Compounding Of Offence To Be Preferred Over Section 482 CrPC: Orissa HC Directs Petitioner To Seek Remedy Under CBDT Circular
The case pertains to the petitioner's alleged failure to deposit tax deducted at source (TDS) into the Central Government account by the stipulated due date.

The Orissa High Court has dismissed a petition seeking to quash proceedings under Section 276(B) of the Income Tax Act, 1961, advising the petitioner to pursue compounding of the offence as permitted under the law.
The Single Bench of Justice Sibo Sankar Mishra observed that the Court's inherent jurisdiction under Section 482 of the Criminal Procedure Code (CrPC) need not be invoked when the Income Tax Act provides a procedural remedy through compounding.
"In the present regime, where the compounding of the offence is permissible, the jurisdiction of this Court under Section 482 CrPC may not be necessarily invoked by the petitioner. The petitioner may resort to the procedural remedy under Section 320 CrPC by relying upon the Circular dated 17.10.2024 and seek compounding of the offences complained of by the Revenue," the Court observed.
Senior Advocate Milan Kanungo appeared for the petitioner and Advocate Abinash Kedia appeared for the respondent.
The case pertains to the petitioner's alleged failure to deposit tax deducted at source (TDS) into the Central Government account by the stipulated due date. While the petitioner had deducted TDS from employees’ salaries, it was not deposited within the required timeframe, leading to a delay of over 12 months.
The Revenue initiated prosecution, and the trial court took cognizance of the offence under Section 276(B). The petitioner sought discharge but was denied, prompting the current petition before the High Court.
The petitioner argued that the entire TDS amount, along with delayed interest, had been deposited, making the quashing of the offence appropriate. However, the Revenue opposed the plea, citing a Central Board of Direct Taxes (CBDT) Circular issued on October 17, 2024, which outlines a comprehensive framework for compounding offences under the Income Tax Act.
Court Reasoning
The Court referred to Clauses 4.6 and 8.3 of the Circular, emphasizing that these provisions specifically address curable defects and offences such as the one faced by the petitioner. It noted that the circular harmonizes the process of compounding, making it the proper avenue for resolution.
"I have given a careful consideration to the submissions made by the parties at the Bar and perused the documents placed before this Court. Perusal of the Circular dated 17.10.2024 issued by the CBDT makes it abundantly clear that the department has harmonized the entire procedure for compounding all kinds of offences under the I.T. Act arising out of curable defects. Clauses 4.6 and 8.3 as reproduced above clearly deals with the offences for which the petitioner is sought to be prosecuted in 2(C) C.C. Case No.70 of 2013," the Court said.
The Court concluded by granting liberty to the petitioner to approach the trial court and seek compounding of the offence, as per the guidelines established by the CBDT Circular. The petition was accordingly disposed of. "The CRLMC is disposed of with a liberty to the petitioner to approach the learned trial Court under the appropriate provision of law for compounding of the offence by relying upon the Circular dated 17.10.2024 issued by the CBDT. If such application is moved before the Court below, the same shall be considered on its merit without being influenced by the observation of this Court in the present order," the Court ordered.
Cause Title: Binod Pattanayak v. Union of India [CRLMC No. 3284 of 2023]
Appearance:-
Petitioner: Senior Advocate Milan Kanungo, Advocates S. K. Dwivedy
Respondent: Advocate Abinash Kedia, Junior Standing Counsel (Income Tax)
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