Recently, CBDT has issued new guidelines for or Compounding of Offences under Direct Tax Laws, 2014 on 23rd Dec., 2014 vide F.No. 285/35/2013 IT(Inv)/108.
In the light of various references received from the field formation from time to time, existing guidelines on compounding of offences under Income-tax Act, 1961 (the Act) have been reviewed and in supersession of the same, including the guidelines issued vide F.No. 285/90/2008-IT(Inv.)/12 dated 16 thMay 2008, the following guidelines are issued for compliance by all concerned.
These guidelines shall come into effect from 01.01.2015 and shall be applicable to all applications for compounding received on or after the aforesaid date. The applications received before 01.01.2015 shall continue to be dealt with in accordance with the guidelines dated 16.05.2008.
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 CCIT/DGIT. As per section 2(15A) and 2(21) of the Act, Chief Commissioner of Income Tax includes Principal CCIT and Director General of Income tax includes Principal DGIT.
Compounding is not a matter of right:
Compounding of offences is not a matter of right. However, offences may be compounded by the competent authority on his satisfaction of the eligibility conditions prescribed in these guidelines keeping in view factors such as conduct of the person; nature and magnitude of the offence and facts and circumstances of each case.
Applicability of these guidelines to prosecutions under IPC:
Prosecution instituted under Indian Penal Code, if any, cannot be compounded as per these guidelines. However, section 321 of Criminal Procedure Code, 1973 provides for withdrawal of such prosecutions.
Classification of Offences:
The offences under Chapter-XXII of the Act are classified into two parts (Category 'A' and Category 13') for the limited purpose of compounding of the offences.
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