WHETHER THERE IS ANY TIME LIMIT FOR FILING COMPOUNDING APPLICATION FOR PROSECUTION U/S 279?

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Short note of today's case law for quick reference:

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[2024] 464 ITR 81 (Mad)

[IN THE MADRAS HIGH COURT]

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JAYSHREE

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CENTRAL BOARD OF DIRECT TAXES AND OTHERS

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1. The assessee purchased an item of immovable property in the year 2006, sold it in the year 2013 and reinvested the sale consideration in the purchased of immovable property.

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2. She filed a belated return of income in year 2016.

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3. Subsequently, the she was prosecuted for delay in filing of the return and filed an application under section 279 for compounding of offences in the year 2021.

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4. The application was rejected as filed beyond the period of limitation of 12 months as prescribed by circular F. No. 285/08/2014-IT (Inv. V)/147, dated June 14, 2019 issued by CBDT. On writ petition it was held that:

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No where in section 279(2), had a time limit mentioned for filing an application for compounding of offences u/s 279 though the explanation thereunder, stated that CBDT was empowered to issue orders, circulars, instructions and directions for the purpose of proper implementation of the Act.

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5. The intention of legislature for bringing section 279(2) was to permit the assessee to file an application for compounding of offence either before institution of proceedings or after institution of proceedings.

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6. The fixing of a time limit by CBDT by way of circular was contrary to the intention of the legislature and amounted to amendment of section 279(2).

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7. Since the idea of the legislature was that the compounding of offences was permissible either before or after the institution of the proceedings the CBDT could not issue a circular contrary to the object of the provisions of section 279.

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8. Clause 7(ii) of Circular F. No. 285/08/2014-IT (Inv. V)/147, dated 14.06.2019 was beyond the scope of the Act and hence, that portion of the circular was to be struck down.

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9. The matter was remanded to the authority to decide the application on merits in accordance with law.