My s.276B prosecution for late deposit of TDS is pending and the CBDT has issued fresh compounding guidelines dated 17 October 2024. Will the High Court still quash the complaint under s.482 CrPC?
On this order, not as a matter of course. The Orissa High Court, having read clauses 4.6 and 8.3 of the CBDT's guidelines of 17 October 2024, took the view that the Department has now harmonised the procedure for compounding offences under the Act arising out of curable defects, and that in the present regime, where compounding of the offence is permissible, the inherent jurisdiction under s.482 CrPC need not necessarily be invoked. The petition was disposed of with liberty to seek compounding, and with a direction that the application be considered on its merits uninfluenced by the Court's observations.
Decided by the High Court (Sibo Sankar Mishra J) on 2025-01-07, reported as CRLMC No. 3284 of 2023 (High Court of Orissa at Cuttack). It bears on section 276B, section 276BB, section 278AA, section 279(2), section 192 of the Income Tax Act 1961, in Prosecution and TDS Defaults matters.
This is the practical consequence of the new compounding regime for anyone holding a s.276B or s.276BB complaint, and it is a change of direction: the same Judge had quashed a s.276B prosecution nine months earlier where the TDS had been paid with interest before the complaint. The guidelines the Court read are also the source of two conditions a practitioner must plan around. Clause 4.6 requires that an application for compounding under s.276B or s.276BB for any period for a particular TAN cover all defaults constituting the offence in respect of that TAN for that period, and that the quantum of TDS default for a quarter be arrived at by combining the defaults in all the statements filed for that quarter. Clause 8.3 fixes the Competent Authority where two or more TANs fall in two or more jurisdictions as the authority where the quantum of default is higher, with the other applications transferred to it, and gives the Pr. CCIT having PAN jurisdiction thirty days to resolve a dispute over which authority is competent. Nothing is said here about eligibility conditions or the compounding fee, because only those two clauses were before the Court.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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A complaint under s.190 CrPC alleged that the petitioner, the Drawing and Disbursing Officer of M/s Indoo Ingots and Re-rollers Private Limited, had deducted tax at source of Rs.2,52,000 under s.192 from salary payments between April 2010 and November 2010 during FY 2010-11 but had not deposited it to the credit of the Central Government by the due dates, the first of which was 07.05.2010; the amount was deposited on 28.12.2011, after a delay of more than twelve months. The trial court took cognizance of the offence under s.276B. The petitioner applied for discharge on the ground that he had deposited the entire TDS with delayed interest, explained the cause of the delay, and sought the benefit of s.278AA. The Additional Chief Judicial Magistrate (Special Court), Cuttack rejected the application by order dated 20.07.2023 in 2(c) C.C. Case No.70 of 2013, and the petitioner moved the High Court under s.482 CrPC. He relied on the same Court's judgment of 15.04.2024 in Sree Metaliks Limited v. Union of India (CRLMC No.1921 of 2023). The Department resisted, relying on the CBDT circular dated 17.10.2024 laying down fresh guidelines for compounding, and specifically on clauses 4.6 and 8.3, and contending that with a compounding route available the inherent jurisdiction of the High Court was not to be exercised.
The petition was disposed of, not allowed on the merits, with liberty to the petitioner to approach the trial court for compounding of the offence relying on the CBDT circular dated 17.10.2024, and with a direction that any such application be considered on its merits without being influenced by the Court's observations. Where the Department has formulated guidelines under which the offence complained of is compoundable, the inherent jurisdiction under s.482 CrPC may not necessarily be invoked.
The Court read the circular dated 17.10.2024 and held that it makes it abundantly clear that the Department has harmonised the entire procedure for compounding all kinds of offences under the Act arising out of curable defects, and that clauses 4.6 and 8.3, which it reproduced, deal directly with the offences for which the petitioner was being prosecuted. From that it concluded that in the present regime, where compounding of the offence is permissible, the s.482 jurisdiction need not necessarily be invoked, and that the petitioner might instead pursue the compounding remedy relying on the circular (para 7). The Court did not decide the s.278AA reasonable cause point, and did not distinguish or disapprove Sree Metaliks; it simply redirected the petitioner.
Therefore, in the present regime, where the compounding of the offence is permissible, the jurisdiction of this Court under Section 482 Cr.P.C. may not be necessarily invoked by the petitioner.
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Handle my notice → Ask a CA on WhatsAppOn this order, not as a matter of course. The Orissa High Court, having read clauses 4.6 and 8.3 of the CBDT's guidelines of 17 October 2024, took the view that the Department has now harmonised the procedure for compounding offences under the Act arising out of curable defects, and that in the present regime, where compounding of the offence is permissible, the inherent jurisdiction under s.482 CrPC need not necessarily be invoked. The petition was disposed of with liberty to seek compounding, and with a direction that the application be considered on its merits uninfluenced by the Court's observations. This was decided by the High Court (Sibo Sankar Mishra J) and bears on section 276B, section 276BB, section 278AA, section 279(2), section 192 of the Income Tax Act 1961. It is reported as CRLMC No. 3284 of 2023 (High Court of Orissa at Cuttack). This is the practical consequence of the new compounding regime for anyone holding a s.276B or s.276BB complaint, and it is a change of direction: the same Judge had quashed a s.276B prosecution nine months earlier where the TDS had been paid with interest before the complaint. The guidelines the Court read are also the source of two conditions a practitioner must plan around. Clause 4.6 requires that an application for compounding under s.276B or s.276BB for any period for a particular TAN cover all defaults constituting the offence in respect of that TAN for that period, and that the quantum of TDS default for a quarter be arrived at by combining the defaults in all the statements filed for that quarter. Clause 8.3 fixes the Competent Authority where two or more TANs fall in two or more jurisdictions as the authority where the quantum of default is higher, with the other applications transferred to it, and gives the Pr. CCIT having PAN jurisdiction thirty days to resolve a dispute over which authority is competent. Nothing is said here about eligibility conditions or the compounding fee, because only those two clauses were before the Court. If it applies to you, the first step is this: Read the CBDT guidelines dated 17 October 2024 in full before advising on eligibility, conditions or fee; only clauses 4.6 and 8.3 were before this Court and are recorded in the order.
A complaint under s.190 CrPC alleged that the petitioner, the Drawing and Disbursing Officer of M/s Indoo Ingots and Re-rollers Private Limited, had deducted tax at source of Rs.2,52,000 under s.192 from salary payments between April 2010 and November 2010 during FY 2010-11 but had not deposited it to the credit of the Central Government by the due dates, the first of which was 07.05.2010; the amount was deposited on 28.12.2011, after a delay of more than twelve months. The trial court took cognizance of the offence under s.276B. The petitioner applied for discharge on the ground that he had deposited the entire TDS with delayed interest, explained the cause of the delay, and sought the benefit of s.278AA. The Additional Chief Judicial Magistrate (Special Court), Cuttack rejected the application by order dated 20.07.2023 in 2(c) C.C. Case No.70 of 2013, and the petitioner moved the High Court under s.482 CrPC. He relied on the same Court's judgment of 15.04.2024 in Sree Metaliks Limited v. Union of India (CRLMC No.1921 of 2023). The Department resisted, relying on the CBDT circular dated 17.10.2024 laying down fresh guidelines for compounding, and specifically on clauses 4.6 and 8.3, and contending that with a compounding route available the inherent jurisdiction of the High Court was not to be exercised. The matter was decided on 2025-01-07 by the High Court (Sibo Sankar Mishra J). On those facts the High Court held as follows. The petition was disposed of, not allowed on the merits, with liberty to the petitioner to approach the trial court for compounding of the offence relying on the CBDT circular dated 17.10.2024, and with a direction that any such application be considered on its merits without being influenced by the Court's observations. Where the Department has formulated guidelines under which the offence complained of is compoundable, the inherent jurisdiction under s.482 CrPC may not necessarily be invoked.
The Court read the circular dated 17.10.2024 and held that it makes it abundantly clear that the Department has harmonised the entire procedure for compounding all kinds of offences under the Act arising out of curable defects, and that clauses 4.6 and 8.3, which it reproduced, deal directly with the offences for which the petitioner was being prosecuted. From that it concluded that in the present regime, where compounding of the offence is permissible, the s.482 jurisdiction need not necessarily be invoked, and that the petitioner might instead pursue the compounding remedy relying on the circular (para 7). The Court did not decide the s.278AA reasonable cause point, and did not distinguish or disapprove Sree Metaliks; it simply redirected the petitioner. In the words reproduced by the source cited on this page: "Therefore, in the present regime, where the compounding of the offence is permissible, the jurisdiction of this Court under Section 482 Cr.P.C. may not be necessarily invoked by the petitioner." The decision followed or applied Sree Metaliks Limited and others v. Union of India and another, CRLMC No.1921 of 2023 (Orissa), decided 15.04.2024 — cited by the petitioner; not applied and not distinguished.
It was decided by the High Court on 2025-01-07 and is reported as CRLMC No. 3284 of 2023 (High Court of Orissa at Cuttack). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 276B, section 276BB, section 278AA, section 279(2), section 192, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The petition was disposed of, not allowed on the merits, with liberty to the petitioner to approach the trial court for compounding of the offence relying on the CBDT circular dated 17.10.2024, and with a direction that any such application be considered on its merits without being influenced by the Court's observations. Where the Department has formulated guidelines under which the offence complained of is compoundable, the inherent jurisdiction under s.482 CrPC may not necessarily be invoked. It arises in Prosecution and TDS Defaults matters, on section 276B, section 276BB, section 278AA, section 279(2), section 192 of the Income Tax Act 1961, and was decided by Sibo Sankar Mishra J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Consolidate: for each TAN and period, list every default constituting an offence under s.276B or s.276BB, and compute the quarterly quantum by combining defaults across all statements filed for the quarter, as clause 4.6 requires. Where the company holds TANs in more than one jurisdiction, identify the jurisdiction with the higher quantum of TDS default and file there; ask for the transfer of the others rather than filing in parallel. If the compounding route is being taken, tell the criminal court and seek time rather than pressing a quashing petition that may be met with this order. Treat the reference in this order to s.320 CrPC with care and see the editor note; the compounding power under the Income-tax Act is in s.279(2) and is exercised by the specified income-tax authority on an application to that authority.
Searched for later treatment; none was found. That is not the same as a source affirming it. A citator search on citedby:108468377 returns nothing. A second search for "Binod Pattanayak" returns 13 documents, all of them earlier orders in the same CRLMC No. 3284 of 2023 or unrelated matters involving the same petitioner. No later decision cites the 7 January 2025 judgment and no Supreme Court matter was found. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order describes the remedy, in para 7, as resorting to 'the procedural remedy under Section 320 Cr.P.C.', and disposes of the petition in para 8 with liberty to approach the trial court for compounding. That is not how compounding under the Income-tax Act works: s.279(2) confers the power to compound, before or after the institution of proceedings, on the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General, and it is exercised on an application to that authority under the CBDT's guidelines, not by the criminal court under s.320 CrPC. The order should be read for what it decides — that the High Court will not exercise s.482 jurisdiction where compounding is available — and not as authority on the route. The order reproduces clauses 4.6 and 8.3 of the CBDT circular dated 17.10.2024 in para 6. The rest of the circular, including any conditions and the compounding charges, was not before the Court and is not stated here. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The petition was disposed of, not allowed on the merits, with liberty to the petitioner to approach the trial court for compounding of the offence relying on the CBDT circular dated 17.10.2024, and with a direction that any such application be considered on its merits without being influenced by the Court's observations. Where the Department has formulated guidelines under which the offence complained of is compoundable, the inherent jurisdiction under s.482 CrPC may not necessarily be invoked.
TaxSphere, “Binod Pattanayak v Union of India”, https://taxnotice.vittsphere.com/caselaw/case/binod-pattanayak-v-uoi-276b-relegated-to-compounding-2024-guidelines/ (validity last checked 2026-09-08)
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