by Court in contempt petition-Court cannot issue directions traversing beyond its scope of jurisdiction-Liberty was granted to the assessee to file a fresh application for compounding of offences and put forth all his contentions. [S. 277, 279, Contempt of Courts Act, 1971, S. 11, 12, Art. 226]