Download CBDT Guidelines For Compounding Of Offences Under Direct Tax Laws, 2019

The CBDT has issued a directive dated 14th June 2019 in which it has specified the guidelines for compounding of offenses under section 279(2) of the Act. The Guidelines supercede the earlier guidelines on the subject. The Guidelines shall come into effect from 17.06.2019 and shall be applicable to all applications for compounding received on or after the aforesaid date. Applications received before 17.06.2019 shall continue to be dealt with in accordance with the Guidelines dated 23.12.2014.

F.No.28S/08/2014-IT(lnv.V)/ ILl, Government
of India
Ministry of Finance
Department of Revenu e
(Central Board of Direct Taxes)
*** * **
C-Block, Dr. S.P. Mukherjee Civic Centre,
Minto Road, New Delhi- l l00(}2.
Dated: 14th June 2019
To,
All Pr.CCsIT/CC sIT/Pr.DGslT/DGsIT
Madam/Sir,
Subject: Guidelines for Compounding of Offences under Direct Tax Laws, 2019
In the light of references received from the field formation from time to
time, the existing Guidelines on Compounding of Offences under the
Income-tax Act, 1961 (the Act) have been reviewed. In supersession of earlier
Guidelines on this subject, including the Guidelines of the Board issued vide
F.No.285/35/2013 1T(lnv.V)1108 dated n rd December 2014, the following
Guidelines are issued for compliance by all concerned.
2. These Guidelines shall come into effect from 17.06.2019 and shall be
applicab le to all applications for compounding received on or after the
aforesaid date.The applications received before 17.06.2019 shall continue to be
dealt with in accordance with the Guidelines dated 23.12.2014.
3. Compounding Provision
Section 279(2) of the Act provides that any offence under Chapter XXII
of the Act may, either, before or after the institution of proceedings, be
compounded by the Pr. CCIT/CCIT/Pr. DGIT/DGIT. As per section 2(15A)
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and 2(21) of the Act, Chief Commissioner of Income Tax includes Principal
Chief Commissioner of Income Tax, and Director General of Income Tax
includes Principal Director General of Income Tax. These Guidel ines are
issued in exercise of power U/S 119 of the Act read with explanation below
sub-section (3) of section 279 of the Act.
4. Compounding is not a ma tter of right
Compounding of offences is not a matter of right. However, offences
may be compounded by the Competent Authority on satisfaction of the
eligibility conditions prescribed in these Guidelines keeping in view factors
such as conduct of the person, the nature and magnitude of the offence in the
context ofthe facts and circumstances of each case.
5. Applicability of these Guidelincs to prosecutions under IPC
Prosecution instituted under Indian Penal Code(‘IPC’), if any, cannot be
compounded. However, section 321 of Criminal Procedure Code, 1973,
provides for withdrawal of such prosecution. In case the prosecution
complaint filed under the provisions ofboth Income -tax Act, 1961 and the IPC
are based on the same facts and the complaint under the Income-tax Act, 1961
is compounded, then the process ofwithdrawal ofthe complaint under the IPC
may be initiated by the Competent Authority.
6. Classification of Offences
The offences under Chapter-XXII of the Act are classified into two parts
(Category ‘A’ and Catego ry ‘B’) for the limited purpose of Compounding of
Offences.
6.1 Category ‘A’
Offences punishable under the following sections are included III
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Category ‘A’:
S.No. Section DescriptionlHeading of section
I. 276 (Prior to 01/04/1976) – Failure to make payment or deliver
return s or statements or allow inspection
ll . 276B (Prior to 01/04/1989) – Failure to deduct or pay tax
111 276B (w.e.f. 01/04/1989 and up-to 30/5/199 7)- Failure to pay tax
deducted at source under Chapter XVII-B
IV 2768 Failure to pay tax deducted at source under chapterXVII-B or
tax payable under section 115 -0 or 2nd proviso the section
1948 to the credit of the Central Government (w.e.f.
01/06/1997)
v. 2768 B Failure to pay the tax collected at source
VI. 276CC Failure to furnish Return ofIncome
Vll 276CCC Failure to furnish returns of income in search cases in block
assessment scheme
…
Vlll . 276DD (Prior to 1.04.1989) – Failure to comply with the provisions
of section 269SS
IX. 276E (Prior to 1.04.1989) – Failure to comply with the provisions
of section 269 T
x. 277 False statement III verification etc. with reference to
Category ‘A’ offences
Xl. 278 Abetment of false return etc. with reference to Category ‘A’
offences
6.2 Category ‘B’
Offences punishable under the following sections are included III
Category’B’:
S. No. Section Desc ription/ Heading of section
1. 276A Failure to comply with the provision of sections 178(1) and
178(3)
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11. 276AA (prior to 01/10/1986)- Failure to comply with the provisions
of section 269 AB or section 269 I.
lll . 276AB Failure to comply with the provisions of sections 269UC,
269UE and 269UL
IV. 276C(1) Willful attempt to evade tax , etc
v. 276C(2) Willful attempt to evade payment of taxes, etc
VI. 276D Failure to produce accounts and documents
V11 277 False statement III verification etc. with reference to
Category ‘B’ offences
.. .
277A Falsifi cation of Vlll books of account or documents, etc.
IX. 278 Abetment of false return, etc. with reference to Category ‘B’
offences
6.3 Offences under sections 275A , 275B and 276 of the Act will not be
compounded.
7. Eligibility Conditions for Compounding
All the following conditions should be satisfied for considering
compounding of an offence:
1. An application is made to the Pro CCIT/CClT/Pr. DGITIDGIT having
jurisdiction over the case for compounding of the offence(s) in the
prescrib ed format (Annexure-I) in the form ofan affidavit on a stamp
paper of Rs.100/-.
11. The compounding application may be filed suo -mota at any time after
the offence(s) is committed irrespective of whether it comes to the
notice of the Department or not. However, no application of
compounding can be filed after the end of 12months from the end ofthe
month in which prosecution complaint, if any, has been filed in the
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court oflaw in respect of the offence for which compounding is sought.
111. The person has paid the outstanding tax, interest (including interest u/s.
220 of the Act), penalty and any other sum due, relating to the offence
for which compounding has been sought before making the application.
However, if any related demand is found outstanding on verification by
the Department, the same should be intimated to the applicant and if
such demand including interest uls 220 is paid within 30 days of the
intimation by the Department, then the compounding application would
be deemed to be valid.
IV. The person undertakes to pay the compounding charges determined in
accordance with these Guidelines by the Pro CCIT/CCIT/Pr.
DGIT/DGIT conce rned.
v. The person undertakes to withdraw appeals filed by him, if any, related
to the offence(s) sought to be compounded. In case such appeal has
mixed grounds , one or more of which may not be related to the
offence(s) under consideration, an undertaking shall be given for
withdrawal of such grounds as are related to the offence to be
compounded.
VI. Any application for compounding of offence u/s 276B/276BB of the
Act by an applicant for any period for a particular TAN should cover all
defaults constituting offence uls 276B/276BB in respect of that TAN
for such period.
8. Offences normally not to be compounded
8.1 The following offences are generally not to be compounded:
1. Category ‘A’ offence on more than three occasions. However, m
exceptional circumstances compounding requested in more than three
occasions can be considered only on the approval of the Committee
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referred to in Para 10 of these Guidelines. The ‘occasion’ is defined in
Para 8.2.
H. Category ‘B’ offence other than the first offence(s) as defined in Para 8.2
for the purpo se of these Guidelines.
HI. Offences committed by a person for which he was convicted by a court
of law under Direct Taxes Laws.
IV. Any offence in respect of which, the compounding application has
already been rejected, except in the cases where benefit of rectification
is available in these Guidelines.
v. The cases of a person as main accused where it is proved that he has
enabled others in tax evasion such as, through entitie s used to launder
money or generate bogus invoices of sale/purchase without actual
business, or by providing accommodation entries in any other manner as
prescribed in section 277A of the Act.
VI. Offences committed by a person who, as a result of investigation
conducted by any Central or State Agency and as per information
available with the Pro CCIT/CCIT/Pr. DGIT/DGIT concerned, has been
found involved, in any manner, in anti-national/terrorist activity.
vii. Offences committed by a person who was convicted by a court of law
for an offence under any law, other than the Direct Taxes Laws, for
which the prescribed punishment was imprisonment for two years or
more, with or without fine and which has a bearing on the offence
sought to be compounded.
VHI. Offences committed by a person which, as per information available
with the Pro CCIT/CCIT/Pr. DGIT/DGIT concerned, have a bearing on a
case under investigation (at any stage including enquiry, filing of
FIR/complaint) by Enforcement Directorate, CEI, Lokpal, Lokayukta or
any other Central or State Agency.
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IX. Offences committed by a person whose application for
‘plea-bargaining’ under Chapter XXI-A of ‘Code of Criminal
Procedure’ in respect of any offence is pending in a Court or where a
Court has recorded that a ‘mutually satisfactory disposition of such an
application is not worked out’ and such offence has bearing on offence
sought to be compounded.
x. Any offence which has bearing on an offence relating to undisclosed
foreign bank account/assets in any manner.
Xl. Any offence which has bearing on any offence under the Black Money
(Undisclosed Foreign Income and Assets) and Imposition of Tax Act,
2015.
Xll. Any offence which has bearing on any offence under the Benami
Transactions (Prohibition) Act, 1988.
XII I. Any other offence , which the Pr. CCIT/CCITIPr. DGIT/DGIT
concerned considers not fit forcompounding in view of factors such as
conduct ofthe person, nature and magnitude of the offence.
8.2 Meaning of terms”oeeasion” and “first offence” for the purpose of
these Guidelines will be as under-
8.2.1 If in one instance the assessee files multiple applications for one or
more than one Assessment Year (AYs), all of these applications shall
be treated as one “occ asion” .
8.2.2 First offence means, offence(s) under any of the Direct Tax Laws:
(a) Offences committed prior to any ofthe following-
I. the date of issue of any letter/notice in relation to the
prosecution, or
ii. Any intimation relating to filing ofprosecution complaint sent
by the Department to the person concerned, or
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111. Launching of any prosecution,
whichever is earlier.
Or
(b) Offence(s) not detected by the department but voluntarily
disclosed by a person pnor to the filing of applicati on for
Compounding ofOffence(s) in the case under any Direc t Tax Acts
for one assessment year or more .
For this purpose, the offence is relevant if it is committed by the same
perso n/entity. Further, the first offence is to be determined separate ly with
reference to each section of the Act under which it is committed.
8.3 Notwithstanding anything contained in these Guidelines, the
Finance Minister may relax restrictions in Para 8.1 above for
compounding of an offence in a deservi ng case, on consideration of a
report from the Board on the petition of an applicant.
9. Relaxation of time
9.1 The restrictions imposed in Para 7(ii) of these Guidelines for
compounding of an offenc e in a deserving case may be relaxed, where
application is filed beyond 12 months but before completion of 24 months from the
end ofmonth in which complaint was filed, by the Committee defmed in Para 10 of
these Guidelines, provided that such delay should be attributable to reasons beyond
the applicant’s control.However, a plea ofpendency ofappeal at any stage or before
any authority cannot be treated as a reason beyond the applicant’ s control, because
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furnishing an undertakingto withdrawthe appeal(s) having bearing on the offenceis
a prerequisiteas per clause 7(v) above.
9.2 However, in all such cases where relaxat ion has been provided in this
Para, the compounding charges would be 1.25 times the normal compounding
charges as applicabl e to the offence on the date of filing of the original
compounding application.
10. Authority Competent to Compound an Offence
10.1 The Pro CCIT/CCIT/Pr. DGIT/DGIT having jurisdiction over the person,
seeking Compounding of an Offence, is the Competent Authority for
compounding of all Category ‘A’ and Category ‘B’ offences. However, an order
in case of an application for compounding of an offence, involving
compounding charges (as explained in Para 12 below) in excess of
Rs.lO,OO,OOO/- (Rupees Ten Lakhs) shall be passed by the Pro CCIT/CCIT/Pr.
DGIT/DGIT concerned only on the prior approval of a Committee comprising
of three officers of the Region concerned, namely Pro CCIT/CCIT/Pr.
DGIT/DGIT having jurisdiction over the case and two other Officers of the rank
of Pr. CCIT/CCIT/Pr. DGIT/DGIT constituted by the Pr.CCIT ofthe Region. In
case such officers are not available within the Region, a suitable Officer of the
rank ofCCIT/DGIT from any nearby Region may be co-opted as Member by the
Pro CCIT.
10.2 If a deductor has committed an offence u/s 276B/276BB of the Act for
non-payment of TDS in respect ofboth resident and non-resident deductees and
therefore the jurisdiction over such deductor lies with more than one Pro
CCIT/CCIT/Pr. DGIT/DGIT, then the Pro CCIT/CCIT/Pr. DGIT/DGIT in
whose juri sdiction compounding application has been filed will be the
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Competent Authority. However, he shall compound the offence only on the
approval of Committee comprising of three Officers of the rank of CCIT from
among the CCITIDGIT/Pr.CCIT/Pr.DGIT having jurisdiction over the
applicant, constituted by the Pr.CCIT of the region .
10.3 In case an applicant having more than one TAN lying in the jurisdiction
of two or more Pr. CCIT/CCIT/Pr. DGIT/DGIT wants to file compounding
application in respect of offences committed u/s 276B/276BB in respect oftwo
or more TANs falling in the jurisdiction of two or more Pr. CCIT/CCIT1Pr.
DGITIDGIT, the application shall be filed before the Pr. CCIT/CCIT having
jurisdiction over the TAN of the region in which PAN jurisdiction of the
applicant is falling . Such Pr. CCIT/CCIT having jurisdiction over such TAN
will be treated as Competent Authority. For such cases the Committee will be
constituted by the Pr. CCIT in whose region jurisdiction over PAN lies and will
also be comprising of three members including Competent Authority. The
report from all j urisdictional authorities concerned from different offender
TANs shall be called by the Competent Authority.
10.4 The Competent Authority will act as the Member Secretary and convene
the meeting, as well as maintain the records.
11. Compounding Procedure
I. On receipt of the application for compounding, the report on the same
shall be obtained from the Assessing Officer/Assistant or Deputy
Director concerne d who shall submit it promptly along-with duly filled
in check-list (Annexur e-2), to the authority competent to compound,
through proper channel.
11. The Competent Authority shall duly consider and dispose of every
application for compounding through a speaking order in the suggested
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format (Annexure-3) either by reject ing or by intimating the
compounding charges payable. Such order may be passed within six
months from the end of the month of its receipt (excluding the time for
payment of the compounding charges) as far as possible .
Ill. Where compounding application is found to be acceptable, the
Competent Authority shall intimate the amount of compounding
charges to the applicant, requiring him to pay the same within one
month from the end of the month of receipt of such intimation . On
written request of applicant for further extensio n of time under
exceptional circumstances, the Pro CCIT/CCIT/Pr. DGIT/DGIT may
extend this period by three months. Extension beyond three months
shall not be permissible except with the previous approval in writing of
the Committee defined in Para 10 of these Guidelines. However, no
extension beyond twelve months from the end of month in which
intimation of compounding charges was given to the applicant shall be
given except with the previous approval ofMember (Inv.), CBDT on a
proposal of the competent authority concerned.
IV. Whenever the compounding charges are paid beyond one month from
the end of month in which it was intimated to the applicant, if extended
by the Competent Authority, he shall have to pay additional
compounding charge at the rate of 2% per month or part of the month
on the unpaid amount of compounding charges upto three months and
3% if the Competent Authority has extended the payment period
beyond three months.
v. The Competent Authority shall pass the compounding order within
one month from the end of the month of payment of compoundi ng
charges . Where compounding charge is not deposited within the time
allowed , the compounding application shall be rej ected after giving the
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applicant an opportunity of being heard only III relation to
compounding charges payable.
VI. The order of acceptance/rejection of application of compounding shall
be brought to the notice of the Court, where the prosecution complaint
was filed/or the complaint is pending, immediately through
prosecution counse l in all cases where prosecution proceedings have
been instituted.
VII. Normally any offence in respect of which the compounding application
has been reje cted is not considered for compounding as per Para
8.1(iv). However, if any compounding application has been rejected
solely on account oflate payment of compounding charges or shortfall
in payment of compounding charges and if such shortfall is for some
bonafide mistakes or on some other technical grounds, such
compounding order can be rectified at the written requ est of applicant
provided the payment of compounding charges was made before
rejection or time allowed by the Competent Authority whichever is
applicable. A decis ion to rectify such order can be taken by the
Committee as per Para 10 after considering various facts and
circumstances of the case . However, the applicant will be required to
pay interest as per Clause (iv) of this Para, on the unpaid compounding
charges from the due date of payment as per original intimation of
compounding along with the shortfall in compounding charges.
Vll l. The timel ines mentioned for processing the compounding applications
prescribed in these Guidelines are administrative and indicative for
work management and do not prescribe a limitation period for disposal
of the compounding application.
IX. Wherever the facility to perform any function relating to processing of
any compounding application is available on ITBA, such function
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should be performed on ITBA.
12. Compounding Charges
The compounding charges shall include compounding fee, prosecution
establishment expenses and litigation expenses, including Counsel’s fee.
12.1 The compounding fee shall be computed in accordance with Para 13 of
these Guidelines for various offences. Prosecution establishment expenses will
be charged at the rate 10% of the compoundi ng fees subject to a minimum of
Rs.25,000/- 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
existing records with the Government and the counsels.
12.2 In all cases where relaxation of time as provided III Para 9 of the
Guidelines is allowed , the compounding charges shall be 1.25 time of the
normal compounding charges.
12.3 Wherever, extens ion of time allowed to make compounding charges is
allowed beyond one month from the end of intimation ofcompounding charges
in accordance with Compounding Guidelines, the applicant shall have to pay
additional compounding charges @ 2% per month or part of month on the
unpaid amount of the compounding charges upto three months and 3% for
period beyond three months .
12.4 The compounding charges are payable in addition to the tax, interest and
penalty, if any payable or imposable as per provisions of the Act. Such tax,
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interest and penalty as mentioned in Para 7(iii) are to be paid before filing the
compounding appl ication as required in these Guidelines.
13. Fees for compounding
For the purpose of computation of the compounding fee, the word “tax”
means- tax including surcharge and any cess by whatever name called, as
applicable.
The fees for compounding of offences shall be as follows:
13.1 Section 276B- Failure to pay the tax deducted at source
Section 276BB- Failure to pay the tax collected at source
13.1.1 In respect of applicati on for Compounding of Offences, the
compounding fee shall be calculated as under-
(i) 2% per month or part of a month of the amount of tax in default
disclosed in the compounding application in those cases, where
the assessee has suo-moto filed compounding applic ation, before
any offence u/s. 276B/276BB ofthe Act for any period is brought
to his knowledge by the Department. Such type of offence would
also constitute an “occasion” for the purpo se of Para 8.1. Such
offences which are detected in the course of any search and
seizure or survey operation will not fall in this category.
However, the compounding fee under this clause shall not exceed
the TDS amount and interest u/s 201(lA) taken together, if the
default in deposit ofTDS is less than Rs.l,OO,OOO/- (Rupees One
lakh).
(ii) 3% per month or part of a month of the amount of tax in default
disclosed in the compounding application for first occasionin
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cas es not covered in Para 13. 1.1(i) above.
(iii) In respect of any application for subsequent occasion, the
app licable rate for compounding of such an offence will be 5%
per month or part of a month of the amount of tax in default.
13. 1.2 The period of default for ca lculating compounding fee in th is category
shall be calculated from the date of deduction to the date of deposit of
tax deduc ted at source as is done in respect of calculating interest under
section 20 1(IA) of the Act in respect of compounding application filed.
13.2. Section 276C (1)- Willful attempt to evade tax, etc.
(a) In the cases involving tax sought to be evaded (where evasion of
interest and penalty may be consequential)
I. Where such tax sought to be evaded exceeds Rs . 25 lakh s,
150% of the tax sought to be evaded.
11. In any other case, 125% of the tax sought to be evaded.
(b) In cases involving attempt to evade only the penalty, 100% of penalty
sought to be evaded. For example, penalties which are not directly
related to tax evasion, such as penalty U/S 27IDA etc.
13.3. Section 276C(2)-Willful attempt to evade payment of any tax,
interest and penalty
3% per month or part of the month of the amount of tax, interest and
penalty, the payment of which was sought to be evaded, for the period of
default. The period of default for calculating the compounding fees shall
be as under:
i) Where tax, interest or penalty as per notice of demand under
section 156 of the Act is not paid, from the date immediately following
the due date of payment ti ll the date of actual payment .
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ii) Where the self-assessment tax was not paid as specified in section
140A ofthe Act, from the due date of filing ofretum ofincome U/S 139(1)
of the Act to the date of actual payment.
For computing the period ofdefault, any period of stay ofdemand granted
by any Income Tax Authority, the Appellate Tribunal or Court shall be
excluded.
In case of default in furnishing the return of income on or before due date
U/S 139(1) of the Act , the default perio d will be computed from the due
date u/sI39(1) to the date of actual filing of return or completion of
assessment, whichever is earlier and compounding fees will be ;
1. Where tax on returned income as reduced by tax deducted at
source and advance tax , if any exceeds Rs. 25 lakhs, RsAOOO/- per
day.
11 . In any other case; Rs. 2000/- per day.
However, in cases where the difference between the aggregate of
taxes paid/payab le on the returned income and the aggregate of
tax es already paid under any provision ofthe Act as enumerated in
section 140A(I ) of the Act, is less than Rs.l ,OO,OOO/-, the
compounding fees will be restri cted to that said difference amount
subject to a minimum of Rs. 10,000/-.
In case of offence of non-compliance of notice u/s 142(1)(i) of the Act,
the compounding fees shall be charged at the rate of RsAOOO/- per day
where the tax on returned income as reduced by tax deducted at source
and advance tax, if any exceeds Rs.25 lakhs and Rs.2,000/- per day in
(b)
13.4 Sectio n 276CC- Failure to furnish returns of income
1304.1
(a)
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other cases from the due date u/s 139(1) to the date specified in the notice
u/s 142( I) , and at the rate of Rs. 5000/- per day where tax on returned
income as reduced by tax deducted at source and advance tax , if any
exceeds Rs.25 lakhs and Rs.3000/- per day in other cases, for the period
between date specified in notice u/s 142(1) to the date of filing of return
of income or completion of assessment, whichever is earlier.
(c) In case of offence of non-compliance of notice u/s 148 of the Act, the
compounding fees shall be charged at the rate ofRs.5000/- per day where
tax on returned income as reduc ed by tax deducted at source and advance
tax, if any exceeds Rs.25 lakhs and Rs.3000/- per day in other cases, from
the date specified in such notice till filing of return or assessment
whichever is earlier. In case, there was also default of not filing return of
income within due date prescri bed u/s 139(1), then for the period
between due date u/s 139(1) to the date specified in the notice u/s 148,
compounding fees at the rate of RsAOOO/- per day where the tax on
returned income as reduced by tax deducted at source and advance tax, if
any exceeds Rs.25 lakhs and Rs.2,000/- per day in other cases from the
due date u/s 139(1) to the date specified in the notice U/S 148 will also be
charged.
(d) In case ofoffence ofnon-compliance ofnotice U/S 153AI1 53C of the Act,
the compound ing fees shall be charged at the rate ofRs. 5,000/- per day
where tax on returned income as reduced by tax deducted at source and
advance tax , if any exceeds Rs.25 lakhs and Rs.3,000 /- per day in other
cases, from the date specified in such notice till filing of return or
assessment whichever is earl ier. In case, there was also default of not
filing return of income within due date prescribed u/s 139(1), then for the
period between due date u/s 139(1) to the date speci fied in the notice U/S
153A11 53C, compounding fees at the rate ofRs.4OOO/- per day where the
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tax on returned income as reduced by tax deducted at source and advance
tax, if any exceeds Rs.25 lakhs and Rs.2,OOO/- per day in other cases from
the due date U/S 139(1) to the date specified in the notice U/S 153A1153C
will also be charged .
(e) In case where return of income filed is not only late but Self Assessment
Tax is not paid :
I. These constitute two separate offences which are to be handled
separately under sections 276CC and 276C(2) , and
II. Action u/s 276C(2) is to be undertaken only after the issue of
demand notice u/s 143(1)/143(3) etc.
1304.2 In cases where no return of income was filed, the compounding fee
is computed upto the date of completion of assessments. In such cases, for
computing the slab prescribed in Para 1304.1 tax on assessed income (as
reduced by tax deducted at source and advance tax) will be adopted.
1304.3 In case the income determined u/s 143(1) is more than the returned
income, tax on the same will be applied for computing tax slab prescribed in
Para 1304.1.
130404 Tax on returned income in the context of Para 1304 means tax
leviable (including surcharge and cess) on the returned income as reduced by
tax deducted at source and advance tax.
13.5 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 was prescribed in the Compounding Guidelines dated
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16.05.2008.
13.6 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 ofthe provisions of Section 269SS.
13.7 Section 276E- Failure to comply with th e provisions of Section
269T (prior to 01.04.89)
A sum equal to 20% of the amount of deposit repaid in contravention of
the provisions of Section 269T.
13.8 Section 277- False statement in verification etc.
Section 278 – Abetment of false return etc.
13.8.1 Where same set offacts and circumstances attract pros ecution uls 277 as
well as section 278, the compounding fee shall be charged for offences
unde r these sections by treating them as one offence.
13.8.2 Where same set of facts and circumstances attract prosecution uls 277
in addition to another offence in connection with which prosecution U/S
277 was attracted in case ofthe same person, no separate compounding
fee shall be charged for offence U/S277. For example, where a person is
charged with an offence uls 276C(1 ) as also uls 277, in respect of the
same facts and circumstances, the compounding fees shall be charged
only for the offence uls 276C(1) at the rates prescribed for the said
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section.
13.8.3 Where same set of facts and circumstances attract prosecution under any
offence as well as u/s 277 and/or 278, normally, a compounding fee at
the rate of 10% of the ‘ compounding fee for the main offence’ shall be
charged from each of the person charged under sections 278B or 278C.
However, the authority competent to compound, after considering the
extent of involvement of any or all co-accused or abettor, may enhance
or reduce or waive the amount of compounding fee to be charged from
any or all the co-accusedor abettor. The compounding fees chargeable
from the co-accused or abettor shall be in addition to the compounding
fees which may be chargeable from the main accused.
It is further clarified that:
(a) In the case of prosecution proceedings under sections 278B or
278C of the Act unless the main accused i.e. Company/HUF comes
for compounding, the offence of the co-accused cannot be
compounded separately.
(b) If one or more co-accused has not filed the compounding
application or is not agreeable to the payment of compounding
charges as the case may be, then unless the main accused , on an
undertaking obtained and furnished from such co-accused,
unequivocally undertakes to pay the compounding charges on his
own behalf and on behalf of all such co-accused as well, the
Compounding of the Offence of the main accused cannot be
accepted.
13.8.4 In case where no offence under any other sections of the Act IS
20
involved except uls 277 or 278 of the Act, the compounding fee shall
be decided by the Committee as per Para 10 having regard to the
amount of tax which would have been evaded as a result of such
offence uls 277 or 278 subject to a minimum compounding fee of
Rs.I ,00,0001- (Rupees One Lakh) which may be increased based on the
assessment of loss caused to the revenue directly or indirectly for each
of such offence on completion of assessment/reassessment.
13.9 Offences, other than those described in Para 13.1 to 13.8, for which no
compounding fee has been prescribed, the authority competent to
compound may determine the amount of compounding fee having
regard to the nature and magnitude of the offence, loss of revenue
directly or indirectly attributable to such offence, subject to levy of a
minimum compounding fee of Rs 1,00,000/- (Rupees One lakh) for
each such offence .
13.10 The prescribed compounding charges shall be applicable while
compounding any offence . However, in extreme and exceptional cases of
genuine financial hardship, the compounding charges may be suitably
reduced with the approval ofthe Finance Minister.
14. In case any pena lty proceedings which have bearing with the offence
sought to be compounded are pending at the time of filing of the compounding
application, efforts should be made to conclude such penalty proceedings
expeditiously and recover demand before concluding the compounding
proceedings.
21
15. Applicability of these Guid elines to offences under othe r Direct Ta x
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.
16. The Pro CCsIT/CCsIT/Pr. DGsIT/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 .
End: As above
Yours faithfully,
~ Ct-Mamta
Bansal
Director (Inv.V),
CBDT, New Delhi
.-
Copy to-
1. The PS to the Revenue Secretary
2. The Chairman, CBDT
3. All Members, CBDT
4. All officers of the rank of Joint Secretary/C IT and above in CBDT
5. The CIT (Media & Technical Policy), CBDT
6. The ADG (Systems)-4 for uploading on www.incometaxindia.gov.in
7. Additional DIT, Database cell, for uploading on
www.irsofficersonline.gov.in
22
Annexure 1
Format of application in the form of Affidavit for Compounding of
Offences under Income-tax Act, 1961 to be submitted separately by each
applicant
S. Partic ulars Remarks
No.
I. Name of the applicant
2. Status
3. Offences committed ufs *
4. AYs / Date/ period involved in offence
5. Status of case (i.e. whether contemplated/pend ing
in Court/conv icted/acquitted)
6. Date offi ling of complaint, if any
7. Whether the offe nce(s) committed by the applicant
is one for which compla int(s) was filed with the
competent court 12 mont hs prior to the filing ofthe
application for compounding
8. Part iculars of offences along-with j ustification for
compoundi ng (separate sheet)
9. Whether the app licant has paid the amount of tax,
intere st, penalty and any other sum due relating to
the offence
10. Whether the appl icant undertakes to pay further
tax, interest, penalty and any other amount as is
found to be payab le on verification of the record.
I I. Whether the applicant undertakes to pay the
compound ing charge s as shall be intimated by the
department.
12. Whether similar offe nces in the case of the
applicant have been compound ed earlier. If yes,
how many times. Give detai ls in annexure.
13 . Whether the offence is first offe nce as defined in
Para 8.2 of the Guide lines
23
14. Whethe r the offence has been committed by the
applicant who, as a result of investigat ion
conducted by any Central or State agency has been
found involved, in any manner, in
anti-national/terrorist activity
15. Whether any enquiry/invest igation being
conducted by Enforcement Directorate, CBI,
Lokpal, Lokayukta or any other Central or State
agencyis pending against the applicant? If so,
particulars may be given
16. Whether the applicant was convicted by a court of
law for an offence under any law, other than the
Direct Taxes Laws, for which the prescribed
punishment was imprisonment for two years or
more, with or without fine. If so, particulars may
be given along with a copy of the court’s order.
17. Whether, the application for ‘plea-bargaining’
under Chapter XXI-A of ‘Code of Criminal
Procedure’ is pendi ng in a Court and the Court
has recorded that a ‘mutually sat isfactory
disposition’ of such an app lication is not worked
out?
18. Whether the applicant was co nvicted by a court 0
law for the offence sought to be compounded
19. Whether it is an offence in respect of which, the
compounding application has already been
rejected .
20. Whether it is an offence which has bearing on an
offence relating to undisclosed foreign bank
account/assets in any manner
21. Whether it is an otfe nce which has bearing on any
offence under the Black Money (Undisclosed
Foreign Income and Assets) and Imposition of
Tax Act, 20 IS.
22. Whether it is an offence which has bearing on any
offence under The Benami Transact ions
(Prohibition) Act, 1988.
23. Whether it is an offence u/s 275A, 275B and/or
276
24
VERIFICATION
I son/daughter of in the capacity of
……………………………certify and solemnly affirm that the information in the above columns
is true and correct to the best of my knowledge and belief.
Place:
Date:
* All offences for which compounding is sought
Signature .
Designation—Current
address —
25
Annexure 2
Suggested Check List for Compounding as per the Guidelines issued by the
CBDT vide F.No.285/08/2014-IT(lnv.V) dated 14.06.2019 on Compounding
of Offences
(To be submitted by AOIADITIDDIT to the authority competent 10 compound through proper channel)
(A case can be compounded only if the answe rs to S. No. I to 22 match with the answers given below in
remarks column.)
Name of the app licant
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)
S.No. Pa rticulars Remarks Reference of
(vis-a-vis Compounding Guidelin es) the File
su bmitt ed
I. The applicant has filed a written request for compounding the Yes On Page
offence in the prescribed Proforma. no. . . ..
2. Whether the applicant has paid the amoun t of tax, interest and Yes On Page no. . …
penalty & any other sum due relating to the default as prescribed
in the Guide lines.
3. Whether on verification of record any further amount of tax, Yes/No If yes, give detai ls
interest and pena lty & any other sum was found payable by the If yes, in brief. Add
applicant. date of annexure if
intimat ion required.
and date On Page no. . . .
of
payment.
4. Whether the applicant has undertaken to pay Yes On Page
the compounding charges computed as per Paras 12 & 13 of the no …….. ….
Guide lines.
5. Whether the offence(s) committed by the appl icant is one for No On Page
which complaint(s) was filed with the competent court 12 months no …………
prior to the receipt of application for compound ing.
26
I
6. Whethe r the offence is unde r the same section unde r which No If ye s, give details
offences have been committed by the applicant earl ier and wh ich in brief. Add
have been compounded thre e times pr ior to the present annexure if
requi red.
application. On Page no… .
NOTE:THIS ISAPPLICABLE ONLY IN CASE OF A CATEGORY
‘A’OFFENCE.
Whether the offence is the first offence as defined in para 8.2 of Yes If no, give detai ls
7. the Guidelines in brief. Add
NOTE: THIS IS APPLICABLE ONLY IN CAS E OF A annexure if
CATEGORY ‘B’ OFFENCE. required.
On Page no . …
8. Whether th e offence has been committed by an applicant who , as No If yes, give deta ils
a res ult of investigation conducted by any Central or State agency in brief. Add
has been found involved, in any mann er, in anti-natio na l/terr or ist annexure if
required .
activity On Page no . . ..
9. Whether the offence committed by the app licant has a bearin g on No If yes, give
a case under investigat ion (at any stag e including enquiry, deta ils in
fil ing of FIR/complaint) by Enfo rcem ent brief. Add
Directo rate, CB I, Lokpal, Lokayukta or any other Central or State annexure if
agency’ req uired.
On Page
no .. ..
10. Whether the offence has been committe d by the applicant who No If ye s, give
was co nvicted by a court of law for an offe nce under any law, detai ls in
oth er than the Direct Taxes Laws, for which the prescribed br ief. Add
punishme nt was imprisonment for two years or more, with or annexure if
witho ut fine’ required .
On Page
no. . ..
II. Whether the application fo r ‘plea-bargaining’ under Chapter No If yes give details
XXI-A of ‘Code of Cr iminal Procedu re’ is pending in a Court or a in brief. Add
Court has recorded that a ‘mutu ally satis fac tory disposition’ of annexure if
such an app licat ion is not worked out ‘
requ ired.
On Page no . . ..
12. Whether the offence is one committed by an applicant for which No If yes, give
he was co nvicted by a co urt of law detai ls in
brief. Add
annexure if
requi red .
On Page no….
27
•
13. (i) Whether it is an offence in respect of which, the compounding i) YesINo If yes, give
app licat ion has already been rejecte d, det ails in
(ii) If yes, wheth er it is a case where relaxation is avai lable in the
(ii) Yes
brief. Add
Guidelines.
[ If (i) is annexure if
yes ] req uired.
On Page
no.. ..
14. Whether it is a case of a person who is main accu sed and where it No If yes, give
is proved that he has enabled others in tax evas ion such as, detail s in
through she ll companies or by prov iding accommodation entr ies brief. Add
in any other manner as mandated in sec . 277A of the Act annexure if
required.
On Page
no.. ..
15. Whether it is an offence which has bearing on an offence rela ting No !f yes, give
to undisclosed foreign bank account/as sets in any manner deta ils in
brief. Add
annexure if
required.
On Page
no . . . .
16. Whether it is an offe nce which has bearing on any offence under No If yes, give
the Black Money (Undisc losed Foreign Income and Assets) and detai ls in
Impositio n of Tax Act, 20 15. brief. Add
annex ure if
required .
On Page
no . . ..
17. Whether it is an offence whic h has bearing on any offence under No If yes, give
The Benami Transactions (Prohibition) Act, 1988. detail s in
brief. Add
annexure if
required.
On Page
no. . ..
18. Amount of com pounding charges comp uted Rs. On Page
by AO/ADIT/DDITas per Paras l2 & 13 of the Guidelines. no …………
19. The compounding charges are in accordance with Paras 12 and Yes Ifno, give
13 of the Guidel ines reasons.
On Page no… .
28
•
20. The factors, such as conduct of the person, nature and magnitude Yes lf no, give details
of the offence and facts and circumstance of the case have in brief. Add
been considered while dealing with the annexure if
compounding application and in calculating compounding required.
charges On Page no… .
21. Whether the cases of Co-accused are being considered as per YesINot If yes, give details
Para 13.8 Applicable in brief. Add
annexure if
required.
On Page no… .
22. Any other fact relating to the person/case relevant for No If yes, give
cons ideration of the Competent Authority details in
brief. Add
annexure if
requ ired.
On Page
no….
Signature:
Name:
Desig nation:
Date :
Recommended by: 1. Add\. CIT/Jt. CIT/Add\. DIT/Jt. DIT SignatureIName/Designation/Date
2. PCITIPDIT/CIT/DIT SignaturelNamelDesignationlDate
“Note: This may be given on the basis of information furnished by the a pplicant in his application for
compounding or information al ready available wit h the Competent Authority for compounding
29
Annexure 3
(Suggested Format)
Part-I
Format fo r Order u/s 279(2) of the Income-tax Act, 196 1 for Comp oun d in g of an
Offence as mentioned in Para II (ii) of the Guidelines issued by the CBDT vide F.No.
285108/2014-IT(lnv.V) dated 14.06.2019 on Comp ound ing of Offences
Orde r u/s 279(2) oflncome-tax Act, 1961
Name of the person
Status
Offences u/s
AYs I Datel period involved in offence
Date of filing of complaint, if any
Status of case (i.e. whether contemplatedl
Pending in Court!Convictedl Acquitted)!
Date of hearing, ifany
Date of order
Order u/s 279(2) of the Income-ta x Act, 1961
I, the Principal Chief Commissioner!Chief Commissioner of Income-tax IPrincipal Director General/Director
General of Income-tax, in exercise of powers vested in me by virtue of the provisions ofsub-section 2 of
section 279 of the Income-tax Act, 1961 hereby compound the offence(s) u1s ofthe Income -tax Act,1961
for the AY.(s) I Datel period , committed by M/s .lShri/Ms .
The Statement of the facts of the case are enclosed as Annexure – ‘A’
Place:
Date:
Seal: Signature
Principal Chief Commissioner/Chief
Commissione r of Income-tax I
Principal Director General/Director
Genera l of Income-tax
Copy to:
The Commissioner ofl ncome Taxi Director of Income Tax The
Assessing Officer! ADITIDDITThe
ADITIDDIT (Prosecution)– —–
The Prosecution Counsel (if the case is pending in the Court) —–The
applicant (By name)-
Guard file.
Signature
ACITI ITO (Hq.)
0 /0 the Pr. CCITICCITI Pr. DGIT/DGIT
30
Annexure 3
(Suggested Format)
Part-IT
Forma t for O rder u/s 279(2) of the In come-tax Act, 1961 for rejecting the Compounding of
an Offence as mentioned in Para 11 (ii) of the Guidelines issu ed by the CBOT vide F. No.
285/08/2014-I T(lnv.V) dated 14.06.2019 on Compou ndi ng of Offences
Order u/s 279(2) of Income-tax Act, 1961
Name of the person
Status
Offences u/s
AYs I Datel 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 Principal Chief Commissioner/Chief Commissioner of Income-taxlPrincipal Director General/Director
General of Income-tax, in exercise of powers vested in me by virtue ofthe provisions of sub-section 2 of
section 279 of the Income-tax Act, 196 I hereby decline the prayer to compound the offence(s), u/s ofthe
Income-tax Act, 1961 for the A.Y.(s) I Date/ period , committed by Mls.lShri /Ms .
The case was not found to be a tit case for compounding as ” (mention reasons) ”
The Statement of the facts of the case are enclosed as Annexure – ‘A’
Place:
Date:
Seal
Signature
Principal Chief Commissioner/Chief
Commissioner of Income-tax I Principal
Director General/Director General of
Income-tax
Copy to:
The Commissioner of Income Taxi Director of Income Tax—–The
Assessing Officer/ ADIT/DDIT —-..
The ADIT/DDIT(Prosecution)——–
The Prosecution Counsel (if the case is pending in the Court}—–The
applicant (By name) ——
Guard file Sd/-
ACIT/ ITO (Hq.)
0 10the Pr. CCIT/CCITI ProDGIT/DGIT
31
Annexure-A
Statement of facts
The statement of facts shou ld, inter alia, contain the following:
1. Detail of application filed
An application for Compounding of Offences committed uls of the Income-tax
Act, 1961 was filed in prescribed format by Mis. IMr. IMs on .
2. Brieffacts
3.Whether complaint has been filed
A complaint was filed in the Court of on and the case is
still pending in the court/the Court has convicted the person who has filed an appeal against the
conviction order that is pending in the Court/ the Court has acquitted the person & the
department has filed an appeal against the acquittal order that is pending in the Court or an
appeal against the acquittal order is contemplated.
OR
The complaint is yet to be filed in the Court.
4. In case of order accepting compounding, details of payment of compounding charges by
the person.
5. Direction to the AOI Standing Counsel to take necessary action to implement the orders at
the earliest.
32