Guidelines for compounding of offences under direct tax laws - Income Tax - F.No.285/20/2007-IT(Inv.)/6

F. No. 285/20/2007-IT(Inv.)/6 dated 12.04.2007 1. The existing guidelines for compounding of offences under direct laws were issued vide F. No. 285/161/90-IT(Inv.), dated 30.09.1994 and subsequently clarification was issued vide F. No. 285/160/90-IT(Inv.), dated 20.10.1995 and guidelines were revised vide F. No. 285/26/2002-IT(lnv.), dated 29.07.2003. 2. Certain ambiguities were noted regarding the issue whether the tax sought to be evaded for purpose of compounding in cases where return were to be filed u/s 158BC/158BD or 153A/153C shall be tax only on the additions made, by A.O to the income shown in such returns. 3. The Board after careful consideration inserts the following-explanation to para 9.5 of the guidelines dated 30.9.1994 read with para V of guidelines dated 29.07.2003 on compounding of offences: Explanation:- The amount of tax sought to be evaded for purpose of computing compounding fee for offence u/s 276C(1) in case of assessments u/s 158BC/158BD or 153A/153C means tax on the difference between the tax on the income determined in such assessments and the tax on the basis of income shown in original return filed u/s 139. Where no returns has been filed u/s 139 tax on the basis of income shown in original return will be treated as nil, for the purpose of this explanation. Tax for this purpose means tax at the maximum marginal rate for assessments u/s 153A/153C and tax as per section 113 for assessments u/s 158BC/158BD. This explanation shall apply to all the pending petitions for compounding as on 01.04.2007 as well as to such petitions received subsequent to this date.