Circular No. 25/2019

Relaxation of time compounding of offences under direct tax laws one time measure

What this is

Circular No. 25/2019 was issued by the Central Board of Direct Taxes on 9 September 2019. Its subject is Relaxation of time compounding of offences under direct tax laws one time measure.

What it does

Relaxes, as a one-time measure, the condition that a compounding application must be filed within 12 months of filing the complaint in court. The application had to be made to the Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General concerned on or before 31 December 2019, and such an application is deemed to be in time under paragraph 7(ii) of the Compounding Guidelines dated 14 June 2019. Paragraph 9.2 of those Guidelines does not apply to applications made under this measure, but the rest of the Guidelines, including the compounding procedure and compounding charges, does. Offences that are generally not compoundable under paragraph 8.1 of the Guidelines dated 14 June 2019 stay outside the relaxation.

Why it was issued

Cases were brought to the Board's notice where taxpayers could not apply for compounding because the application fell beyond the 12-month limit in paragraph 8(vii) of the 2014 Guidelines or paragraph 7(ii) of the 2019 Guidelines, and the Board wished to mitigate unintended hardship and reduce the pendency of prosecution cases before the courts.

Who it reaches

Taxpayers facing prosecution complaints pending for more than 12 months
Applicants who withdrew a compounding application solely because it was out of time
Applicants whose compounding application was rejected for technical reasons alone
Competent Authorities receiving compounding applications up to 31 December 2019

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.279	s.491, s.532

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

Circular No. 25/2019
F.No.285/0812014-IT(Inv. V)
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)

Room No. 515, 5th Floor, C-Block,
Dr. Shyama Prasad Mukherjee Civic Centre,
Minto Road, New Delhi -110002.
Dated: 09.09.2019

Subject: Relaxation of time-Compounding of Offences under Direct Tax Laws-One-time measure-Reg.

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 within 12 months from filing of complaint in the court.

2. 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 in view of para 7(ii) of the Guidelines for Compounding of Offences under Direct Tax Laws, 2019 dated 14.06.2019.

3. 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, 1961 (the Act) read with explanation below subsection (3) of section 279 of the Act issues this Circular.

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

i) 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.

ii) Relaxation shall not be available in respect of an offence which is generally/normally not compoundable, in view of Para 8.1 of the Guidelines dated 14.06.2019.

4.2 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.

4.3 It is clarified that Para 9.2 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 14.06.2019 including the compounding procedure, compounding charges etc. shall apply to such applications.

5. For the purposes of this Circular, 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.

Hindi version shall follow.

(Mamta Bansal)
Director to the Government of India

Copy to:
1. P.S. to Finance Minister
2. P.S. to Revenue Secretary
3. The Chairman and all the Members, CBDT
4. All the Pr. Chief Commissioners/Chief Commissioners/Pr. Director Generals/Director Generals of Income-tax
5. All the officers of the rank of Joint Secretary/CIT and above in the CBDT
6. The CIT (Media & Technical Policy), CBDT
7. ADG (Systems)-41 Web Manager for placing it on www.incometaxindia.gov.in
8. Addl. CIT, Data Base Cell for placing it on www.irsofficersonline.gov.in
9. The Guard File

Director to the Government of India

What to watch

The window closed on 31 December 2019, so this is a spent one-time measure and a fresh application today falls back on the ordinary Guidelines.
An offence that is generally not compoundable under paragraph 8.1 of the 2019 Guidelines gets nothing from this circular.
Only the time limit is relaxed; compounding charges and the rest of the procedure apply in full.
A previous rejection helps only where it was on technical grounds or on the 12-month point alone, not where it was on the merits.

Where you meet it

In a prosecution complaint pending before a magistrate under Chapter XXII, when moving the Principal Chief Commissioner for compounding under section 279(2).

What it names

It mentions. Circular No. 25/2019

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 1/2020 — Relaxation of time compounding of offences under direct tax laws one time measure extension of timeline 3 January 2020

← Circular No. 24/2019 · Circular No. 23/2019 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.