The Central Board of Direct Taxes (CBDT) has extended the deadline of the Compounding of Offences under Direct Taxes till January 31, 2020.
According to the Circular, taxpayers to avail of a “one-time” facility to apply for compounding of income tax offences. The earlier deadline was December 31, 2019.
The CBDT has received references from the field formations, including requests made by the ICAI chapters, wherein, it has been brought to the notice of CBDT that the taxpayers could not avail the benefit of the one-time relaxation window due to genuine hardships.
Applications, as per the procedure of the scheme, are to be filed before the appropriate competent authority that is either a principal chief commissioner or a chief commissioner or a principal director general or director-general of the Income-Tax Department “on or before” January 31, 2020.
Earlier, CBDT had issued guidelines of exclusion provisions, under which, offences have done under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Act, 2015, the Benami Transactions (Prohibition) Act, 1988 cannot be compounded in normal cases. This includes money laundering cases. Compounding means that the authorities agree to not prosecute offenders in return for a consideration.
The guidelines classify offences into three categories. The first category of offences open to compounding includes defaults under tax deducted or collected at source, failure to file the return. The second category of offences, for which compounding will not be allowed, deal with willful evasion of tax, removal or concealment or transfer or delivery of property to thwart tax recovery in a search operation.
The guidelines specifically stated that the compounding of direct taxes offences is not a matter of right and can be invoked on the satisfaction of certain conditions prescribed in it.
The application can be filed in all such cases where-
a) prosecution proceedings are pending before any court of law for more than 12 months, or
b) any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months, or
c) any compounding application for an offence had been rejected previously solely for technical reasons.
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