Compunding of offences, Income Tax

[Poornima Gupta]

What is the meaning of compounding of offences under section 37 of Income tax act? Are there any examples to it, which can help me gain a better knowledge of what exactly it is?

Posts / Replies

[Charu Tyagi]

Compounding of an offence means giving an opportunity to defaulter for settlement of charges and for prosecution against defaulter to avoid litigation proceedings

For Example -

1. Failure to furnish return of income.

2. Certain income not disclosed in return which is later find in an assessment.

3. Failure to pay Tax deducted at source.

[Padmanathan Kollengode]

Dear Poornima Gupta Ji,

Pls go through the Compounding Guidelines issued by CBDT dated 16-09-2022 vide F No. 285/08/2014-IT(Inv.V)/196. to gain knowledge on compounding. you can find the same in below link:

https://incometaxindia.gov.in/Lists/Latest%20News/Attachments/540/Compounding-Guidelines-dated-16.09.2022.pdf

Following are the main points discussed therein are:

1. Compounding of offence is not a matter of right.

2. Prosecution instituted under IPC cannot be compounded.

3. The guideline basically classifies offences as Category A and Category B for purpose of compounding.

4. Application has been made for compounding.

5. Procedure explained for compounding.

6. Compounding fee and charges as prescribed has to be paid.