AI Drafter 
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Compounding is nothing but a sort of compromise between the offender and the department to avoid criminal proceedings and is a punishment outside the court proceedings. Oxford Dictionary defines it as ‘forbear from prosecuting in exchange for money or other consideration; condone for money. Compoundable offence is an offence which the law allows to be compounded between the parties; an offence which is capable of being compounded.
The offence of accepting or agreeing to accept consideration for not disclosing information that might assist in convicting or prosecuting someone who has committed an arrestable offence (consideration here does not include reasonable compensation for loss or injury caused by the offence). There is also a special statutory offence of advertising a reward for stolen goods on the basis that no question will be asked or that the person producing the goods ‘will be safe from inquiry (England) Oxford Law Dictionary, 5th Edn,.. 2003. )
Compounding is a compromise arrangement between administrator of statute and the person who has committed an offence. Compounding involves receipt of consideration in return of non- prosecution of person who has committed an offence (1997) 24 CLA 214 (CLB).
Compounding result is dropping of prosecution proceedings and once the offence is compounded, penalty or prosecution proceedings can not be taken up for same offence. Compounding order can not be challenged by both the parties and appeal against such order does not lie. Such matters can not be revived or reopened. Compounding is not a right but discretion of the compounding authority.
Section 320 of Criminal Procedure Code permits compounding of offence under Indian Penal Code. Any compounding results in acquittal of offender.
Compounding Rules
Central Government is empowered to frame and notify the rules in relation to compounding of offences which will prescribe the procedure for compounding.
Generally, an opportunity shall be gives to assessee to compound the offence before instituting the prosecution proceedings.
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