Circular No. 1/2020

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

What this is

Circular No. 1/2020 was issued by the Central Board of Direct Taxes on 3 January 2020. Its subject is Relaxation of time compounding of offences under direct tax laws one time measure extension of timeline.

This is an extension of time. It moves a date that the Act or the Rules otherwise fix, and it does so only for the compliance and the period it names — not for anything else that happens to fall due at the same time.

What it does

Gives a final extension of the one-time window to apply for compounding of an offence out of time. Circular No. 25/2019 dated 9 September 2019 had relaxed, till 31 December 2019, the requirement that a compounding application be made within twelve months of the complaint being filed in court. Acting under section 119 read with the Explanation below sub-section (3) of section 279, the Board modifies paragraph 4.1(i) of that circular so that the application may be filed before the competent authority - the Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General concerned - on or before 31 January 2020. Every other prescription and condition of Circular No. 25/2019 stands unchanged and applies to such applications.

Why it was issued

References came in from the field, including from chapters of the Institute of Chartered Accountants of India, that taxpayers could not use the one-time window because of genuine hardship; the Board wanted to give a final opportunity and to reduce the pendency of prosecution cases before the courts.

Who it reaches

Assessees facing prosecution where the complaint was filed more than twelve months earlier
Applicants who missed the 31 December 2019 window
Principal Chief Commissioners and Directors General deciding compounding applications

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. 112020
F.No.285/08/2014-IT(Inv. V)/6 3rt
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
*******
Room No. 513, 5th Floor, C-Block,
Dr. Shyama Prasad Mukherjee Civic Centre,
Minto Road, New Delhi -110002.
Dated: 03.01.2020
Subject: Relaxation of time-Compounding of Offences under Direct Tax Laws-One-time
measure-Extension of Timeline-Reg.
Reference is inv ited to the Circular No. 2512019 F. No. 285/08/2014-TT(Tnv. V)/350
dated 09.09.2019, whereby, the condition for filing of applications for compounding of
offences under the Income-tax Act, 1961 (the Act), to be filed within 12 months from filing of
complaint in the court, was relaxed by CBDT till 31.12.2019, as a one-time measure.
2. The CBDT has received references from the field formation, 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.
3. With a view to give a final opportunity to such taxpayers, and to reduce the pendency
of existing prosecution cases before the courts, the CBDT in exercise of powers u/s 119 of the
Act, read with explanation below sub-section (3) of section 279 of the Act, issues this
Circular, whereby para 4. 1 i) of the Circular No. 25/2019 F. No. 285/08/20 14-IT(Inv. V)/350
dated 09.09.2019 stands modified as under:
"Such application shall be filed before the Competent Authority i.e. the Pro
CClT/CClT/Pr. DGlT/DGlT concerned, on or before 31.01.2020. "
4. It is clarified that all other prescriptions/conditions of the Circular No. 25/2019 shall
remain unchanged and shall apply to all such applications.
5. Hind version shall follow.
Copy to:
I. P.S. to Finance Minister
2. P.S. to Revenue Secretary
3. The Chairman and all the Members, CBDT
DDIT(Prosecution),
(Sneha~' CBDT
1
4. All the Pro Chief Commissioners/Chief Commissioners /Pr. Director Generals/
Director Generals ofTncome-tax
5. All the officers of the rank of Joint Secretary/CIT and above in the CBDT
6. The CIT (Media & Technical Policy), CSDT
7. ADG (Systems)-4/ Web Manager for placing it on www.incometaxindia.gov.in
8. Add\. CIT, Data Base Cell for placing it on www.irsofficersonline.gov.in
9. The Guard File
2

What to watch

Only the date moves; the eligibility conditions, the compounding fees and every other condition of Circular No. 25/2019 continue to apply, and an application must satisfy them.
The application had to reach the named competent authority, not the Assessing Officer or the prosecution counsel.
31 January 2020 has long passed and the circular is spent; the relaxation of the twelve month rule was expressly a one-time measure.
The scan renders the circular numbers imperfectly, so verify them from the published text.

Where you meet it

Where a compounding application filed in January 2020 is rejected as out of time under the twelve month rule.

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. 25/2019 — Relaxation of time compounding of offences under direct tax laws one time measure 9 September 2019

← Circular No. 2/2020 · Circular No. 32/2019 →

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.