# Vinubhai Mohanlal Dobaria v. Chief Commissioner of Income Tax & Anr

- **Citation:** 2025 INSC 155
- **Court:** Supreme Court of India
- **Decided:** 2025-02-07
- **Case number:** Civil Appeal No. 1977 of 2025
- **Bench:** J.B. Pardiwala, Sanjay Karol
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/vinubhai-mohanlal-dobaria-v-chief-commissioner-of-income-tax-anr-38751
- **Pages:** 45

## Headnote

Whether an offence u/s.276CC of the Income Tax Act, 1961 could
be said to have been committed on the actual date of filing of return
of income or on the day immediately after the due date for filing
of returns as per s.139(1) of the Act; what is the meaning of the
expression "first offence" appearing in Clause 8 of the Guidelines
for Compounding of Offences under Direct Tax Laws, 2014; what
amounts to voluntary disclosure for the purpose of Clause 8 of
the 2014 Guidelines; whether the 2014 Guidelines are mandatory
or directory in nature.
Headnotes†
Income Tax Act, 1961 - s.276CC - Compounding of offence -
Commission of offence, when - Appellant, an individual
earning income by way of salary and also share of profit of
partnership firm - Delay in filing the return of income for AY
2011-12 and 2013-14 by appellant - Issuance of show cause
notice to the appellant for the AY 2011-12 alleging violation
of s.276CC - Application for compounding for AY 2011-12
allowed - Thereafter, the appellant received another show
cause notice as regards launching of prosecution for the
AY 2013-2014 - Compounding application for AY 2013-14
rejected - Writ petition by appellant that his compounding
application was rejected solely on the ground that the offence
alleged to have been committed by the appellant of belated
filing of the return of income for AY 2013-14 was not covered
by the expression "first offence" as defined in the 2014
guidelines, rejected by the High Court - Offence u/s.276CC
could be said to have been committed on the actual date of
* Author
[2025] 2 S.C.R.
477
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
filing of return of income or on the day immediately after the
due date for filing of returns as per s.139(1):
Held: Offence u/s.276CC could be said to have been committed
as soon as there is a failure on the part of the assessee in
furnishing the return of income within the due time as prescribed
u/s.139(1) - Subsequent furnishing of the return of income by the
assessee within the time limit prescribed under sub-section (4) of
s.139 or before prosecution is initiated does not have any bearing
upon the fact that an offence u/s.276CC has been committed on
the day immediately following the due date for furnishing return of
income - Offence u/s.276CC could be said to have been committed
on the dates immediately following the due date for furnishing the
return of income for both these assessment years respectively -
Date for commission of both of these offences would be the day
falling immediately next to the due date for filing of return, that is
01.10.2011 for AY 2011-12 and 01.11.2013 for the AY 2013-14 -
Show cause notice for the AY 2011-12 was issued to the appellant
on 27.10.2014 - Offence for the AY 2011-12 could be said to have
been committed on 01.10.2011 and the offence for the AY 201314 could be said to have been committed on 01.11.2013 - Both
the offences u/s.276CC were committed prior to the date of issue
of any show cause notice for prosecution - Thus, the offence as
alleged to have been committed by the appellant u/s.276CC for the
AY 2013-14 is covered by the expression "first offence" as defined
under the 2014 Guidelines and thus, the compounding application
filed by the appellant could not have been rejected - High Court
erred in rejecting the writ petition filed by the appellant against the
order passed by the Chief Commissioner of Income Tax rejecting
the application for compounding - Impugned order passed by the
High Court as well as the order passed by the Chief Commissioner
of Income Tax set aside - Guidelines for Compounding of Offences
under Direct Tax Laws, 2014. [Paras 35, 41-43, 69, 70, 81-83]
Income Tax Act, 1961 - ss.276CC, 279 - Failure to furnish
returns of income - Compounding of Offences - Guidelines
for Compounding of Offences under Direct Tax Laws, 2014 -
Paragraph 8 - "First offence" - Meaning of:
Held: "First offence" is any offence committed prior to the date of
issuance o

## Text

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[2025] 2 S.C.R. 476 : 2025 INSC 155
Vinubhai Mohanlal Dobaria
v.
Chief Commissioner of Income Tax & Anr.
(Civil Appeal No. 1977 of 2025)
07 February 2025
[J.B. Pardiwala* and Sanjay Karol, JJ.]
Issue for Consideration
Whether an offence u/s.276CC of the Income Tax Act, 1961 could
be said to have been committed on the actual date of filing of return
of income or on the day immediately after the due date for filing
of returns as per s.139(1) of the Act; what is the meaning of the
expression "first offence" appearing in Clause 8 of the Guidelines
for Compounding of Offences under Direct Tax Laws, 2014; what
amounts to voluntary disclosure for the purpose of Clause 8 of
the 2014 Guidelines; whether the 2014 Guidelines are mandatory
or directory in nature.
Headnotes†
Income Tax Act, 1961 - s.276CC - Compounding of offence -
Commission of offence, when - Appellant, an individual
earning income by way of salary and also share of profit of
partnership firm - Delay in filing the return of income for AY
2011-12 and 2013-14 by appellant - Issuance of show cause
notice to the appellant for the AY 2011-12 alleging violation
of s.276CC - Application for compounding for AY 2011-12
allowed - Thereafter, the appellant received another show
cause notice as regards launching of prosecution for the
AY 2013-2014 - Compounding application for AY 2013-14
rejected - Writ petition by appellant that his compounding
application was rejected solely on the ground that the offence
alleged to have been committed by the appellant of belated
filing of the return of income for AY 2013-14 was not covered
by the expression "first offence" as defined in the 2014
guidelines, rejected by the High Court - Offence u/s.276CC
could be said to have been committed on the actual date of
* Author
[2025] 2 S.C.R.
477
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
filing of return of income or on the day immediately after the
due date for filing of returns as per s.139(1):
Held: Offence u/s.276CC could be said to have been committed
as soon as there is a failure on the part of the assessee in
furnishing the return of income within the due time as prescribed
u/s.139(1) - Subsequent furnishing of the return of income by the
assessee within the time limit prescribed under sub-section (4) of
s.139 or before prosecution is initiated does not have any bearing
upon the fact that an offence u/s.276CC has been committed on
the day immediately following the due date for furnishing return of
income - Offence u/s.276CC could be said to have been committed
on the dates immediately following the due date for furnishing the
return of income for both these assessment years respectively -
Date for commission of both of these offences would be the day
falling immediately next to the due date for filing of return, that is
01.10.2011 for AY 2011-12 and 01.11.2013 for the AY 2013-14 -
Show cause notice for the AY 2011-12 was issued to the appellant
on 27.10.2014 - Offence for the AY 2011-12 could be said to have
been committed on 01.10.2011 and the offence for the AY 201314 could be said to have been committed on 01.11.2013 - Both
the offences u/s.276CC were committed prior to the date of issue
of any show cause notice for prosecution - Thus, the offence as
alleged to have been committed by the appellant u/s.276CC for the
AY 2013-14 is covered by the expression "first offence" as defined
under the 2014 Guidelines and thus, the compounding application
filed by the appellant could not have been rejected - High Court
erred in rejecting the writ petition filed by the appellant against the
order passed by the Chief Commissioner of Income Tax rejecting
the application for compounding - Impugned order passed by the
High Court as well as the order passed by the Chief Commissioner
of Income Tax set aside - Guidelines for Compounding of Offences
under Direct Tax Laws, 2014. [Paras 35, 41-43, 69, 70, 81-83]
Income Tax Act, 1961 - ss.276CC, 279 - Failure to furnish
returns of income - Compounding of Offences - Guidelines
for Compounding of Offences under Direct Tax Laws, 2014 -
Paragraph 8 - "First offence" - Meaning of:
Held: "First offence" is any offence committed prior to the date of
issuance of any show cause notice for prosecution in relation to
the said offence; or prior to any intimation relating to prosecution by
the department to the person concerned or prior to the launching
478
[2025] 2 S.C.R.
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of any prosecution, whichever is earlier - Expression "first offence"
is also defined to include any offence which has not been detected
by the Department, but has been voluntarily disclosed by a person
prior to the filing of an application for compounding of offence in the
case under any direct tax Acts - Paragraph 8 further clarifies that
the first offence would be determined separately with reference to
each section of the Act under which it is committed and it would be
relevant only if it is committed by the same entity - Scheme that
permeates Paragraph 8 allows only those offences to be treated
as the "first offence" which are committed by the assessee either
prior to a notice that he is liable to prosecution under the Act for the
commission of such offences or those offences which are voluntarily
disclosed by the assessee to the Department before they come to
be detected - Latter part of the definition of the expression "first
offence" is not to curtail the scope of the first half but to expand
its ambit by including those cases where the assessee comes
forward on his own initiative and discloses the commission of the
offence. [Paras 59-61, 73]
Guidelines for Compounding of Offences under Direct Tax
Laws, 2014 - Paragraph 8 - "Voluntary disclosure" - Purpose of:
Held: Voluntary disclosure to be construed in a manner which
ensures that such disclosure on part of the assessee saves the
Department from the trials and tribulations of having to detect the
commission of offence by the assessee by setting into motion
its own machinery of detection of offences - Neither the filing of
belated return of income by the assessee nor the making of an
application for compounding of offence after a show cause notice
has already been issued to the assessee fulfills the underlying
idea of saving the Department from the inconvenience of detecting
the offence - Even after a belated return of income is filed, the
Department is still required to process the return, identify the cases
wherein offences have been committed - Voluntary disclosure by
the assessee before the stage of detection by the Department
besides being economically viable also saves time and efforts
on part of the Department and also ensures that the dues are
recovered promptly. [Para 74]
Guidelines for Compounding of Offences under Direct Tax
Laws, 2014 - Paragraphs 4, 7, 8 - Guidelines, mandatory or
directory:
[2025] 2 S.C.R.
479
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
Held: Paragraph 4 of the 2014 guidelines provides that compounding
of offences is not a matter of right of the assessee - Plain reading
of the 2014 guidelines reveals that while it is mandatory that
the eligibility conditions prescribed under Paragraph 7 are to be
satisfied, the restrictions laid down in Paragraph 8 have to be
read along with Paragraph 4 which provides that the exercise of
discretion by the competent authority is to be guided by the facts
and circumstances of each case, the conduct of the appellant
and nature and magnitude of offence - Thus, it is clear that the
restrictions laid down in Paragraph 8 are although required to be
generally followed, the guidelines do not exclude the possibility that
in a peculiar case where the facts and circumstances so require,
the competent authority cannot make an exception and allow the
compounding application. [Paras 78-79]
Guidelines for Compounding of Offences under Direct Tax
Laws, 2014 - Guiding principles for the exercise of the power
conferred by s.279(2) allowing compounding of offences either
before or after the institution of proceedings - Explained -
Income Tax Act, 1961 - s.279(2). [Paras 53-67]
Case Law Cited
Prakash Nath Khanna v. CIT [2004] 2 SCR 434 : (2004) 9 SCC
686 - relied on.
Union of India v. Banwari Lal Agarwal [1998] Supp. 2 SCR 356 :
(1998) 7 SCC 652; Y.P. Chawla v. M.P. Tiwari [1992] 2 SCR
440 : (1992) 2 SCC 672; Sports Infratech P. Ltd. & Anr. v. Deputy
Commissioner of Income-tax, 2017 SCC OnLine Del 6543 -
referred to.
List of Acts
Income Tax Act, 1961; Penal Code, 1860; Code of Criminal
Procedure, 1973.
List of Keywords
Compounding of offence; Compounding application; First offence;
Actual date of filing of return of income; Due date for filing of returns;
Subsequent furnishing of return of income by assessee; Failure
to furnish returns of income; "Voluntary disclosure"; Guidelines
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for Compounding of Offences under Direct Tax Laws, 2014;
Guidelines for Compounding of Offences under Direct Tax Laws,
2008; Guidelines for Compounding of Offences under Direct Tax
Laws, 2019; Guidelines for Compounding of Offences under Direct
Tax Laws, 2022; Delay in filing return.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1977 of 2025
From the Judgment and Order dated 21.03.2017 of the High Court
of Gujarat at Ahmedabad in SCA No. 5386 of 2017
Appearances for Parties
Tushar Hemani, Sr. Adv., Ms. Dharita Purvish Malkan, Alok Kumar,
Kush Goel, Suraj Pandey, Ms. Khushboo Aakash Sheth, Advs. for
the Appellant.
Mrs. Monica Benjamin, Raj Bahadur Yadav, Udai Khanna,
Shashank Bajpai, V C Bharathi, A K Kaul, Prahlad Singh, Advs.
for the Respondent.
Judgment / Order of the Supreme Court
Judgment
J.B. Pardiwala, J.
For the convenience of exposition, this judgement is divided into
the following parts:
INDEX*
A.
FACTUAL MATRIX ..........................................................
2
B.
SUBMISSIONS ON BEHALF OF THE APPELLANT
13
C.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS
15
D.
ISSUES FOR CONSIDERATION ....................................
19
E.
ANALYSIS ......................................................................
20
i.
Section 276CC of the Income Tax Act, 1961 ..............
20
* Ed. Note: Pagination as per the original Judgment.
[2025] 2 S.C.R.
481
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
ii.
Provisions pertaining to compounding of offences .....
36
iii.
Guidelines for Compounding of Offences under
Direct Tax Laws, 2014 ............................................
41
F.
 CONCLUSION ...............................................................
57
1.
Leave granted.
2.
This appeal arises from the judgment and order passed by the High
Court of Gujarat dated 21.03.2017 in Special Civil Application No.
5386 of 2017 (hereinafter referred to as "the impugned order") by
which the High Court rejected the writ petition filed by the appellant
herein and thereby upheld the order of the Chief Commissioner of
Income Tax, Vadodara ("Respondent No. 1") dated 14.02.2017
rejecting the application preferred by the appellant-assessee for
compounding of the offence under Section 276CC of the Income
Tax Act, 1961 (hereinafter referred to as "the Act").
A.
FACTUAL MATRIX
3.
The appellant is an individual earning income by way of salary and
also by way of share of profit of partnership firm engaged in the
business of chemicals. He filed his income tax returns for the AY
2011-12 and 2013-14 on 04.03.2013 and 29.11.2014 respectively
declaring his income to be Rs 49,79,700/- and Rs 31,87,420/-
respectively. The due dates for the filing of returns for AY 2011-12
and 2013-14 were 30.09.2011 and 31.10.2013 respectively and as
such there was delay on the part of the appellant in filing the return
of income for the said assessment years.
4.
On 27.10.2014, a show cause notice was issued to the appellant
by the Commissioner of Income Tax - III, Baroda alleging violation
of Section 276CC of the Act for the AY 2011-12. The notice stated
that although the due date for filing the income tax return for the AY
2011-12 was 01.08.2011 yet the appellant had filed the same with
delay on 04.03.2013. The notice further stated that after allowing
for the credit of prepaid taxes, the appellant was liable to pay selfassessment tax of Rs. 0/- which however remained unpaid by the
due date prescribed for the filing of return of income. In the last, the
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appellant was called upon to show cause as to why proceedings
under Section 276CC of the Act should not be initiated against him.
The contents of the said notice are extracted hereinbelow:
"Office of the Commissioner of Income Tax III
2nd floor, Aayakar Bhavan, Race Course Circle,
Baroda 390 007
No.BRD/CIT-III/HQ/Pros/17/2014-15
Date.27.10.2014
To,
Shri Vinubhai Mohanbhai Dobaria
B-2/203, Subhlaxmi Coop. Housing Society
Ankleshwar
PAN ACIPD4420D
Sir/Sirs,
Sub: Launching of prosecution under section 276CC of
the income Tax Act, 1961 Chapter XXII of the I.T.Act
1961 regd.
On examination of records, it is seen that you have
furnished your return of income for the assessment year
2011-12 declaring total income of Rs.49,79,700/- on
4.3.2013. Further, after allowing credit of prepaid taxes,
you were liable to pay self assessment tax of Rs.0/- by
due date of filing of return. Later, your return of income
was processed under section 143(1) of the Act 20.3.2013
determining demand of Rs0/- out of which Rs.0 is still
pending.
2. In this context, take notice and show cause as to why
proceedings under section 276CC of the Act should not be
initiated against you for failure to furnish returns of income
after the expiry of the assessment year. You may attend
either personally or through representative duly authorized
on 11.11.2014 at 12.30 p.m. If you fail to attend, it would
[2025] 2 S.C.R.
483
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
be presumed you have nothing to say in the matter and
this office shall proceed in the matter accordingly.
Yours faithfully
Sd/- S.R. Malik
Commissioner of Income Tax- III, Baroda"
5.
The appellant replied to the aforesaid show cause notice along with
the application for compounding in accordance with the Guidelines for
Compounding of Offence, 2008 (hereinafter referred to as "the 2008
guidelines"). The application, along with application for compounding
the delay in filing of return of income for two other years came to
be allowed by the Respondent No. 1 vide order dated 11.11.2014.
6.
Thereafter, on 12.03.2015, the appellant received another show
cause notice as regards launching of prosecution under Section
276CC of the Act for the AY 2013-2014 issued by the Commissioner
of Income Tax, Vadodara - III. The notice stated that the appellant
had furnished the return of income for AY 2013-14 declaring a total
income of Rs. 31,87,420/- on 29.11.2014 and after allowing for the
credit of prepaid taxes the appellant was liable to pay self-assessment
tax of Rs. 2,78,740/-. The notice further called upon the appellant
to show cause as to why proceedings under Section 276CC of the
Act should not be initiated against him as he had filed his return of
income after the expiry of the due date. The contents of the said
notice are extracted hereinbelow:
"Office of the Commissioner of Income Tax,
Vadodara -3 Vadodara
2nd floor Aayakar Bhavan Race Course Circle,
Vadodara 7
No. BRD/CIT-3/HQ/Pros/17-B/2014-15
Date.12.3.2015
To,
Shri Vinubhai Mohanbhai Dobaria
303/C/16, Tulsi Kunj Society,
Near Marathi School, GIDC,
Ankleshwar
484
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PAN ACIPD4420D
Sir/Sirs
Sub: Launching of prosecution under section 276CC of
the Income Tax Act, 1961 Chapter XXII of the I.T.Act, 1961
A.Y.2013-14 reg.
On examination of records, it is seen that you have furnished
your return of income for the assessment year 2013-14
declaring total income of Rs.31,87,420/- on 29.11.2014.
Further, after allowing credit of prepaid taxes, you were
liable to ay self assessment tax of Rs.2,78,740/- by due
date of filing of return. Later, your return of income was
processed under section 143(1) of the Act on 5.1.2015.
2. In this context, take notice and show cause as to why
proceedings under section 276CC of the Act should not be
initiated against you for failure to furnish returns of income
before expiry of the assessment year. You may attend
either personally or through representative duly authorized
on 19.3.2015 at 11.30 a.m. If you fail to attend, it would
be presumed that you have nothing to say in the matter
and this office shall proceed in the matter accordingly.
Yours faithfully
Dr. Banwari Lal
Commissioner of Income Tax
Vadodara-3 Vadodara"
7.
The appellant replied to the aforesaid notice along with an application
for compounding as per the Guidelines for Compounding of Offence,
2014 (hereinafter referred to as "the 2014 guidelines"). In his reply,
the appellant stated that he had filed the return of income belatedly
because necessary funds were not available with him to enable him
to pay the assessed amount of tax. He further stated that the delay
in filing of the return of income was neither deliberate nor wilful.
8.
By an order dated 14.02.2017 passed under Section 279(2) of the
Act, the Respondent No. 1 rejected the compounding application of
the appellant. The Respondent No. 1 took the view that the case of
the appellant was not fit for compounding as a committee comprising
[2025] 2 S.C.R.
485
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
of Principal CCIT Gujarat, CCIT Vadodara, DGIT (Investigation)
Ahmedabad and the CCIT - II Ahmedabad in the minutes recorded
of the meeting dated 25.01.2017 had opined that the assessee had
filed his return of income for AY 2013-14 after the show cause notice
for the offence under Section 276CC for offence during AY 201112 had already been issued. Therefore, as per the committee, the
offence committed by the appellant under Section 276CC for the AY
2013-14 would not be covered by the expression "first offence" as
defined in the 2014 guidelines. The relevant part of the said order
is extracted hereinbelow:
"The case is not found to be fit case for compounding
as the Committee comprising of Pr. CCIT Gujarat and
CCIT, Vadodara DGIT (Investigation) Ahmedabad and the
CCIT 2 Ahmedabad, competent to consider the assessee's
petition, in its minutes of the meeting held at Ahmedabad
on 25.1.2017 found that the Pr. CIT-3, Vadodara had issued
show cause notice for initiating proceedings under section
276CC of the Act on 27.10.2014 for the AY.2011- 12. The
assessee filed his return of income for the A.Y.2013-14
on 29.11.2014 as against the due date for filing of return
on 31.10.2013, after issuance of such show cause notice
for A.Y. 2011-12. Accordingly, taking into consideration the
definition of "First Offence" as specified in the Board's
guidelines for compounding offence dated 23.11.2014,
as well as the opinion obtained from the Board vide
F.No.285/20/2014-IT (Inv.)/340 dated 15.9.2014 in the case
of Chandra Knee Clinic P. Ltd. the committee unanimously
opined that, the offence of similar nature committed by
the assessee for A.Y.2013-14 cannot be compounded,
as it does not fall within the definition of "First Offence".
Thus, the committee rejected compounding petition for
A.Y.2013-14.
In view of the above facts, compounding petition filed by
the assessee for A.Y.2013-14 is rejected."
9.
The appellant challenged the aforesaid order passed by the
Respondent No. 1 before the High Court of Gujarat by way of Special
Civil Application No. 5386 of 2017. The appellant, who was the
petitioner before the High Court, contended that his compounding
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application had been rejected by Respondent No. 1 solely on the
ground that the offence alleged to have been committed by the
appellant of belated filing of the return of income for AY 2013-14
was not covered by the expression "first offence" as defined in the
2014 guidelines. The appellant further submitted that the show cause
notice for the initiation of prosecution issued under Section 276CC of
the Act for AY 2013-14 was issued on 12.02.2015 whereas he had
already filed the return of income for the said assessment year on
29.11.2014, that is, much before the issuance of show cause notice on
12.02.2015 and therefore it could not be said that it was not the first
offence. It was also contended by the appellant that the respondent
had erroneously computed the date of issuance of show cause
notice for AY 2011-12 for the purpose of holding that the appellant
had committed the offence post that date. Lastly, it was argued by
the appellant that the 2014 guidelines are only general guidelines
and are not in the nature of strict law and thus are to be construed
accordingly. The appellant submitted that the general nature of the
guidelines was also suggested by the heading "offences generally
not to be compounded" used in the said Guidelines.
10. However, the High Court rejected the Special Civil Application of the
appellant vide the impugned judgment and order dated 21.03.2017
taking the view that the contention of the appellant was based on
a misreading of the Clause 8(ii) of the 2014 guidelines. The High
Court held that although the show-cause notice for AY 2011-12 was
issued on 27.10.2014, yet the appellant filed the return of income
for the AY 2013-14 on 29.11.2014 and thus could be said to have
committed the offence under Section 276CC of the Act for the AY
2013-14 after the show cause notice for the AY 2011-12 had already
been issued. It was further observed by the High Court that the
circumstances surrounding the delay in the filing of return of income
by the appellant were not required to be considered in detail by the
compounding authority and the same would be considered during
the course of the trial. The relevant observations made by the High
Court are extracted hereinbelow:
"4.0 [...] However, on the other hand, it is the case on behalf
of the petitioner assesee that for AY 2013-14 the show
cause notice under Section 276 CC of the Act was issued
on 12.03.2015 and prior thereto the return of income for AY
2013-14 was already filed on 29.11.2014 and therefore, the
[2025] 2 S.C.R.
487
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
same can be said to be "first offence" even as per the clause
8(ii) of the Guidelines. The submission on behalf of the
assessee cannot be accepted. The aforesaid submission
on behalf of the assessee is absolutely on misreading of
clause 8(ii). On true interpretation of clause 8(ii), in case
the offence is committed prior to date of issuance of any
show cause notice for prosecution, in that case, it can
be said to be the "first offence". Therefore, in case for
any prior assessment year, the show cầuse notice has
been issued for prosecution and despite the same, in the
subsequent year, the offence is committed by not filing the
return, the same cannot be said to be "first offence". The
submission on behalf of the petitioner assessee that in the
present case the show cause notice for prosecution for AY
2013-14 was issued on 12.03.2015 and prior thereto the
return of income was filed for AY 2013-14 on 29.11.2014
and therefore, the same can to be said to be first offence,
cannot be accepted. What is required to be considered
is whether for any prior year any show cause notice for
prosecution is issued and served upon the petitioner or not.
If the contention on behalf of the petitioner is accepted,
in that case, it will be contrary to the clause 8(ii) of the
Guidelines. In the present case, for AY 2011-12, the show
cause notice was already issued under Section 276 CC of
the Act on 27.10.2014 for non filing of return before due
date (for AY 2011-12) and despite the same for the
subsequent years i.e. for AY 2013-14 the assessee did
not file return of income before due date of filing of return.
Therefore, again the petitioner -assessee committed the
offence for AY 2013-14. Thus, it cannot be said that in AY
2013-14 it can be said to be the "first offence" committed
by the assessee. Under the circumstances, the respondent
no.1 has rightly rejected the compounding application
submitted by the petitioner. Rejection of the compounding
application submitted by the petitioner is absolutely in
consonance with the Guidelines, 2014.
5.0. Now, so far as submission on behalf of the petitioner
that while rejecting the compounding application submitted
by the petitioner, respondent no.1 has not properly
appreciated and / or considered the reason for not filing
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the return of income by petitioner before due date is
concerned, at the outset, it is required to be noted that it
has nothing to do with the compounding application. It is
required to be noted that while considering the application
for compounding, merits is not required to be considered
as is to be considered in trial.
6.0. Now, so far as reliance placed upon the decision of
the Madras High Court in the case of K. Inba Sagaran
(supra) relied upon by the learned advocate for the
petitioner-assessee is concerned, the said decision shall
not be applicable to the facts of the case on hand, more
particularly, while considering the compounding application.
In the case before the Madras High Court, three different
complaints for the offence under Section 276CC of the
Act for AY 1991-92, 1992-93 and 1993-94 though were
filed and numbered separately, were clubbed together in
one case and the learned Magistrate passed the orders
holding the accused guilty under Section 276CC on three
counts. The question arose whether the offence for which
accused was charged were distinct or separate and not
in any way inter-related and when each offence had no
connection with other, joinder of charges would become
bad in law or not and to that it has been observed and
held by the Madras High Court that framing of charge was
defective and violative of Sections 218 and 219 of the Code
of Criminal Procedure and as judgment was rendered only
in one case and there was no finding of guilt recorded
as regards two other cases, the Madras High Court has
observed that error committed by the trial Court was of
such grave nature that it had caused prejudice to accused
and therefore, in that view of the matter, conviction and
sentence passed by the lower Court has to be set aside.
Therefore, the said decision shall not be applicable to the
facts of the case on hand.
7.0. Now, so far as reliance placed upon the decision of
the Delhi High Court in the case of Sport Infratech (P)
Ltd (supra) relied upon by the learned advocate for the
petitioner is concerned, the said decision also shall not
be applicable to the facts of the case on hand.
[2025] 2 S.C.R.
489
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
8.0. Even the learned advocate for the petitioner has
requested not to observe anything on merits and therefore,
we refrain from observing anything on merits, more
particularly, the reasons given by the petitioner assessee
for not filing return of income before due date, even for
AY 2013-14.
9.0. In view of the above and for the reasons stated
above, the impugned order passed by the respondent
no.1 rejecting the compounding application submitted
by the petitioner cannot be said to be either illegal or
contrary to the Guidelines, we see no reason to interfere
with the same. In view of the above and for the reasons
stated above, present petition fails and same deserve to
be dismissed and is accordingly dismissed."
11. In such circumstances referred to above, the appellant is here before
this Court with the present appeal.
B.
SUBMISSIONS ON BEHALF OF THE APPELLANT
12. Mr. Tushar Hemani, the learned Senior Counsel appearing for
the appellant, submitted that an offence as contemplated under
Section 276CC of the Act is committed upon the failure of the
assessee in furnishing the return of income within the due date as
contemplated under Section 139(1) of the Act. He submitted that
whether the assessee had filed a belated return of income, that is,
after the expiry of the due date or not, is immaterial and the point
in time when the offence under Section 276CC is committed is the
date immediately following the due date for furnishing the return
of income as prescribed under Section 139(1) of the Act. Thus, for
the AY 2013-14, the appellant could be said to have committed the
offence on the date immediately following the due date for filing
of returns for the AY 2013-14. Hence the date for commission of
the offence under Section 276CC for the AY 2013-14 would be
01.11.2013 as the due date for filing the returns for AY 2013-14
was 31.10.2023. He emphasised on the fact that the actual date
of filing the belated return is of no consequence for the purpose
of an offence under Section 276CC as otherwise an assessee
who has missed filing the return before the due date for a given
assessment year would never file a belated return and the offence
would never be committed.
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13. He further submitted that as per the 2014 guidelines, the expression
"first offence" means offence committed prior to the issuance of show
cause notice seeking to initiate prosecution as that is the earliest
point in time when the assessee is put to notice about the offence
alleged to have been committed by him. Once an assessee is put
to notice, all offences alleged to have been committed thereafter are
not compoundable. However, offences committed prior to the date
when the assessee is put to notice, would be treated as constituting
the "first offence" and hence would be compoundable. He submitted
that in the facts of the present case, two show cause notices were
issued against the appellant by the respondent authorities, one for
AY 2011-12 issued on 27.10.2014 and the other for AY 2013-14
issued on 12.03.2015. He argued that the High Court erroneously
relied upon the actual date of filing of return of income for the AY
2013-14 to hold that the offence for the said assessment year was
committed after the first show cause notice in respect of AY 2011-12
had already been received. He submitted that it is not the date of
actual filing of the belated return of income but the date immediately
following the due date for filing of return for the given assessment
year which should be considered while determining whether the
offence is a "first offence" as per the 2014 guidelines.
14. After explaining the factual position as aforesaid, he submitted that
as the offence under Section 276CC of the Act could be said to have
been committed on 01.11.2013, therefore, it could be said that the
same was committed before the first show cause notice seeking
to initiate prosecution for the AY 2011-12 was issued against the
appellant. Thus, even for the AY 2013-14, the offence committed by
the accused under Section 276CC would come within the scope of
the expression "first offence" as it is defined in the 2014 guidelines.
15. In such circumstances referred to above, the counsel prayed that
there being merit in his appeal, the impugned order passed by the
High Court be set aside and the respondent authorities be directed
to accept the compounding application moved by the appellant.
C.
SUBMISSIONS ON BEHALF OF THE RESPONDENTS
16. Mrs. Monica Benjamin, the learned counsel appearing for the
Revenue, submitted that the offence under a particular provision of
the Act, for a specific assessment year, can only be committed once
[2025] 2 S.C.R.
491
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
for that assessment year. She further submitted that the objective of
the 2014 guidelines has never been to compound the same offence
every year with no limit on the number of years for which it may be
compounded.
17. Referring to Clause 8 of the 2014 guidelines, she submitted that the
said Clause prescribes a limit after which both category of offences,
that is, A and B, are not to be generally compounded, by laying
down that Category A offences will not be generally compounded
after the third offence and Category B offences will not be generally
compounded after the first offence.
18. In response to the contention of the appellant that more than one
offence under Section 276CC of the Act can be compounded if all
such offences were committed before the issuance of the first show
cause notice for prosecution in relation to any of those offences,
she submitted that if the aforesaid submission is accepted then it
would defeat the very intent and purpose of the 2014 guidelines,
as the said Guidelines are not meant to benefit habitual and repeat
offenders intending to circumvent the provisions of the Act.
19. She further submitted that the issuance of a show cause notice
is not a prerequisite for recognising a first offence under the 2014
guidelines. As per the meaning of the expression "first offence" as
defined in the 2014 guidelines, a first offence can also be said to have
been committed when such an offence has not been detected by the
Department but has been voluntarily disclosed by the applicant by
filing a compounding application. In view of this, the counsel argued
that the issuance of a show cause notice could not be said to be a
prerequisite for the recognition of a first offence.
20. In furtherance of the aforesaid submission, she submitted that the
appellant could be said to have disclosed the commission of offence
for both AY 2011-12 and 2013-14 by belatedly filing his returns on
04.03.2013 and 29.11.2014 respectively for both the years, that is,
after the due dates prescribed for filing the returns for these years
had expired. She submitted that it was only after such a late filing
of returns by the appellant that the Department became aware of
both the offences and issued the respective show cause notices
for the same. Thus, merely because a show cause notice was not
issued by the Department due to non-detection that an offence
under Section 276CC had been committed, the same cannot be
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construed as absolving the assessee from the fact that he had
already committed an offence and disclosed the same by filing the
return of income belatedly.
21. She submitted that by virtue of delayed filing of the return of income
for AY 2011-12, the appellant had disclosed the commission of his
first offence prior to the due date of filing return for AY 2013-14.
Therefore, as the offence under Section 276CC of the Act for the
AY 2013-14 was committed after the disclosure of the offence under
Section 276CC for the AY 2011-12, hence the offence for the AY
2013-14 could not be said to be covered within the meaning of the
expression "first offence" as defined in the 2014 guidelines.
22. Placing emphasis on a letter dated 29.09.2017, she submitted that
in the said letter the appellant had admitted committing the second
offence and having made such an admission, he cannot be permitted
to retract from it at this stage.
23. The counsel further submitted that Clause 4 of the 2014 guidelines
stipulates that compounding of offences is not a matter of right and
therefore a hyper-technical view should not be taken by the Court
while interpreting the 2014 guidelines and only such an interpretation
which furthers the underlying intention behind the guidelines should
be adopted.
24. She further submitted that the appellant's reading of the definition of
the expression "first offence" under Clause 8 of the 2014 guidelines
could be termed as erroneous for the reason that it conveniently
overlooks the latter part of the definition which provides that the
offences that have gone undetected by the Department but have
been voluntarily disclosed by the applicant would also be covered
under the definition of the expression "first offence".
25. In the last, the counsel prayed that this Court may not allow the
appellant to take advantage of his own wrongs. She prayed that the
impugned judgment of the High Court may not be disturbed and the
appeal be dismissed.
D.
ISSUES FOR CONSIDERATION
26. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
fall for our consideration:
[2025] 2 S.C.R.
493
Vinubhai Mohanlal Dobaria v.
Chief Commissioner of Income Tax & Anr.
a.
Whether an offence under Section 276CC of the Income Tax
Act, 1961 could be said to have been committed on the actual
date of filing of return of income or on the day immediately
after the due date for filing of returns as per Section 139(1)
of the Act?
b.
What is the meaning of the expression "first offence" appearing
in Clause 8 of the 2014 guidelines?
c.
What amounts to voluntary disclosure for the purpose of Clause
8 of the 2014 guidelines?
d.
Whether the 2014 guidelines are mandatory or directory in
nature?
E.
ANALYSIS
i.
Section 276CC of the Income Tax Act, 1961
27. Chapter XXII of the Act deals with offences and prosecutions and
consists of Sections 275A to 280D. Section 276CC of the Act interalia provides that if a person fails to furnish the return of income
which he is required to furnish under sub-section (1) of Section 139
of the Act, then he shall be punishable with:
a.
Rigorous imprisonment for a term ranging between six months
to seven years along with fine in cases where the amount of
tax which would have been evaded if the failure of the person
had not been discovered is more than twenty-five hundred
thousand rupees; and
b.
Rigorous imprisonment for a term ranging between three months
to two years and with fine - in any other case.
28. Section 276CC of the Act as it stood at the relevant point in time is
reproduced hereinbelow:
"276CC. Failure to furnish returns of income.-
If a person wilfully fails to furnish in due time the return
of fringe benefits which he is required to furnish under
sub-section (1) of section 115WD or by notice given under
sub-section (2) of the said section or section 115WH or
the return of income which he is required to furnish under
sub-section (1) of section 139 or by notice given under
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clause (i) of sub-section (1) of section 142 or section 148
or section 153A, he shall be punishable,-
(i) in a case where the amount of tax, which would
have been evaded if the failure had not been
discovered, exceeds twenty-five hundred thousand
rupees, with rigorous imprisonment for a term which
shall not be less than six months but which may
extend to seven years and with fine;
(ii) in any other case, with imprisonment for a term
which shall not be less than three months but which
may extend to two years and with fine:
Provided that a person shall not be proceeded against
under this section for failure to furnish in due time the return
of fringe benefits under sub-section (1) of section 115WD
or return of income under sub-section (1) of section 139-
(i) for any assessment year commencing prior to the
1st day of April, 1975; or
(ii) for any assessment year commencing on or after
the 1st day of April, 1975, if-
(a) the return is furnished by him before the
expiry of the assessment year; or
(b) the tax payable by such person, not being
a company, on the total income determined on
regular assessment, as reduced by the advance
tax, if any, paid, and any tax deducted at source,
does not exceed three thousand rupees."
29. Sub-clause (b) of clause (ii) of the proviso to Section 276CC was
substituted by the Act No. 23 of 2019 with effect from 01.04.2020.
The said sub-clause, as it stands after the amendment, is reproduced
hereinbelow:
"(b) the tax payable by such person, not being a company,
on the total income determined on regular assessment,
as reduced by the advance tax or self-assessment tax, if
any, paid before the expiry of the assessment year.