TMI BlogGUIDELINES FOR COMPOUNDING OF OFFENCES UNDER DIRECT TAX LAWS, 2014X X X X Extracts X X X X X X X X Extracts X X X X ..... Income tax includes Principal DGIT. 4. Compounding is not a matter of right: Compounding of offences is not a matter of right. However, offences may be compounded by the competent authority on his satisfaction of the eligibility conditions prescribed in these guidelines keeping in view factors such as conduct of the person; nature and magnitude of the offence and facts and circumstances of each case. 5. Applicability of these guidelines to prosecutions under IPC: Prosecution instituted under Indian Penal Code, if any, cannot be compounded as per these guidelines. However, section 321 of Criminal Procedure Code, 1973 provides for withdrawal of such prosecutions. 6. Classification of Offences: The offences under Chapter-XXII of the Act are classified into two parts (Category 'A' and Category 'B') for the limited purpose of compounding of the offences. 6.1 Category 'A' Offences punishable under the following sections are included in Category 'A': Sl. No. Section Description/Heading or section i. 276 (Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 69UE and 269UL vii 276C(1) Wilful attempt to evade tax etc. viii 276C(2) Wilful attempt to evade payment of taxes etc. ix. 276CC Failure to furnish returns of Income x. 276CCC Failure to furnish returns of income in search cases in block assessment scheme xi. 276D Failure to produce accounts and documents xii 277 False statement in verification etc. with reference to Category 'B' offences xiii 277A Falsification of books of account or documents etc. xiv. 278 Abetment of false return etc. with reference to Category 'B' offences 7. Eligibility Conditions for compounding: The following conditions should be satisfied for considering compounding of an offence : i. The person makes an applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years or more, with or without fine, and which has a bearing on the offence sought to be compounded. v. Offences committed by a person which, as per information available with the CCIT/DGIT concerned, have a bearing on a case under investigation (at any stage including enquiry, filing of FIR/complaint) by Enforcement Directorate, CBI, Lokpal, Lokayukta or any other Central or State agency. vi. Offences committed by a person for which he was convicted by a court of law under Direct Taxes laws. vii. Offences committed by a person for which complaint was filed with the competent court 12 months prior to receipt of the application for compounding. viii. Offences committed by a person 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 disposition of such an application is not worked out'. ix. Any other offence, which the CCIT/DGIT concerned considers not fit for compounding in view of its nature and magnitude. 9. Notwithstanding anything contained in these Guidelines, the Finance Minister may relax restrictions in para 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such intimation. Under exceptional circumstances and on receipt of a written request for further extension of time, the competent authority may extend this period up-to further period of 120 days. Extension beyond this period shall not be permissible except with the previous approval of the Member (Inv), CBDT on a proposal of the competent authority concerned. iv. However, wherever the compounding charges are paid beyond 60 days as extended by the competent authority, the applicant shall have to pay additional compounding charge at the rate of 2% per month or part of the month of the unpaid amount of compounding charges. v. The competent authority shall pass the compounding order within 30 days of payment of compounding charges. Where compounding charge is not deposited within the time allowed, the compounding application may be rejected after giving the applicant an opportunity of being heard. The order of rejection shall be brought to the notice of the Court immediately through prosecution counsel in the cases where prosecution had been instituted. 12. Fees for compounding: The fees for compounding of offences shall be as follows: 12.1 Section 276B - Fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, as reduced by the TDS, TCS, advance tax and tax paid u/s 140A before filing of the return of income or where no return was furnished from the date of completion of assessment or reassessment. 12.5 Section 276CCC - Failure to furnish return of income as required under section 158BC . The fee for this offence shall be calculated in the same manner as for offences u/s 276CC. 12.6 Section 276DD - Failure to comply with the provisions of Section 269SS (prior to 01/04/89). A sum equal to 20% of the amount of any loan or deposit accepted in contravention of the provisions of Section 269SS. 12.7 Section 276E - Failure to comply with the provisions of Section 269T (prior to 01/04/89). A sum equal to 20% of the amount of deposit repaid in contravention of the provision of Section 269T. 12.8 Section 277 - False statement in verification etc. Section 278 - Abetment of false return etc. 12.8.1 Where same set of facts and circumstances attract under Section 277 as well as section 278 , the compounding fee shall be charged for offences under these sections by treating them as one offence. 12.8.2 Where same set of facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- in addition to litigation expenses including Counsel's fees paid/payable by the Department in connection with offence(s) compounded by a single order. In a case where the litigation expenses are not readily ascertainable, the competent authority may arrive at litigation expenses, inter alia, on the basis of rates prescribed by the Government and on the basis of available records with the government and the counsels. 14. Applicability of Guidelines to offences under other direct tax laws These guidelines shall apply mutatis mutandis to offences under other Direct Tax Laws and the compounding fee for offences under the other Direct Tax Laws will be same as prescribed supra for the corresponding provisions of offences under the Income-tax Act, 1961. 15. The application for compounding in the cases of co-accused shall be considered along with the main case or immediately after a decision has been taken in the main case. 16. The PCCsIT/CCsIT/PDGsIT/DGsIT are requested to circulate the above revised Guidelines along with its annexure Nos. 1, 2 and 3 among all the officers of their region for compliance. Annexure 1 Annexure 2 Annexure 3 Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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