Relaxation of time-Compounding of Offences under Direct Tax Laws-One-time measure

Circular 25/2019 Dated 09/09/2019

The Central Board of Direct Taxes (CBDT) has been issuing guidelines from time to time for compounding of offences under the Direct  Tax  Laws,  prescribing  the  eligibility conditions. One of the conditions for filing of Compounding application is that, it should be filed with in 12 months from filing of complaint in the court.

Cases have been brought to the notice of CBDT where the taxpayers could not apply for Compounding of the Offence, as the compounding application was filed beyond 12 months, in view of para 8(vii) of the Guidelines for Compounding of Offences under Direct Tax Laws, 2014 dated 23.12.2014 or i n view of para 7(ii) of the Guidelines for Compounding of Offences under Direct Tax Laws, 2019 dated 14.06.201 9.

With a view to mitigate unintended hardship to taxpayers in deserving cases, and to reduce the pendency of existing prosecution cases before the courts, the CBDT in exercise of powers u/s 119 of the Income-tax Act, 196 1 (the Act) read with explanation below sub­ section (3) of section 279 of the Act issues this Circular.

As a one-time  measure, the  condition that compounding  application  shall  be filed within  12 months, is hereby relaxed, under the fol lowing conditions:

  • Such application shall be filed before the Competent Authority  i.e. the Pr. CCIT/CCIT/Pr. DGIT/DGIT concerned, on  or before 31.12.2019.
  • Relaxation  shall   not   be   available   in   respect   of   an   offence   which   is generally/normally   not   compoundable,  in   view  of  Para   1  of  the  Guidelines  dated 14.06.20 1 9.
  • Applications filed before the Competent Authority on or before 31.12.2019 shall be deemed to be in time in terms of Para 7(ii) of the Guidelines dated 14.06.2019.
  • It is clarified that Para 2 of the Guidelines dated 14.06.2019, shall not apply to all such applications made under this one-time measure. The other prescriptions of the Guidelines dated 14.06.201 9 including the compounding procedure, compound ing charges etc. shall apply to such applications.

For the purposes of this Circular, application can be filed in all such cases where-

  • Prosecution proceedings are pending before any court of law for  more than  12 months, or
  • any compounding application  for an  offence filed  previously was withdrawn  by  the applicant solely for the reason that such application was filed beyond  12 months, or
  • any compounding application for an offence had been rejected previously solely for technical reasons.

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