TaxTMI 
TaxTMI 
Guidelines for Compounding of Offences under the Income-Tax Act, 1961
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....ereof, and in exercise of powers conferred u/s 119 read with explanation to section 279 of the Act, following Guidelines are hereby issued. 3. Scope of the Guidelines to prosecutions under Income Tax Act, 1961 3.1 These Guidelines shall come into effect from the date of issuance. They shall apply mutatis mutandis to all applications which are either filed after the date of issuance of these guidelines or were already filed earlier but had not been disposed. For applications, pending on the date of issuance of these Guidelines, if compounding charges have already been determined and intimated but not fully paid, the compounding charges shall be re-determined, provided they are lower as per these Guidelines. However, no refund or adjustment against other dues shall be made if the higher compounding charges, determined as per the previous Guidelines, have already been paid. 3.2 Applications may also be filed again, in case applications under earlier guidelines were rejected only on account of curable defects such as non-payment of outstanding tax, interest, penalty, or any other sum related to the offence, filing of application in incorrect proforma, mention of incorrect assessment....
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....bove rates, shall also be payable in respect of applications which were filed before the date of issuance of these guidelines but have been rejected and that are proposed to be revived in terms of these guidelines. 4.2.4 The Compounding Application Fee shall not be payable in respect of applications pending as on date of issuance of the guidelines and filed in terms of earlier guidelines. 4.3 Payment of all taxes, interest & other sums relating to offence for which compounding sought: 4.3.1 All outstanding tax, interest (including interest u/s 220 of the Act), penalty and any other sum due, relating to the offence(s) for all relevant year(s) and/or quarter(s) for which compounding has been sought shall be paid before making the Compounding Application or the Consolidated Compounding Application, as the case may be. 4.3.2 However, if on verification by the Department, any related demand is found outstanding or is considered payable, the same; on being intimated to the applicant, shall be paid (including interest u/s 220 of the Act) within 30 days of the intimation by the Department or such period (not exceeding three months) allowed by the Competent Authority. The compounding ap....
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....ble with the approval of higher authority 6.1 The Competent Authority, in the following cases, may compound only with the approval of Chairman, CBDT. (a) In case of an offence for which the applicant has been convicted with imprisonment for two years or more, with or without fine, by a court of law; (b) In case of an offence which is related to another offence under any other law for which he has been convicted with imprisonment for two years or more, with or without fine, by a court of law; (c) If the applicant, as per information available on the basis of an investigation conducted by any Central or State Agency, has been found to be involved, in any manner, in anti-national or terrorist activity. In such cases, the Competent Authority shall consult with relevant Agency and seek inputs regarding the said activity and its implications, for the purpose of deciding it as a deserving case and incorporate them while seeking approval; (d) In the case of an applicant, being a person other than the main accused, where it is proved that the applicant facilitated tax evasion through mechanisms such as use of entities for laundering of money, generation of bogus invoices of sale/pu....
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.... any dispute in deciding Competent Authority, the Pr. CCIT having PAN jurisdiction will decide Competent Authority, within 30 days of receipt of such reference. 8.3 In case an applicant files Compounding application for offences committed u/s 276B/276BB of the Act, in respect of two or more TANs falling in two or more jurisdictions, the jurisdictional authority where the quantum of TDS default is higher shall be the Competent Authority. All other applications shall be transferred to such Competent Authority. Further, in case of any dispute in deciding Competent Authority, the Pr. CCIT having PAN jurisdiction will decide Competent Authority, within 30 days of receipt of such reference. 9. Compounding Procedure 9.1 On receipt of the Compounding application, the Competent Authority shall obtain a report from the Assessing Officer/Assistant or Deputy Director concerned who shall submit it promptly along-with duly filled in check-list (Annexure-2), to the Competent Authority, through proper channel. 9.2 In cases where, the compounding application is not found to be acceptable, then the Competent Authority shall dispose of such application through a speaking order in the suggested fo....
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....rder. 9.9 For the purpose of payment of compounding charges, the following path on e-Filing website of the department is relevant: "Login on e-FiIing portal →e-Pay Tax → New Payment → Income Tax Minor Head → Other Receipts (500) → compounding charges". 9.10 Where the payment of compounding charges is made within time allowed/extended, the Competent Authority shall pass the compounding order in the suggested format (Annexure-3 - Part-I) within one month from the end of the month of payment of total compounding charges. 9.11 Taxpayers, particularly NRIs, avoid opting for compounding due to a misconception that it constitutes an admission of offences, which could affect their reporting obligations at various statutory and international forums. To address this misconception and encourage taxpayers to seek compounding, it is directed that the Competent Authority shall include the following paragraph in the compounding order issued under section 279(2) of the Act: "This compounding order is intended to resolve the offence under section 279(2) of the Act and should not be construed as an admission of the offence(s) by the applicant." 9.12 The timelines fo....
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....ies) 11.1 Where an offence under this Act has been 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 i.e., Company, or HUF and/or any of the person(s) deemed to be guilty of the offence under section 278B or 278C of the Act, to be referred as "Co-accused" for the purpose of compounding under these guidelines. The Competent Authority may decide the application accordingly subject to the payment of compounding charges as per these guidelines. 11.2 It is again clarified that in cases of offences by a company or HUF, the main accused or co-accused 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. 11.3 For the purpose of depositing compounding charges, co-accused under Section 278B or 278C of the Act may deposit the charges under his PAN for the relevant financial year of the offence for which compounding is sought. 1....
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....ch have been applied for compounding earlier. Give details in annexure. 17. Whether application include any offence(s) which have not been applied for compounding earlier. Give details in annexure. 18. Whether the applicant was convicted with an imprisonment for a period two years or more by a court of law under direct tax laws for the offence sought to be compounded. 19. Whether the applicant was convicted with an imprisonment for a period two years or more by a court of law under any other law direct tax laws which is related to the offence sought to be compounded. 20. Whether the offence has been committed by the applicant who, as a result of investigation conducted by any Central or State agency has been found involved, in any manner, in anti-national/terrorist activity. 21. Whether it is an offence which is directly related to any offence under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. 22. Whether it is an offence which is directly related to any offence under The Prohibition of Benami Property Transactions Act, 1988. 23. Whether it is an offence u/s....
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....ant has furnished undertaking to withdraw appeals filed by him related to the offence sought to be compounded. Yes On Page no.......... . 6. Whether it is an offence in respect of which, the compounding application has been rejected earlier on merits, as per para 3.2. Yes/No If yes give details in brief. Add annexure if required. On Page no.... 7. Whether the application is filed beyond 12 months from the end of the month in which prosecution complaint is filed per para 10.7. Yes/No On Page no 8. Whether application include any offence(s) which have been applied in any earlier compounding application(s). Yes/No If yes, give details in brief. Add annexure if required. On Page no.... 9. Whether application include any offence(s) which have not been applied in any earlier compounding application(s). Yes/No If yes, give details in brief. Add annexure if required. On Page no.... 10. Whether the applicant was convicted with an imprisonment for a period two years or more by a court of law under direct tax laws for the offence sought to be compounded. Yes/No If yes, give details in brief. Add annexure if required. On Page no.... 11. Whether t....
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....he details in this annexure may be given on the basis of information furnished by the applicant in his application for compounding or information already available or inputs sought from any other agency. Annexure 3 (Suggested Format) Part-I Order u/s 279(2) of the Income-tax Act, 1961 for Compounding of an Offence as mentioned in Para 9.10 of the Guidelines issued by the CBDT vide F. No. 285/08/2014-1T (Inv.V)/ dated.....2024 on Compounding of Offences. Order u/s 279(2) of Income-tax Act, 1961 Name of the person : Status : Offences u/s : AYs / Quarters/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 ....
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.... (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 Commissioner/Chief Commissioner of Income-tax/Principal Director General/Director General of Income-tax, in exercise of powers vested in me by virtue of the provisions of sub-section 2 of section 279 of the Income-tax Act, 1961 hereby decline the prayer to compound the offence(s), u/s...... of the Income-tax Act, 1961 for the A.Y.(s) / Date/ period...... committed by M/s./Shri [Ms.. . . . . . .. .. The case was not found to be a fit case for compounding as " ...... (mention reasons) ......................................................................................................................................................" The Statement Of the facts of the case are enclosed as Annexure - 'A' Place: Date: Seal Signature Principal Chief Commissioner/Chief Commissioner of Income-tax / Principal Director General/Director General of Income-tax Copy to: The Pr. Commissioner of Income Tax/ Pr. Director of Income Tax The Assessing Officer/ ADIT/DDIT The ADIT/DDIT(Prosec....
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.... Order passed by the authorized officer during the search and seizure action. 10 % of the highest of total income declared or assessed. in the last 7 financial years including year of search, subject to a minimum of Rs. 5,00,00,000/- (Rupees five crore). 275B Failure to comply with the provisions of clause (iib) of sub-section (1) of section 132) i.e., failure to afford the authorized officer the necessary facility to inspect such books of account or other documents during the during the search and seizure action. 10 % of the highest of total income declared or assessed, in the last 7 financial years including year of search, subject to a minimum of Rs. 5,00.00,000/- (Rupees five crore). 276 (W.e.f. 01.04.1989) - Removal, concealment, transfer or de livery of property to the wart tax recovery. 75% of the outstanding tax or the recovery amount sought to be thwarted through the removal concealment/ transfer/ delivery of property, whichever is lower. 276B Failure to pay tax deducted at source under Chapter XIID or XVII -B 1.5 % per month or part of a month of the amount of tax in default for the default period. The period of default shall be calcula....