CBDT issues Guidelines for Compounding of Offences under Direct Tax Laws, 2019

Jun 18, 2019 | by Avantis RegTech Legal Research Team

The Central Board of Direct taxes (CBDT) on June 14, 2019, has issued a Guidelines for Compounding of Offences under Direct Tax Laws, 2019, in supersession of earlier Guidelines on this subject, including the Guidelines of CBDT.

These Guidelines has come into effect from June 17, 2019 and shall be applicable to all applications for compounding received on or after the aforesaid date. The applications received before June 17, 2019 will continue to be dealt with in accordance with the Guidelines dated December 23, 2014.

Any offence under Income-tax Act, 1961 may, either, before or after the institution of proceedings, be compounded by the Chief Commissioner of Income Tax, Principal Chief Commissioner of Income Tax, Director General of Income Tax, Principal Director General of Income Tax. It 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 Indian Penal Code (IPC):

Prosecution instituted under 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 Income-tax Act, 1961 and IPC are based in the same facts and the complaint under the Income-tax Act, 1961 is compounded, then the process of withdrawal of the complaint under the IPC may be initiated by the Competent Authority.


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