Prosecution establishment expenses in case of compounding of offences. - Income Tax - 1661/1995

INSTRUCTION NO. 1661/1995 Dated: November 18, 1995 As per the present Guidelines for compounding of offences under the Income-tax Act 1961, no payment is received from the assessee towards the prosecution establishment expenses. Only the compounding fee and the litigation expenses are paid by the assessee. It is observed that a number of man hours of the Departmental officials are spent in identifying and processing a case from prosecution angle. It is therefore necessary that while compounding the offence, some compensation in the form of additional fees are charged from the erring tax payers for this effort. The idea behind charging the prosecution establishment expenses is that while compounding the offence, the erring tax payers should compensate the Department for all the expenses incurred by it. 2. The Board have considered this point in detail. In future prosecution establishment expenses at the following rates shall be charged:- Compounding fee payable as per Board s Instructions No. 1317 dated 11-3-1980 Prosecution Establishment expenses (i) Upto Rs. 50,000 5,000 (ii) Above Rs. 50,000 to Rs. 1 lakh 10,000 (iii) Above Rs. 1 lakh to Rs. 5 lakhs 15,000 (iv) Above Rs. 5 lakhs 20,000 The prosecution establishment expenses as mentioned above shall be charged in addition to the compounding fee as mentioned in Board s Instruction No. 1317 dated 11-3-1980 and the litigation expenses incurred by the Department.