Policy in regard to prosecution and compounding of technical offences - Income Tax - 563/CBDT

INSTRUCTION NO. 563/CBDT Dated : July 3, 1973 Section(s) Referred: 276B Statute: Income - Tax Act, 1961 Reference is invited to Board's circular F.No.4/92/69-IT(Inv) dated the 15th May, 1970. The policy in regard to prosecution and compounding of technical offences has since been reviewed by the Board. 2. The Department has been prosecuting assessees both under the Income-tax Act and the Indian Penal Code. The offences for which the assessees are prosecuted under these two laws can be broadly categorised into technical and non-technical. Technical offences are those which are due to certain procedural lapses. Under the Income-tax Act, 1961, the technical offences are those which fall under sections 276, 276A, 276B, 276C and 276D. These cover offences relating to delay in payment of tax deducted at source failure to furnish returns of income and failure to produce accost and documents. In view of the fact that technical offences are not as serious as the non-technical offences such as filing of false returns/statements, fabrication of accounts, fabrication of evidence, false statements on oaths, etc., it is felt that a lenient view could be taken in respect of technical offences. Such an approach would be justifiable as the technical defaults are more often due to negligence than to morel turpitude. The Board, therefore, consider that in such cases, except in certain types of cases mentioned below, the Department may adopt a policy in general to compound the first offence. If the assessee commits the offence again, the prosecution proceedings should be pursued to their logical end. Such a procedure would also have the necessary educative and reformative value without being unduly harsh in technical matters. 3. Keeping in view what is stated above, in the case of technical offences, ie. offences under section 276, 276A, 276B 276C and 276D, etc. the Board will be inclined to consider favourably any recommendation of the Commissioners for compounding the offences if there are sufficient grounds. While sending their proposals for compounding of such technical offences, the Commissioners, amongst others, should furnish the following particulars:-