Co-Accused Can Apply Separately For Compounding Of Offences Committed By Company Or HUF Under Income Tax Act: Delhi High Court

The Delhi High Court has held that co-accused are entitled to apply separately for compounding of offences committed by a Company or a Hindu Undivided Family under the Income Tax Act, 1961. A division bench of Acting Chief Justice Vibhu Bakhru and Justice Tushar Rao Gedela ruled that the co-accused need not await filing of application for compounding by the company or the HUF. In doing so, it relied upon the guidelines issued by the Central Board of Direct Taxes, stipulating that where an offence is committed by a Company or HUF as defined in section 278B or 278C of the Act, an application for compounding may be filed separately or conjointly by the main accused and any persons deemed to be guilty of the offence. In the case at hand, the Petitioner was the Director of a company and was hauled up under Sections 276B and 278B of the Income Tax Act, for default in depositing TDS for the relevant period. His application for compounding of the offences was rejected on the ground that the company had not filed any such application. The Magistrate Court held that Petitioner's application for compounding could not be considered on a stand alone basis. Relevant to note that proceedings against the company were stayed, pursuant to the moratorium under the Insolvency and Bankruptcy Code, 2016 . The High Court said that the paragraph 11 of the CBDT guidelines dated 17.10.2024 were clear that “the co-accused are now entitled to apply separately for compounding of the offences.” The guideline reads- in cases of offences by a company or HUF, the main accused or coaccused may apply separately or conjointly. On payment of compounding charges for the offence as determined under these guidelines, by any one of them separately or jointly, the Competent Authority shall compound the offences of the main accused as well as all the co-accused, vide an order u/s 279(2) of the Act. In light of the above, the Court set aside the impugned order and remanded the compounding application to the competent authority to decide afresh. Appearance: Mr. Tanmay Nagar, Mr. Surinder Sinha & Ms. Shamli Verma, Advocates for Petitioner; Ms Saroj Bidawat, SPC for UOI. Mr Ruchir Bhatia, SSC, Mr Anant Mann, JSC and Mr Abhishek Anand, Advocate for Respondents Case title: Sumit Bharana v. UoICitation: 2025 LiveLaw (Del) 4 Case no.: W.P.(C) 16701/2024 Click Here To Read/Download The Order

Co-Accused Can Apply Separately For Compounding Of Offences Committed By Company Or HUF Under Income Tax Act: Delhi High Court

Kapil Dhyani

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