Issuing new set of guidelines for compounding of offences, the Central Board of Direct Taxes on Friday said the offences related to tax evasion, such as through money laundering, generation of bogus invoices without actual business and any offence under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act and the Benami Transactions (Prohibition) Act will not be normally allowed to be compounded. The new guidelines will come into effect from June 17, the CBDT said.
The CBDT issued the guidelines for compounding of offences under Direct Tax Laws, 2019, in supersession of its earlier guidelines dated December 23, 2014. Compoundable offences are those which can be conciliated by the parties under dispute, without the requirement of the permission of the court.
The new guidelines have classified offences into two categories, Category A for TDS / TCS related defaults under Sections 276, 276B and 276BB of Income Tax Act, failure to furnish return of income under Section 276CC and Section 278 relating to abetment of false return.
Category B includes offences about failure to produce accounts under Section 276D, wilful attempt to evade tax under Section 276C. The guidelines also state that offences under sections 275A, 275B (for contravening orders relating to search – seizure operation under Sections 132(1)/(3)] and Section 276 (dealing with removal, concealment, transfer or delivery of property to thwart tax recovery) will not be compounded.
Other offences which shall normally not be compounded include Category ‘A’ offence on more than three occasions, Category ‘B’ offence other than the first offence, offences committed by a person for which he was convicted by a court of law under Direct Taxes Laws, any offence where it is proved that he has enabled others in tax evasion such as through entities used to launder money or generate bogus invoices of sale/purchase without actual business, or by providing accommodation entries in any other manner as prescribed in section 277A of the Act.
Offences committed by a person which, as per the information available with the Principal Chief Commissioner of Income Tax and other officials concerned, have a bearing on a case under investigation (at any stage including enquiry, filing of FIR/complaint) by Enforcement Directorate, CBI, Lokpal, Lokayukta or any other Central or State Agency are also not to be normally compounded, the CBDT said.
However, the guidelines state that the Finance Minister may relax restrictions in deserving cases, on consideration of a report from CBDT on the petition of an applicant. “Notwithstanding anything contained in these Guidelines, the Finance Minister may relax restrictions in Para 8.1 above for compounding of an offence in a deserving case, on consideration of a report from the Board on the petition of an applicant,” it said.
Norms In effect from June 17
*Compoundable offences are those which can be conciliated by the parties under dispute, without requirement of permission of court
*Centre not to allow compounding of offences under the Black Money law, Benami law and money laundering