TaxTMI 
TaxTMI 
Guidelines for Compounding of Offences under the Income-Tax Act, 1961
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....de letter dated 16.09.2022. 2. The above Guidelines have been reviewed and in supersession thereof, 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 su....
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....justable against applicable total compounding charges decided by the Competent Authority, if any. 4.2.3 The Compounding Application Fee, at above 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 Ac....
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....ny further application filed for the same purpose, will be considered as subsequent compounding application and charges will be applicable as per para 10 of these guidelines. 6. Offences compoundable 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 o....
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....plicant files applications in more than one jurisdictional charge, the Competent Authority will be the jurisdictional authority where the quantum of TDS default is higher. 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. 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 dul....
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.....8 In case proceedings to impose penalty related to the offence sought to be compounded are pending at the time of filing of the compounding application, such proceedings should be concluded expeditiously and the demand related to penalty, if any, recovered before issuing the compounding order. 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 Authori....
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....ication is made beyond 12 months from the end of the month in which the prosecution complaint is filed, the compounding charges shall be increased by 50% of the amount calculated as per paras 10.2 to 10.5 above. 11. Co-accused and Abettor- Section 278B (Offences by companies) and Section 278C (Offences by Hindu undivided families) 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 c....
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....and any other amount as is found to be payable on verification of the record. 13. Whether the applicant undertakes to pay the compounding charges as shall be intimated by the department. 14. Whether the applicant undertakes to withdraw appeals filed by him related to the offence sought to be compounded. 15. Whether the application is a first application as per para 10. If no, then sequence number of the application. 16. Whether application include any offence(s) which 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 ....
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.... 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 on verification of record any further amount of tax, interest and penalty & any other sum was found payable by the applicant. Yes/No, If yes date of intimation and date of payment. If yes. give details in brief. Add annexure if required. On Page no. . . 4. Whether the applicant has undertaken to pay the compounding charges computed as per Para 10 of the Guidelines. Yes On Page no........... 5. Whether the applicant 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....
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....ef. Add annexure if required. On Page no.... 16. Amount of compounding charges computed by AO/ADIT/DDIT as per Para 10 of the Guidelines. On Page no 17. The compounding charges are in accordance with Para 10 of the Guidelines Yes [f no. give reasons. On Page no. . . . 18. The factors such as habitual offender or the gravity of the offence, have been considered while d with the compounding application. Yes On Page no. . . . 19. Whether the cases of Co-accused are being considered as per Para 11 Yes/Not Applicable If yes, give details in brief. Add annexure if required. On Page no.. 20. Any other fact relating to the person/case relevant for consideration of the Competent Authority. Yes/No If yes, give details in brief. Add annexure if required. 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/De....
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....e)- Guard file. Signature ACIT/ ITO (Hq.) O/o the Pr. CCIT/CCIT/ Pr. DGIT/DGIT Annexure 3 (Suggested Format) Part-II Order u/s 279(2) of the Income-tax Act, 1961 for rejecting the Compounding of an Offence as mentioned in Para 9.2 of the Guidelines issued by the CBDT vide F. No. 285/08/2014-IT(lnv.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 &n....
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.... OR The complaint is yet to be filed in the Court. 4. In case of order accepting compounding, details of payment of compounding charges by the person. 5. Direction to the AO/ Standing Counsel to take necessary action to implement the orders at the earliest. Annexure 4 Section Description/Heading of section Compounding Charges 276A (Prior to 01.04.2023) Failure to comply with the provision of sections 178(1) and 178(3) The Competent Authority may determine compounding charge having regard to the nature and magnitude of the offence, loss of revenue directly or indirectly attributable to such offence, subject to levy of a minimum compounding charge of Rs. 10,000/- (Rupees one thousand) for each such offence. 276AA (Prior to 01.10. 1986)- Failure to comply with the provisions of section 269AB or section 269I 276AB (Prior to 01.04.2022) Failure to comply with the provisions of sections 269UC, 269UE and 269UL 276DD (Prior to 1.04.1989) - Failure to comply with the provisions of section 269SS 10% of the amount of any loan or deposit accepted in contravention of the provisions of Section 269SS. 276E ....