pay 100% of the tax sought to be evaded for compounding of offence under Section­276C(1) of the Income Tax Act, 1961

Case covered:

MEHTA LABORATORIES THROUGH PARTNER KAUSHIK MAYACHAND MEHTA
Versus

THE PRINCIPAL CHIEF COMMISSIONER OF INCOME TAX 2

Facts of the case:

The short facts of the case are that the petitioner was a partnership firm and dealing in the business of lubricating oil and petroleum products. The search was conducted on various premises of the petitioner on 11th October 1984. During the course of the search, incriminating material such as books of accounts, written loose papers, etc. and 503 grams of gold ornaments were seized and were retained under section 132(5) of the Act. In the scrutiny assessment proceedings, an assessment order was passed for the period from A.Y. 1983­84 to A.Y.1985­86 by the Assessing Officer making addition on account of cash credit, bogus purchases, etc.

 Being aggrieved by the assessment order, an appeal was preferred before the Commissioner of Income Tax (Appeals) and then before the Income Tax Appellate Tribunal, which was partly allowed.

In the year 1987, three complaints under Sections 276C(1), 271, 278B and 278 of the Act, 1961 were filed being Criminal Case No.57 of 1987 for A.Y. 1983­84; Criminal Case No.54 of 1987 for A.Y.1984­85 and Criminal Case No.56 of 1987 for A.Y. 1985­86 in the Court of the Additional Chief Metropolitan Magistrate, Ahmedabad by the respondents against the petitioner.

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Observations of the court:

In view of the aforesaid decision of this Court, for compounding of an offense under Section­276C(1) of the Act, 1961 would be permissible on payment of 100% of the tax sought to be evaded and not 100% of the amount sought to be evaded by the assessee.

In view of the foregoing, the petitions succeed and are accordingly allowed. The petitioner is therefore required to pay 100% of the tax sought to be evaded for compounding of an offense under Section­276C(1) of the Income Tax Act, 1961.
The rule is made absolute to the aforesaid extent. No order as to costs.