Re: Compounding application u/s 276B/276BB for TDS late deposit

Assessee has filed application with CCIT for compounding of offences u/s 276B /276BB. Are these application covered in VSV scheme

A Declaration can be filed under S. 4 of the DTVSV Act, 2020 only in respect of the ‘tax arrear’ . In the given facts, it is gathered that the assessee is not seeking to settle any dispute relating to the disputed tax, interest or penalty and that any appeal relating thereto is pending before any appellate forum. The desire of the querist is to seek immunity form prosecution on compounding of the offence. The correct thing for him to stay on the course as he has already filed an application for compounding of offence and once it s entertained, the prosecution launched would be dropped.

Assuming that an appeal is filed by the querist and is pending  on the specified date before an appellate forum in respect of the disputed tax, interest or penalty and the querist desires to file a declaration in respect of the tax arrear arising out of such disputed amounts, the querist should look in to the provisions of S..9(1) and in particular clause(ii) which prohibits the filing of the Declaration in a case where a prosecution has been instituted on or before the date of filing the declaration relating to an assessment year in respect of the tax arrear. In our considered opinion, the institution of proceedings u/s 276B or 276BB should not disentitle an assesssee form filing the declaration for settlement of the tax arrear in as much as the said sections 276B and 276BB provide for prosecution in relation to the offences for TDS, DDT or TCS violations that are unrelated to the tax arrear of the kind that is being dealt with under the DTVVSAct.

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