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Team Studycafe | Sep 17, 2022 | Views 5426

CBDT issued guidelines for Compounding of Offences under Income Tax Act 1961

CBDT issued guidelines for Compounding of Offences under Income Tax Act 1961

The Central Board of Direct Taxes(CBDT) has issued guidelines for Compounding of Offences under Income Tax Act 1961.

The Guidelines on Compounding of Offences under the Income-tax Act, 1961 (herein after referred to as ‘the Act’) have been reviewed by the Board with a view to simplify and facilitate compounding of offences.

Accordingly, in supersession of all earlier Guidelines on this subject, including the last Guidelines of the Board issued vide F.No.285/08/2014IT (Inv.V)/147 dated 14th June, 2019, the following Guidelines are issued, henceforth, for compliance by all concerned.

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 Pr.CCIT/ CClT/ Pr.DGIT/ DGIT. As per section 2(15A) and 2(21) of the Act, Chief Commissioner of Income Tax includes Principal Chief Commissioner of Income Tax and Director General of Income Tax includes Principal Director General of Income Tax. These Guidelines are issued in exercise of power conferred u/s 119 of the Act read with explanation below sub-section (6) of section 279 of the Act.

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 satisfaction of the eligibility conditions prescribed in these Guidelines keeping in view factors such as conduct of the person, the nature and magnitude of the offence in the context of the facts and circumstances of each case.

Applicability of these Guidelines to prosecutions under TPC

Prosecution instituted under Indian Penal Code(‘IPC’), if any, cannot be compounded. However, section 321 of Criminal Procedure Code, 1973, provides for withdrawal of such prosecution. In case the prosecution complaint filed under the provisions of both the Act and the IPC are based on the same facts and, the complaint under the Act is compounded, then the process of withdrawal of the complaint under the IPC may be initiated by the Competent Authority.

Classification of Offences

The offences under Chapter-XXII of the Act are classified into two parts (Category ‘A’ and Category ‘B’) for the limited purpose of Compounding of Offences. The Category A offences are the ones where the offences are of technical nature caused by an act of omission. Whereas the Category 8 offences are non-technical offences attributed to an act of commission.

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