Q & A Series: Compounding of Offences under the Income- tax Act, 1961 - Part 2

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Q & A Series: Compounding of Offences under the Income Tax Act, 1961 - Part 1

Question 6: What is defective application?

Applications which do not fulfill any of the specified conditions (refer Question 5 in Part 1 of Q & A series) or contain curable defects, such as:

• Non-payment of outstanding tax, interest, penalty, or any other sum related to the offence;
• Application not filed in correct proforma;
• Applications filed for incorrect financial year or assessment year or under incorrect section, etc.;

is treated as 'defective' application under the new Guidelines.

Question 7: Can a defective application be revived?

Yes, Defective application can be revived, provided the defects are cured within a one month from the date of intimation of the defect(s).

Question 8: Do one needs to pay some fees for revival of defective application?

Defective application can be revived without additional payment of Compounding Application Fee, provided the defect(s) are cured within a one month from the date of intimation of the defect(s).

If the defect(s) are not cured within the time allowed, defective application will be returned back to the applicant. Any subsequent application filed for the same purpose, will be considered as subsequent compounding application and charges will be applicable accordingly.

Question 9: Who is the Competent Authority for the compounding of offences?

The jurisdictional Pr. CCIT / CCIT / Pro DGIT / DGIT is the Competent Authority for compounding of offences.

Question 10: Who is the Competent Authority when a person commits an offence under section 276B/276BB of the Act for non-payment of TDS/TCS related to both resident and non-resident payees?

If a person has committed an offence under section 276B / 276BB of the Act for non-payment of TDS/TCS in respect of both resident and non-resident payees/ collectees then the jurisdiction over such person normally lies with more than one jurisdictional authority. In such case, the Pr. CCIT/ CCIT/ Pr. DGIT/ DGIT in whose jurisdiction compounding application has been filed will be the Competent Authority. However, in case the applicant files applications in more than one jurisdictional charge, the Competent Authority will be the jurisdictional authority where the quantum of TDS default is higher. All other applications shall be transferred to such Competent Authority. Further, in case of any dispute in deciding Competent Authority, the Pr. CCIT having PAN jurisdiction will decide Competent Authority, within 30 days of receipt of such reference.

Question 11: Who will be the Competent Authority when a compounding application for offences under section 276B/276BB involves multiple TANs across different jurisdictions?

If an applicant files Compounding application for offences committed under section 276B/276BB of the Act, in respect of two or more TANs falling in different jurisdictions, the jurisdictional authority where the quantum of TDS default is higher will be the Competent Authority. All other applications will be transferred to such Competent Authority. In case of any dispute in deciding Competent Authority, the Pr. CCIT having PAN jurisdiction will decide within 30 days of receiving the reference.

Question 12: In which cases, the Competent Authority needs the approval of Chairman, CBDT before compounding the offence?

The Competent Authority, in the following cases, may compound only with the approval of Chairman, CBDT;

(a)??? Convicted with imprisonment of two years or more

i. In case of an offence for which the applicant has been convicted with imprisonment for two years or more (with or without fine) by a court of law;

ii. In case of an offence which is related to another offence under any other law for which the applicant has been convicted with imprisonment for two years or more (with or without fine) by a court of law;

(b)??? Involved in anti-national or terrorist activity

?iii.?If the applicant, as per information available on the basis of an investigation conducted by any Central or State Agency, has been found to be involved, in any manner, in anti-national or terrorist activity. In such cases, the Competent Authority shall consult with relevant Agency and seek inputs regarding the said activity and its implications, for the purpose of deciding it as a deserving case and incorporate them while seeking approval;

(c)???? Facilitation of tax evasion

iv.?In the case of an applicant, being a person other than the main accused, where it is proved that the applicant facilitated tax evasion through mechanisms such as use of entities for laundering of money, generation of bogus invoices of sale/purchase without actual business, by providing accommodation entries or in any other manner, as prescribed in section 277A of the Act;

(d)??? Offences relating to Black Money Act or Benami Property

?v.?If the offence is directly related to an offence under the following Acts:

a.?the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; or

b. Prohibition of Benami Property Transactions Act,1988;

(e)??? Offences relating to Search & Seizure

vi.?In case of an offence under section 275A and/or 275B of the Act.

For Part 3 Q & A Series: Compounding of Offences under the Indian Income Tax Act, 1961 - Part 3