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TMI BlogRevised Guidelines for Compounding of offences under the provisions of the Direct Tax LawsX X X X Extracts X X X X X X X X Extracts X X X X ..... ences for the limited purpose of compounding of the offences. 2.1 Technical offences Offences punishable under the following sections shall be treated as technical offences: (Prior to 01/04/1976 - failure to make payment or deliver returns or statements or allow inspection). i. 276 (Prior to 01/04/1976 - failure to make payment or deliver returns or statements or allow inspection). ii. 276B (Prior to 01 /04/1989 - failure to deduct or pay tax) iii. 276B (w.e.f. 01/04/1989 - failure to pay tax deducted at source to the credit of central Government) iv. 276 BB (failure to pay the tax collected at source) v. 276DD (failure to comply with the provisions of section 269SS) vi. 276E (failure to comply with the provisions of section 269 T) vii. 277 (false statement in verification etc.) with reference to technical offences viii. 278 (abetment of false return etc.) with reference to technical offences 2.2 Non-technical offences : Offences punishable under the following sections shall be treated as non-technical offences :- i. 275A (contravention of order made u/s 132(3)) ii. 275B (Failure to comply with the provisions of Section 132(1)(iib) iii. 276 (w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined in para 8 below. b) Offences involving major fraud or scam or misappropriation of government funds or public property. c) Offences committed by an assessee linked to any Anti-national/terrorist activity and cases being investigated by CBI, police, enforcement directorate or any other Central Govt. agencies, as per information available with the Income tax department. d) Offences committed by an assessee who has enabled others in large-scale concealment of income in a systematic and planned way over a number of years like hawala entries, bogus trusts, bogus remittance etc. e) Offences committed by an assessee whose application for 'plea-bargaining' under Chapter XXI-A of 'Code of Criminal Procedure' is pending in a Court or a Court has recorded that a 'mutually satisfactory disposition1 of such an application is not worked out. f) Where conviction order has been passed by a Court. g) Any other ground, which the CCIT/DGIT may consider relevant for not accepting the compounding petition, in view of the nature and magnitude of the offence. 5. Compounding procedure 5.1 All conditions prescribed in para 4 above should be satisfied before a non-technical offence i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Committee. The CCIT/DGIT having jurisdiction over the case will act as Member-Secretary who will also co-opt such other member as the case may be, and convene the meeting, as well as maintain its minutes. d) Henceforth, no reference to the Board in the above cases will be required. 7.2 Notwithstanding anything contained in the Guidelines, the Finance Minister may grant approval for compounding of an offence in a suitable and deserving case, after obtaining report from the Board on the petition of the applicant. 8. For the purpose of these guidelines, "first offence" means: a) Offence under any of the Direct Tax Laws committed prior to the date of issue of any show-cause notice for prosecution or any intimation relating to prosecution by the Department to the person concerned or before launching of any prosecution, whichever is earlier; and/or b) Offence not detected by the department but voluntarily disclosed by a person prior to the filing of application for compounding of offence in the case under any Direct Tax Acts. For this purpose, offence is relevant if it is committed by the same taxable entity. The first offence is to be determined separately with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reckoned from the date immediately following the date on which the return of income was due to be furnished before to the date of furnishing of the return or where no return was furnished, the date of completion of the assessment. Where before the date of furnishing of the return or where no returns was furnished before the date of completion of assessments, any tax is paid by the assessee u/s 140A or otherwise: i) Compounding fee shall be calculated in the manner prescribed in this Para up to the date on which the tax is so paid; and ii) Thereafter, the fee shall be calculated at the aforesaid rate on the amount of tax and interest determined on regular assessment as reduced by the TDS, advance tax and tax paid u/s 140A or otherwise before filing the return of income or where no return was furnished from the date of completion of assessment. 9.8 Section 276CCC - Failure to furnish return of income in Search cases The fee for this offence shall be calculated in the same manner as for offences u/s 276CC. 9.9 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 contraven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hment expenses will be charged at the rate 10% of the compounding fee subject to a minimum of Rs. 10,000/- and maximum of Rs. 50,000/-. This limit will apply even where a number of offences are compounded under a single order. Applicability to pending cases 11. With effect from 01st June 2008, the procedure mentioned in the new guidelines shall mutatis mutandis apply to all future as well as pending petitions for compounding of offences under all the Direct Tax Laws. However, the offences already compounded under the old guidelines shall not be reconsidered. Applicability to offences under other Direct Tax Laws 12. These guidelines shall apply mutatis mutandis to offences under the other Direct Tax Laws also and the compounding fee for offences under the other Direct Tax Laws will be same as for the corresponding provisions of offences under IT. Act. 13. The petition for compounding in all cases of a co-accused shall be considered either along with or after compounding has been approved in the main case. 14. The amount of tax/interest/ penalty/period of default should be as modified after giving effect to order of appellate authorities/ revision/ rectification as on the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 16 matches with the answers given below in remarks column.) a) Name of the assessee :- b) Status :- c) Non-technical offences u/s :- d) AYs/ Date/ period involved in offence :- e) Date of filing of complaint, if any :- f) Status of case (i.e. whether Contemplated/ Pending in Court/ Convicted/ Acquitted) :- S.No. Particulars Reference Remarks Reference 1. The assessee has filed a written request for compounding the offence in the prescribed Proforma. Yes On Page no 2. The assessee has paid the amount of tax as well as interest and penalties & any other sum relating to the default, Yes On Page no 3. The assessee has stated that he is willing to pay the prescribed compounding fee on receipt of its intimation from the Department. Yes On Page no 4. It is the first offence as defined in para 8 of the guidelines. Yes On Page no 5. The offence involves major fraud or scam or misappropriation of government funds or public property. No On Page no 6. The assessee is linked to any Anti-national/terrorist activity and cases being investigated by CBI, police, enforcement directorate or any other central govt. agencies, as per information availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of tax as well as interest and penalties & any other sum relating to the default. Yes On Page no.... 3. The assessee has stated that he is willing to pay the prescribed compounding fee on receipt of its intimation from the Department. Yes On Page no 4. The offence involves major fraud or scam or misap propriation of government funds or public property. No On Page no 5. The assessee is linked to any Anti-national/terrorist activity and cases being investigated by CBI, police, enforcement directorate or any other central govt. agencies, as per information available with the In come tax department. No On Page no 6. The assessee has enabled others in large-scale con cealment of income has been done in a systematic and planned way over a number of years. No On Page no 7. The assessee is a habitual defaulter. No On Page no 8. The application for 'plea-bargaining' under Chapter XXI-A of 'Code of Criminal Procedure' is pending in a Court or a Court has recorded that a mutually satisfactory disposition' of such an application is not worked out. No On Page no 9. Amount of compounding fee as computed by Assess ing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ........... The case was not found to be a fit case for compounding as " ........................ ........................ ........................ (mention reasons)........................ ........................ ........................ ........................ .............. .................................. ........................ ........................ ........................ ........................ ........................" The Statement of the facts of the case are enclosed as Annexure 'A' Place: Seal Sd/- Chief Commissioner of Income-tax / Director General of Income-tax. ANNEXURE 3(c) Suggested format for Statement of facts The statement of facts should mention the following: 1. Detail of application filed A petition for compounding of offences punishable u/s .................................. of the Income Tax Act was filed in prescribed proforma by M/s /Mr. /Ms. .................................. on ........... ....................... 2. Brief facts 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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