Circular No. 5/2020

Clarification regarding circular no. 24/2019 f. no. 285/08/2014 it inv. v /349 dated 09.09.2019 reg.

What this is

Circular No. 5/2020 was issued by the Central Board of Direct Taxes on 23 January 2020. Its subject is Clarification regarding circular no. 24/2019 f. no. 285/08/2014 it inv. v /349 dated 09.09.2019 reg.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Modifies para 2(iii) of Circular No. 24/2019 dated 9 September 2019, which set the criteria for launching prosecution. As modified, prosecution under section 276C(1) in cases up to the monetary limit stated in that para is not to be processed except with the previous administrative approval of the Collegium of two officers of Chief Commissioner or Director General rank described in para 3, and prosecution under that section is ordinarily to be launched after the penalty order is confirmed by the Income-tax Appellate Tribunal. But in other cases, including those covered by section 132, section 132A or section 133A, prosecution may be launched at any stage of the proceedings before an income-tax authority with the same Collegium approval, and the requirement of Tribunal confirmation of penalty does not apply to them. The circular also confirms that Circular No. 24/2019 reaches only cases where the prosecution complaint is to be filed after 9 September 2019.

Why it was issued

Clarifications had been sought on whether para 2(iii) applied where the penalty had not yet been confirmed by the Tribunal, and on whether the circular touched prosecutions already launched before it was issued.

Who it reaches

Assessees facing prosecution under section 276C(1) for wilful attempt to evade tax
Persons covered by a search under section 132, a requisition under section 132A or a survey under section 133A
Assessees whose complaint was already filed before 9 September 2019, who are outside the circular
Counsel resisting a sanction for prosecution on the ground that penalty is not yet confirmed

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.

F.No.285/08/2014-1T(lnv. V) /, 'l..
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
*******
Circular No. 5/2020
Room No. 501, 5th Floor, C-Block,
Or. Shyama Prasad Mukherjee Civie Centre,
Minto Road, New Delhi -110002.
Dated: 23.01.2020
Subject: Clarification regarding Circular No. 24/2019 F. No. 285/08/2014-IT(lnv.
V)/349 dated 09.09.2019-Reg.

The CBDT has issued a Circular No. 24/20 19 dated 09.09.2019 ('the Circular') for
laying down criteria for identification and processing of cases for launching prosecuti on under
the Income-tax Act, 196 1. Clarificati ons have been req uested with regard to the app li cability
of para 2(iii) o f the aforesa id Circul ar to the cases where pena lty has not yet been confirmed
by th e Income Tax Appe ll ate Tribunal.

2. The matter has been exam ined by the CB DT and in partial modification of the Circular
No. 24/20 19, it is hereby clari lied that the prosecuti on may be laun ched in deserving cases,
including cases covered uls 1321 132AI 133A. at any stage of the proceed ings belo re an
Incomc-tax Authority with the prior approval of the Collegium of two CCIT/DG IT rank
offi cers as men ti oned in para 3 of the Circular and the req uirement of confirmation of penalty
by the In come Tax Appe llate Tribunal shall not apply to such cases. Accordingly, the existing
para 2(iii) of the afo rementioned Circul ar is modifi ed as under:

.. iii. Offellces III\' 276C(I): Wilflll (Illempllo evade lax, elc.
Cases where Ihe amount soughl /0 be evaded or lax on lIl1der-reported income is Rs.
25 10k"" 01' beloll'. shall nol be processed for prosecution except lI'ith the previous
administrative approval of the CollegiulII of two CCIT/ DGIT rank officers as menlioned in
Para 3.

Further, prosecution under this section shall be launched ordinarily a/ier the
cOn/irmation of the order imposing penalty by the Income Tax Appellate Tribunal. Furlher,
proseclllion in other cases. including cases covered u/s 132/ 132A/ 133A, may be launched at
any stage of the proceedings before an Income-tax A IIthority, lI'ith the previous approval of
the Collegiull/ of two CCIT/DGIT rank o./Jicers as mentioned in para 3 of the Circular. "

3. Further, clarifications have also been req uested regarding the applicabi lity of th e
Circu lar to cases, where the prosecution has already been launched before the date of issuc of
the Circul ar. In this connection, it may be noted that in para 5 of the Circular, it is stated that
the Circular shall app ly to all pending cases whcre complai nt is yet to be fil ed. Therefore, the
Circular is app li cable to only those cases where the prosecution complaint is to be filed after
the date of issuance of the Circular, i.e. 09.09.20 19.

4. This clarifi cation shall be read as pari of the Board's Circular No. 24/20 19 F. No.
285/08/2014-IT(lnv. V)/349 dated 09.09.20 19.

5. The Pr. CCsIT/Pr. DGsIT/CCsIT/DGsIT are requested to irculate he e
clarification among all the officers of their region for compliance.

;z....~\\I~O

Copy to:
I. P.S. to Finance Minister
2. P.S. to Revenue Secreta ry
eepak Tiwari
Commissioner of Income Tax (OSD)(INV.),CBDT
3. The Chairman and all the Members, CBDT
4. All the Pro 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)-4/ Web Manager for placing it on www.incometaxindia.gov.in
8. Addl. CIT, Data Base Ce ll for placing it on www. irsofficersonl ine.gov. in
9. The Guard File

Deepak Tiwari
Commissioner of Income Tax (OSD)(INV.),CBDT

What to watch

The Tribunal-confirmation shield is narrow: it survives only for the section 276C(1) cases within the monetary limb, and is expressly withdrawn for search, requisition and survey cases.
In every case the Collegium of two Chief Commissioner or Director General rank officers must approve — that requirement is not diluted.
This clarification is to be read as part of Circular No. 24/2019; the two must be read together, not separately.
The monetary figure in para 2(iii) is garbled in the text as read here — verify it against Circular No. 24/2019 before arguing from it.

Where you meet it

On a show-cause notice for sanction of prosecution, or in a petition to quash a complaint filed while the penalty appeal is still pending before the Tribunal.

What it names

It mentions. Circular No. 24/2019, Circular No. 5/2020

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.