Reports on compounding petitions. - Income Tax - 5002/1990

INSTRUCTION NO. 5002/1990 Dated: August 8, 1990 The compounding guidelines No. 1317 dated 11-3-80 and the Board's F.No. 285/1026/87-IT(Inv) dated 3-8-89 contain the conditions and the circumstances under which an offence can be compounded. It has been noticed that the reports called for from the Chief Commissioners on the petition for compounding filed by the assessees are not complete with respect to various conditions enumerated in the compounding guidelines. As a result, invariably a further report is to be called for by the Board. It has also been noticed that the reports on the compounding petitions are not sent to the Board in time. This leads to delay in taking a decision on the compounding petitions of the assessees. The following deficiencies have been noticed in the reports. 1. In many cases the reports do not deal with the submissions made by the assessee in the petition. The submissions should invariably be dealt with and the report must clearly indicate whether these submissions are factually correct. 2. In many cases the reports do not indicate whether all the conditions for compounding are satisfied in the case. All the conditions and circumstances mentioned in the compounding guidelines must be specifically commented upon before submitting the recommendations on the compounding petition. It should be clearly mentioned whether:- a) It is the first offence b) The case does not belong to a Large Industrial House. c) The chances of successful prosecution are good or not giving reasons thereof. d) The case falls within the Board's letter F.No. 285/1026/87-IT (Inv) dated 3-8-89 even if the chances of successful prosecution are good in cases where the amount of default is less than Rs. 1 lakh. It is necessary to comment whether the assessee is cooperative and not recalcitrant in the discharge of his obligations under the I.T. Act. 3. In cases involving hard-ship it is not specifically commented as to what are the circumstances due to which the assessee was facing hard-ship. A proper justification in such cases must be given. 4. In certain cases the reports are not received under the signatures of the Chief Commissioners. The specific comments of the Chief Commissioners are necessary in deciding the compounding petition. 5. There is delay in sending the reports. A comprehensive report must reach the Board within one month of the receipt of the communication from the Board. 6. In certain cases there is no indication in the reports whether the assessee is willing to pay the full composition fee. It has also been noticed that in some cases the Chief Commissioners recommend scaling down of the composition fee even though there is no provision in the compounding guidelines for the same. The reports, therefore, must clearly indicate whether the assessee is willing to pay the full composition fee. I have been directed to convey that the above facts should be taken into consideration while submitting the reports. There are certain offences for which no guidelines have been framed so far. The framing of these guidelines is under active consideration and the same will be communicated as and when a decision is taken in this regard. Kindly acknowledge the receipt of this letter. F.No. 285/82/90-IT(Inv)/1154