TaxTMI 
TaxTMI 
Guidelines for Compounding of Offences under Direct Tax Laws, 2014
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....ed 16.05.2008. 3. Compounding Provision: Section 279(2) of the Act provides that any offence under chapter XXII of the Act may, either before or after the institution of proceedings, be compounded by the CCIT/DGIT. As per section 2(15A) and 2(21) of the Act, Chief Commissioner of Income Tax includes Principal CCIT and Director General of Income tax includes Principal DGIT. 4. Compounding is not a matter of right: Compounding of offences is not a matter of right. However, offences may be compounded by the competent authority on his satisfaction of the eligibility conditions prescribed in these guidelines keeping in view factors such as conduct of the person; nature and magnitude of the offence and facts and circumstances of each case. 5. Applicability of these guidelines to prosecutions under IPC: Prosecution instituted under Indian Penal Code, if any, cannot be compounded as per these guidelines. However, section 321 of Criminal Procedure Code, 1973 provides for withdrawal of such prosecutions. 6. Classification of Offences: The offences under Chapter-XXII of the Act are classified into two parts (Category 'A' and Category 'B') for the limite....
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.... or documents etc. xiv. 278 Abetment of false return etc. with reference to Category 'B' offences 7. Eligibility Conditions for compounding: The following conditions should be satisfied for considering compounding of an offence :- i. The person makes an application to the CCIT/DGIT having jurisdiction over the case for compounding of the offence(s) in the prescribed format (Annexure-1) ii. The person has paid the outstanding tax, interest, penalty and any other sum due, relating to the offence for which compounding has been sought. iii. The person undertakes to pay the compounding charges including the compounding fee, the prosecution establishment expenses and the litigation expenses including counsel's fee, if any, determined and communicated by the CCIT/DGIT concerned. iv. The person undertakes to withdraw appeal filed by him, if any, in case the same has a bearing on the offence sought to be compounded. In case such appeal has mixed grounds, some of which may not be related to the offence under consideration, the undertaking may be taken for appropriate modification in....
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....bsp; Offences committed by a person whose application for 'plea-bargaining' under Chapter XXI-A of 'Code of Criminal Procedure' is pending in a Court or a Court has recorded that a 'mutually satisfactory disposition of such an application is not worked out'. ix. Any other offence, which the CCIT/DGIT concerned considers not fit for compounding in view of its nature and magnitude. 9. Notwithstanding anything contained in these Guidelines, the Finance Minister may relax restrictions in para 8 above for compounding of an offence in a deserving case, on consideration of a report from the Board on the petition of an applicant. 10. Authority Competent to Compound an Offence: The CCIT/DGIT having jurisdiction over the person, seeking compounding of an offence, is the competent authority for compounding of all Category 'A' and Category 'B' offences. However, an order in ease of an application for compounding of an offence appearing in Category 'B' of para 6 supra, involving compounding charges (as explained in para 13 infra) in excess of Rs. 10,00,000 (Rs. ten lakhs) shall be passed by the CCIT/DGIT concerned onl....
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....id amount of compounding charges. v. The competent authority shall pass the compounding order within 30 days of payment of compounding charges. Where compounding charge is not deposited within the time allowed, the compounding application may be rejected after giving the applicant an opportunity of being heard. The order of rejection shall be brought to the notice of the Court immediately through prosecution counsel in the cases where prosecution had been instituted. 12. Fees for compounding: The fees for compounding of offences shall be as follows: 12.1 Section 276B- Failure to pay the tax deducted at source. Section 276BB- Failure to pay the tax collected at source. 3% per month or part of a month of the amount of tax in default disclosed in the compounding application. After compounding of the said offence, if the same person comes forward for compounding of such offence through any subsequent application, the applicable rate for compounding of such an offence will be 5% per month or part of a month of the amount of tax in default. The period of default for calculating compounding fee in the category shall be calculated from the date of deduct....
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....ailure to comply with the provisions of Section 269T (prior to 01/04/89). A sum equal to 20% of the amount of deposit repaid in contravention of the provision of Section 269T. 12.8 Section 277- False statement in verification etc. Section 278- Abetment of false return etc. 12.8.1 Where same set of facts and circumstances attract under Section 277 as well as section 278, the compounding fee shall be charged for offences under these sections by treating them as one offence. 12.8.2 Where same set of facts and circumstances attract prosecution under section 277 in addition to the offence in connection with which prosecution under section 277 got attracted in case of the same person, no separate compounding fee shall be charged for offence under section 277. For example where a person is charged with an offence under section 276C(1) as also under section 277, for the same set of facts and circumstances, the compounding fees shall be charged only for the offence under section 276C(1) at the rates prescribed for the said section. 12.8.3 Where same set of facts and circumstances attract prosecution under any offence as well as u/s 277 and /or 278, normally, a compounding ....
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....e corresponding provisions of offences under the Income-tax Act, 1961. 15. The application for compounding in the cases of co-accused shall be considered along with the main case or immediately after a decision has been taken in the main case. 16. The PCCsIT/CCsIT/PDGsIT/DGsIT are requested to circulate the above revised Guidelines along with its annexure Nos. 1, 2 and 3 among all the officers of their region for compliance. Annexure 1 Format of application for compounding of offences under Income Tax Act to be submitted separately by each applicant S. No. Particulars Remarks 1 Name of the applicant 2 Status 3 Offences committed u/s * 4 AYs / Date/ period involved in offence 5 Status of case (i.e. whether contemplated/pending in Court/convicted/ acquitted 6 Date of filing of complaint, if any 7 Particulars of offences along-with justification for compounding (separate sheet) 8 Whether the applicant has paid the amount of tax, interest, penalty and any other sum due relating to the offence 9 Whether the applicant undertakes to pay....
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.... Sl. No. 1 to 17 matches with the answers given below in remarks column.) Name of the applicant :- Status :- Offences u/s :- AYs/ Date/ period involved in offence :- Date of filing of complaint, if any :- Status of case (i.e. whether Contemplated/ Pending in Court/ Convicted/ Acquitted):- S. No. Particulars (vis a vis compounding guidelines) Remarks Reference of the File submitted 1. The applicant has filed a written request for compounding the offence in the prescribed Proforma. Yes On Page no. .............. 2. Whether the applicant has paid the amount of tax, interest and penalty & any other sum due relating to the default as prescribed in the guidelines. Yes On Page no. .............. 3. Whether the applicant has undertaken to pay the compounding charges in terms of para 7 as computed as per para 12 & 13 of the Guidelines. Yes On Page no. .............. 4. Whether the offence is under the same section under which offences have been committed by the applicant earlier and which have been compounded three times prior to the present application. NOTE: THIS IS APPLICABLE ONLY IN CASE OF A Category 'A&#....
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....onsideration of the competent authority No On Page no. .............. Signature Name Designation Date Recommended by: 1. Jt.CIT/ Addl. CIT/Jt.DIT/ Addl. DIT...... Signature/ Name /Designation/ Date 2. PCIT/PDIT/CIT/DIT .......... Signature/ Name /Designation/ Date *Note: This may be given on the basis of information furnished by the applicant in his application for compounding or information already available with the competent authority for compounding Annexure 3 Part-I Format for order u/s 219(2) of the I.T.Act for compounding of an offence as mentioned in Para 11 (ii) of the Guidelines issued by the CBDT vide F.No.-285/35/2013-IT(Inv.V) dated 23.12.2014 on Compounding of Offences Order u/s 279(2) of I.T. Act, 1961 Name of the person :- Status :- Offences u/s :- AYs / Date/ period involved in offence :- Date of filing of complaint: if any :- Status of case (i.e. whether contemplated/ Pending in Court/ Convicted/ Acquitted) :- Date of hearing, if any :- Date of order :- ORDER u/s 279(2) of the Income-Tax Act, 1961 I, the Principal Chief/Chief Commissioner of Income-tax Principal Director/Director General of Incom....