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Income Tax | New Guidelines for Compoundable aggression In Income Tax

New Guidelines for Compoundable aggression In Income Tax

New Guidelines for Compoundable aggression In Income Tax

The Income Tax Act, 1961 specifies legal actions and statutory problems for the taxpayer for defaults made the following regulations. The Income-Tax Act provides detailed guidance on how to handle the punishable–non-punishable, cognizable–non-cognizable, compoundable–non-compoundable crimes and how to impose the sanctions that are responsible for them.

This article will guide you all on recognized legal penalties and the amount of relief given by the tax department to comply with regulations linked to income-tax compounding crimes.

Offences under Income tax

Sections 275 A to 280 of the Income-Tax Act define the income-tax department for all charges against a defaulting assessee. Depending on the case situation, these may be prosecuted either against an assessee in the court of law or within the jurisdiction of the assessing officer or competent authorities (“CA”).

While the Act also says to prosecute the taxpayer only if it is appealed by the Income Tax Commissioner or Income Tax Appeals Commissioner or by any authorized authority. The Sections guide the following list of crimes against which a taxpayer is prosecuted:

Section Offenses
275A Contravention of order u/s. 132(3)
275B Contravention of order u/s. 132(1)(ii)
276 Removal, concealment, transfer or delivery of property to thwart recovery of taxes.
276A   Failed to comply with provisions of 178(1) & 178(3)
276AB   Failed to comply with provisions of 269, 269UE, 269UL, 269UC
276B   Failed  to pay tax to the credit of the central Govt. under chapter XIID or XVII-B
276BB   Failed to pay TCS
276C(1)   Attempted to evade tax
276C(2)   Attempted to evade payment of tax
276CC   Failed to furnish return
276CCC   Failed to furnish return in search cases ( u/s 158BC(a))
276D   Failed to furnish or produce account books or documents
277   False statement in verification etc
277A   False information sufficed in books of accounts etc
278   Abatement of false return etc.

For either of the above defaults selected, the tax department prescribes for three modes of the charge against the taxpayer:

  • Charge of interest.
  • A penalty by way of excellent, charges, etc.
  • Legal prosecution, confinement, etc.

Compounding of offences in Income Tax Law

Compoundable attacks include all crimes that are discretionary at the stage of the disputed sides. No court authorization is needed for redress or implementation of penalties and is appealed & conciliated within the assigned authorities ‘ final judgment. In brief, it is a way to adjust compliance through a legal settlement that prohibits it.

The Income-tax Act provides relief of prosecution from the following offences:

Section   Compoundable by Chief Commissioner (CCIT) or Director General of Income-tax (DGIT) as per section 279(2)
275A   Compoundable with prior approval of CBDT
275B   Compoundable with prior approval of CBDT
276   Compoundable with prior approval of CBDT
276A   If a reasonable cause specified u/s 278AA else, Compoundable with prior approval of CBDT
276AB   If a reasonable cause specified u/s 278AA else, Compoundable with prior approval of CBDT
276B   If a reasonable cause specified u/s 278AA else, Compoundable by CCIT or DGIT.
276BB   Compoundable by CCIT or DGIT.
276C(1)   No prosecution shall be held if imposition of penalty has been reduced or waived off by Commissioner u/s 279(1A), else compoundable with prior approval of CBDT
276C(2)   No prosecution shall be held if imposition of penalty has been reduced or waived off by Commissioner u/s 279(1A), else compoundable with prior approval of CBDT
276CC   Compoundable with prior approval of CBDT
276CCC   Compoundable with prior approval of CBDT
276D   Compoundable with prior approval of CBDT
277   No prosecution shall be held if imposition of penalty has been reduced or waived off by Commissioner u/s 279(1A), else compoundable with prior approval of CBDT
277A   Compoundable with prior approval of CBDT
278   Compoundable with prior approval of CBDT

Procedure for Compounding

  1. Compounding the offence will only be initiated if the assesses then submits a written request to the authority.
  2. The Assessing Officer / Deputy Director shall do the same upon receipt of a request and presented by correct channel to the Compounding competent authority (DGIT or CCIT)
  3. The power shall then proceed on the case on time within the time limit indicated by the board. (180 days generally)
  4. The penal fees as appropriate shall be notified to the assesses within a designated time to be paid to the authority. The power shall then transfer the order to compound the situation. If the administration dismisses the case, it will be prosecuted and purchased at the court’s notice.

Provisions applicable for Compounding as per New Guidelines 2019

As stated’ Compounding is not a correct matter.’ Compounding by the competent authority shall be performed on the fulfilment of the circumstances of eligibility specified in the timely compounding rules published by the Department and the facts /conditions of the situation other than requesting it as a legal duty.

The prosecution of the case recorded under both the Income Tax Act and the IPC (Indian Penal Code) regulations is based on the same facts; if any of the acts compounds the complaint, the competent authority shall withdraw.

In instances that have already been dismissed under the compounding regulations, no compounding of crimes shall be permitted; in the cases where the individual has engaged others in tax evasion; linked to unreported overseas bank accounts/assets; related to black money or Benami transactions.

The request for the Compounding of the offence must be produced only in the prescribed format on a legal stamp document of Rs 100 (Annex 1)

No application filed after 12 months of implementation of prosecution application shall be accepted for Compounding.

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