TaxTMI 
TaxTMI 
Revised Guidelines for Compounding of offences under the provisions of the Direct Tax Laws
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....er-XXIl of I.T. Act 1961 shall be classified as technical and non technical offences for the limited purpose of compounding of the offences. 2.1 Technical offences Offences punishable under the following sections shall be treated as technical offences: (Prior to 01/04/1976 - failure to make payment or deliver returns or statements or allow inspection). i. 276 (Prior to 01/04/1976 - failure to make payment or deliver returns or statements or allow inspection). ii. 276B (Prior to 01 /04/1989 - failure to deduct or pay tax) iii. 276B (w.e.f. 01/04/1989 - failure to pay tax deducted at source to the credit of central Government) iv. 276 BB (failure to pay the tax collected at source) v. 276DD (failure to comply with the provisions of section 269SS) vi. 276E (failure to comply with the provisions of section 269 T) vii. 277 (false statement in verification etc.) with reference to technical offences viii. 278 (abetment of false return etc.) with reference to technical offences 2.2 Non-technical offences : Offences punishable under the following sections shall be treated as non-technical offences :- i. ....
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....tment. 4.4 Cases not to be compounded:- Notwithstanding anything contained in the guidelines, the following cases should normally not be compounded: a) In case of a non-technical offence, offences other than the first offence as defined in para 8 below. b) Offences involving major fraud or scam or misappropriation of government funds or public property. c) Offences committed by an assessee linked to any Anti-national/terrorist activity and cases being investigated by CBI, police, enforcement directorate or any other Central Govt. agencies, as per information available with the Income tax department. d) Offences committed by an assessee who has enabled others in large-scale concealment of income in a systematic and planned way over a number of years like hawala entries, bogus trusts, bogus remittance etc. e) Offences committed by an assessee 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 disposition1 of such an application is not worked out. f) Where conviction order has been passed by a Court. g) A....
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.... in para 7.1 (b) above will be the Committee comprising: i) CCIT (CCA) ii) DGIT (Inv.) and iii) CCIT/DGIT having jurisdiction over the case. Where CCIT (CCA)/DGIT(Inv) is the CCIT/DGIT having jurisdiction over the case, then another officer of the rank of CCIT may be co-opted as the member of the Committee. The CCIT/DGIT having jurisdiction over the case will act as Member-Secretary who will also co-opt such other member as the case may be, and convene the meeting, as well as maintain its minutes. d) Henceforth, no reference to the Board in the above cases will be required. 7.2 Notwithstanding anything contained in the Guidelines, the Finance Minister may grant approval for compounding of an offence in a suitable and deserving case, after obtaining report from the Board on the petition of the applicant. 8. For the purpose of these guidelines, "first offence" means: a) Offence under any of the Direct Tax Laws committed prior to the date of issue of any show-cause notice for prosecution or any intimation relating to prosecution by the Department to the person concerned or before launching of any prosecution, whichever is earlier; and/or....
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.... of the amount, the payment of which is sought to be evaded, for period of default. 9.7 Section 276CC - Failure to furnish returns of income. 2% per month or part of a month of the tax and interest determined on regular assessment as reduced by the tax deducted at source and advance tax, if any, paid during the financial year immediately preceding the assessment year reckoned from the date immediately following the date on which the return of income was due to be furnished before to the date of furnishing of the return or where no return was furnished, the date of completion of the assessment. Where before the date of furnishing of the return or where no returns was furnished before the date of completion of assessments, any tax is paid by the assessee u/s 140A or otherwise: i) Compounding fee shall be calculated in the manner prescribed in this Para up to the date on which the tax is so paid; and ii) Thereafter, the fee shall be calculated at the aforesaid rate on the amount of tax and interest determined on regular assessment as reduced by the TDS, advance tax and tax paid u/s 140A or otherwise before filing the return of income or where no return was f....
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.... exceptional cases of genuine financial hardship the compounding charges may be suitably reduced with the approval of Finance Minister. ^1[10. ln addition to the compounding fee, the compounding charges shall include prosecution establishment expenses and the litigation expenses. While the prosecution establishment expenses will be charged at the rate of 10% of the compounding fee subject to a minimum of Rs. 10,000/- and maximum of Rs. 50,000/-, the litigation expenses will be the fees paid/payable by the Department to the prosecution counsel till (he date of compounding of offences as per the Instruction applicable on the subject on the date of compounding. This will apply even where a number of offences are compounded under a single order.] Applicability to pending cases 11. With effect from 01st June 2008, the procedure mentioned in the new guidelines shall mutatis mutandis apply to all future as well as pending petitions for compounding of offences under all the Direct Tax Laws. However, the offences already compounded under the old guidelines shall not be reconsidered. Applicability to offences under other Direct Tax Laws 12. These guidelines shall apply mu....
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....corded that a 'mutually satisfactory disposition' of such an application is not worked out? :- 16) Whether a conviction order has been passed by a Court :- Verification I/we s/shri ........................................................... S/o ........................................................... certify that the information in the above columns is true and correct. Signature Designation Place Date ANNEXURE 2(a) Check List for Compounding of Non-technical Offences(to be submitted by Assessing Officer/ADIT/DDIT to the authority competent to compound) (A case can be compounded only if the answers to S.No. 1 to 16 matches with the answers given below in remarks column.) a) Name of the assessee :- b) Status :- c) Non-technical offences u/s :- d) AYs/ Date/ period involved in offence :- e) Date of filing of complaint, if any :- f) Status of case (i.e. whether Contemplated/ Pending in Court/ Convicted/ Acquitted) :- S.No. Particulars Reference Remarks Reference 1. The assessee has filed a written request for compounding the offence in the prescribed P....
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....gnature).......................... 2. CIT/DIT.......................... (Signature).......................... ANNEXURE 2(b) Check List for Compounding of Technical Offences(to be submitted by Assessing Officer /ADIT/DDIT to the authority competent to compound ) (A case can be compounded only if the answers to S.No. 1 to 13 matches with the answers given below in remarks column.) a) Name of the assessee.:- b) Status :- c) Technical offences u/s :- d) AYs/ Date/ period involved in offence :- e) Date of filing of complaint, if any :- f) Status of case (i.e. whether Contemplated/ Pending in Court/ Convicted/ Acquitted) :- S.No. Particulars Remarks Reference 1. The assessee has filed a written request for com pounding the offence in the prescribed Proforma. Yes On Page no.... 2. The assessee has paid the amount of tax as well as interest and penalties & any other sum relating to the default. Yes On Page no.... 3. The assessee has stated that he is willing to pay the prescribed compounding fee on receipt of its intimation from the Department. Yes On Page ....
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....y compound the offence(s), punishable u/s of the Income Tax Act for the A.Y.(s) / Date/ period, committed by M/s / Shri /Ms The Statement of the facts of the case are enclosed as Annexure 'A' Place Seal Sd/- Chief Commissioner of Income-tax / Director General of Income-tax. ANNEXURE 3(b) Suggested format of order u/s 279(2) rejecting compounding Name of the assessee :- 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 Chief Commissioner of Income-tax / 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), punishable u/s ........................ of the Income Tax Act 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 "....