The Commissioner has refused to compound my s.276CC offence. Can I take that refusal to the High Court?
Yes. The Delhi High Court set aside a rejection of a compounding application for offences under s.276CC read with s.278E. The two reasons given for the refusal — that the application was out of time, and that the applicant stood convicted — had both fallen away, the first because the Board had relaxed the time limit and the second because the conviction had been set aside on appeal. The Court sent the application back to be considered on its merits.
Decided by the High Court (Delhi High Court - Manmohan and Navin Chawla, JJ. (judgment delivered by Navin Chawla, J.); W.P.(C) 2356/2020) on 2022-02-25, reported as (2022) 325 CTR 485 / 211 DTR 293 (Delhi)(HC); W.P.(C) 2356/2020 [assessment years 2008-09 to 2013-14]. It bears on section 276CC, section 278E of the Income Tax Act 1961, in Prosecution matters.
Compounding is discretionary and the department treats a rejection as unassailable. This decision shows the rejection order being read like any other administrative order: if the grounds recited in it are no longer good, the order goes and the application has to be decided again. It also confirms that a compounding refusal is reachable under Article 226 without waiting for the criminal trial to run its course.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee applied to compound offences under s.276CC read with s.278E for assessment years 2008-09 to 2013-14. The Additional Chief Metropolitan Magistrate (Special Acts), Central, Tis Hazari Courts, Delhi convicted him by order of 19 February 2018 in CC No. 535107/2016. The Chief Commissioner rejected the compounding application by order of 21 August 2018 on two grounds - that it had not been filed within the stipulated time, and that the assessee already stood convicted. On 3 December 2018 the Special Judge-03, CBI (PC Act), Delhi set aside the conviction and the order of sentence, directing the Magistrate to consider the fresh documents filed by the assessee and pass a fresh order in the trial. The Chief Commissioner nevertheless dismissed the review application by order of 29 January 2020, observing that the conviction was still open for adjudication and that the assessee had not been acquitted of the criminal charges. Both orders were challenged under Article 226.
The petition was disposed of by setting aside both impugned orders and directing the Chief Commissioner to consider the compounding application on its merits and in accordance with law, with no order as to costs (paras 13 and 14). The Court took the rejection order of 21 August 2018 at the two grounds it states (para 9) and held that neither survived: “As far as the ground of limitation is concerned, in view of the CBDT circular dated 09.09.2019, the said objection does not survive any further. As far as the conviction is concerned, in view of the order dated 03.12.2018 passed by the learned Special Judge, the said objection also no longer survives as the conviction has been set aside” (para 10). On the review order of 29 January 2020 it held the reason given untenable in law: the conviction having been set aside, a compounding application cannot be rejected on the ground that the applicant has not been acquitted, since such an application is premised on his facing the charge and not having been acquitted of it (para 11). The Court gave no direction that the offence be compounded.
The Court did not construe the compounding guidelines or the offence. It read the rejection order as resting on exactly two grounds and tested each. The limitation ground fell away because of the CBDT circular of 9 September 2019. The conviction ground fell away because the conviction had been set aside by the Special Judge on 3 December 2018, before the review order was passed. On the review order it went one step further and identified the error as one of law: rejecting a compounding application because the applicant has not been acquitted inverts the premise of compounding, which assumes a pending charge. Having found both stated grounds untenable it remitted the application rather than directing that it be allowed (paras 9 to 13).
The conviction having been set aside by the learned Special Judge, application seeking compounding of the offence cannot be rejected on the ground that the petitioner has not been acquitted of the criminal charges.
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Handle my notice → Ask a CA on WhatsAppYes. The Delhi High Court set aside a rejection of a compounding application for offences under s.276CC read with s.278E. The two reasons given for the refusal — that the application was out of time, and that the applicant stood convicted — had both fallen away, the first because the Board had relaxed the time limit and the second because the conviction had been set aside on appeal. The Court sent the application back to be considered on its merits. This was decided by the High Court (Delhi High Court - Manmohan and Navin Chawla, JJ. (judgment delivered by Navin Chawla, J.); W.P.(C) 2356/2020) and bears on section 276CC, section 278E of the Income Tax Act 1961. It is reported as (2022) 325 CTR 485 / 211 DTR 293 (Delhi)(HC); W.P.(C) 2356/2020 [assessment years 2008-09 to 2013-14]. Compounding is discretionary and the department treats a rejection as unassailable. This decision shows the rejection order being read like any other administrative order: if the grounds recited in it are no longer good, the order goes and the application has to be decided again. It also confirms that a compounding refusal is reachable under Article 226 without waiting for the criminal trial to run its course. If it applies to you, the first step is this: Get the rejection order and reduce it to the grounds it actually states; those are the only grounds the department can defend.
The assessee applied to compound offences under s.276CC read with s.278E for assessment years 2008-09 to 2013-14. The Additional Chief Metropolitan Magistrate (Special Acts), Central, Tis Hazari Courts, Delhi convicted him by order of 19 February 2018 in CC No. 535107/2016. The Chief Commissioner rejected the compounding application by order of 21 August 2018 on two grounds - that it had not been filed within the stipulated time, and that the assessee already stood convicted. On 3 December 2018 the Special Judge-03, CBI (PC Act), Delhi set aside the conviction and the order of sentence, directing the Magistrate to consider the fresh documents filed by the assessee and pass a fresh order in the trial. The Chief Commissioner nevertheless dismissed the review application by order of 29 January 2020, observing that the conviction was still open for adjudication and that the assessee had not been acquitted of the criminal charges. Both orders were challenged under Article 226. The matter was decided on 2022-02-25 by the High Court (Delhi High Court - Manmohan and Navin Chawla, JJ. (judgment delivered by Navin Chawla, J.); W.P.(C) 2356/2020). On those facts the High Court held as follows. The petition was disposed of by setting aside both impugned orders and directing the Chief Commissioner to consider the compounding application on its merits and in accordance with law, with no order as to costs (paras 13 and 14). The Court took the rejection order of 21 August 2018 at the two grounds it states (para 9) and held that neither survived: “As far as the ground of limitation is concerned, in view of the CBDT circular dated 09.09.2019, the said objection does not survive any further. As far as the conviction is concerned, in view of the order dated 03.12.2018 passed by the learned Special Judge, the said objection also no longer survives as the conviction has been set aside” (para 10). On the review order of 29 January 2020 it held the reason given untenable in law: the conviction having been set aside, a compounding application cannot be rejected on the ground that the applicant has not been acquitted, since such an application is premised on his facing the charge and not having been acquitted of it (para 11). The Court gave no direction that the offence be compounded.
The Court did not construe the compounding guidelines or the offence. It read the rejection order as resting on exactly two grounds and tested each. The limitation ground fell away because of the CBDT circular of 9 September 2019. The conviction ground fell away because the conviction had been set aside by the Special Judge on 3 December 2018, before the review order was passed. On the review order it went one step further and identified the error as one of law: rejecting a compounding application because the applicant has not been acquitted inverts the premise of compounding, which assumes a pending charge. Having found both stated grounds untenable it remitted the application rather than directing that it be allowed (paras 9 to 13). In the words reproduced by the source cited on this page: "The conviction having been set aside by the learned Special Judge, application seeking compounding of the offence cannot be rejected on the ground that the petitioner has not been acquitted of the criminal charges."
It was decided by the High Court on 2022-02-25 and is reported as (2022) 325 CTR 485 / 211 DTR 293 (Delhi)(HC); W.P.(C) 2356/2020 [assessment years 2008-09 to 2013-14]. 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 276CC, section 278E, 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 helps the taxpayer. The petition was disposed of by setting aside both impugned orders and directing the Chief Commissioner to consider the compounding application on its merits and in accordance with law, with no order as to costs (paras 13 and 14). The Court took the rejection order of 21 August 2018 at the two grounds it states (para 9) and held that neither survived: “As far as the ground of limitation is concerned, in view of the CBDT circular dated 09.09.2019, the said objection does not survive any further. As far as the conviction is concerned, in view of the order dated 03.12.2018 passed by the learned Special Judge, the said objection also no longer survives as the conviction has been set aside” (para 10). On the review order of 29 January 2020 it held the reason given untenable in law: the conviction having been set aside, a compounding application cannot be rejected on the ground that the applicant has not been acquitted, since such an application is premised on his facing the charge and not having been acquitted of it (para 11). The Court gave no direction that the offence be compounded. It arises in Prosecution matters, on section 276CC, section 278E of the Income Tax Act 1961, and was decided by Delhi High Court - Manmohan and Navin Chawla, JJ. (judgment delivered by Navin Chawla, J.); W.P.(C) 2356/2020. 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. Check each ground against the Board's current guidelines and against any relaxation circular in force when the application was made. Where the rejection rests on a conviction, check what has since happened to that conviction on appeal or revision. Ask for a direction that the application be decided on its merits rather than a direction that it be allowed — that is the relief this line of cases gives.
Searched for later treatment; none was found. That is not the same as a source affirming it. The judgment itself has now been read at https://indiankanoon.org/doc/101089424/. Nothing applying, following, doubting or overruling it was traced, and no record of a special leave petition against it was found; a search of indiankanoon for the phrase in its operative reasoning returns only this judgment. That is an empty search rather than a clearance, and the status therefore stays unverified: reading the judgment fixed the sourcing of this entry, not its standing. The point it decides is narrow - a compounding rejection resting on stated grounds that have both fallen away cannot stand. The wider proposition, that the Act lays down no limitation for a compounding application and the Board's guidelines cannot introduce one, comes not from this judgment but from L.T. Stock Brokers (P.) Ltd. v. Chief CIT-2, Mumbai [2025] 180 taxmann.com 214 / (2025) 480 ITR 26 (Bom.), 4 March 2025. The compounding guidelines were reissued by Circular F. No. 285/08/2014-IT(Inv. V)/163 of 17 October 2024, with FAQs in Circular No. 4/2025; neither was read for this entry, so no statement is made here about what the 2024 guidelines do to the time limit. 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 judgment has now been read in full on indiankanoon (https://indiankanoon.org/doc/101089424/) and this entry is written from it rather than from a digest. It is W.P.(C) 2356/2020, decided 25 February 2022 by Manmohan and Navin Chawla, JJ., the judgment being delivered by Navin Chawla, J.; it runs to fourteen numbered paragraphs and covers assessment years 2008-09 to 2013-14, not 2008-09 alone as this entry previously said. What the Court actually did is narrow: it took the rejection order at the two grounds stated in it, held both untenable, set both impugned orders aside and remitted the application for decision on merits. It construed no guideline, decided no question about the scope of s.279(2), and gave no direction that the offence be compounded. Two provisions and two only are named in the judgment - s.276CC and s.278E - so s.279 and s.279(2), which the entry previously listed, have been removed from the sections list; they were an editor's tags, not provisions the Court cited. On the limitation ground the Court said no more than that “in view of the CBDT circular dated 09.09.2019, the said objection does not survive any further”; it did not examine the closing date of that relaxation. A reader should therefore note, from the Board's own text rather than from this judgment, that Circular No. 25/2019 [F. No. 285/08/2014-IT(Inv. V)/350] of 9 September 2019 relaxed the twelve-month condition in para 7(ii) of the 2019 compounding guidelines as a one-time measure for applications filed on or before 31 December 2019, extended to 31 January 2020 by Circular No. 1/2020 [F. No. 285/08/2014/-IT(Inv. V)/639] of 3 January 2020, and expressly not for an offence normally not compoundable under para 8.1. The reported citation (2022) 325 CTR 485 / 211 DTR 293 (Delhi)(HC) is carried forward from the digest and has still not been checked against a law report. Two decisions to read alongside this one: L.T. Stock Brokers (P.) Ltd. v. Chief CIT-2, Mumbai [2025] 180 taxmann.com 214 / (2025) 480 ITR 26 (Bom.), 4 March 2025, on limitation for a compounding application; and Vinubhai Mohanlal Dobaria v. Chief CIT [2025] 171 taxmann.com 268 / 303 Taxman 415 / 473 ITR 394 (SC), 7 February 2025, on “first offence” in the guidelines. The judgment decides only that a rejection order whose two stated grounds have both fallen away must be set aside and the application reconsidered. It does not say how much reasoning a compounding refusal must carry to survive, does not reproduce the rejection order or identify the guideline paragraph the department relied on, and does not say when the compounding application was made - which matters, because the relaxation the Court invoked was a window that closed on 31 January 2020. It does not record what happened on the remitted application or what the compounding charge would have been, and it does not decide whether a refusal can be set aside where the grounds stated in it were good when made. 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 by setting aside both impugned orders and directing the Chief Commissioner to consider the compounding application on its merits and in accordance with law, with no order as to costs (paras 13 and 14). The Court took the rejection order of 21 August 2018 at the two grounds it states (para 9) and held that neither survived: “As far as the ground of limitation is concerned, in view of the CBDT circular dated 09.09.2019, the said objection does not survive any further. As far as the conviction is concerned, in view of the order dated 03.12.2018 passed by the learned Special Judge, the said objection also no longer survives as the conviction has been set aside” (para 10). On the review order of 29 January 2020 it held the reason given untenable in law: the conviction having been set aside, a compounding application cannot be rejected on the ground that the applicant has not been acquitted, since such an application is premised on his facing the charge and not having been acquitted of it (para 11). The Court gave no direction that the offence be compounded.
TaxSphere, “Jai Singh Goel v CCIT”, https://taxnotice.vittsphere.com/caselaw/case/jai-singh-goel-v-ccit-compounding-276cc/ (validity last checked 2026-08-23)
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I missed the due date but I did file the return under s.139(4) before the assessment. Doesn't that mean I filed 'in due time' and cannot be prosecuted under s.276CC?
The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
The Department has appealed against my acquittal on a s.276CC charge. Given the presumption in s.278E, how much has the Department still to prove?
I never filed my return for the year and the department has launched a prosecution, but my TDS and advance tax more than covered the tax and I am actually due a refund. Can the criminal case go on?
