A set of guidelines issued by the Central Board of Direct Taxes, as F. No. 285/08/2014-IT(Inv.V), dated 14 June 2019. Issued under section 279(2).
The Board's 2019 rewrite of its compounding guidelines. Compounding of an offence under the direct tax laws is discretionary and is done under section 279(2) by the Principal Chief Commissioner or Chief Commissioner. These guidelines tell those officers when an application should be entertained, how the offences under Chapter XXII are classified, which offences are normally not to be compounded, who the competent authority is and what procedure to follow. They replace the guidelines the Board had issued in December 2014.
These are guidelines. Where a section says the Board may issue guidelines and that they bind, guidelines carry more weight than an ordinary administrative direction — so read the enabling words before deciding which kind these are.
The guidelines are issued under section 279(2) read with the Explanation to section 279(3) and section 119. Offences under Chapter XXII are put into two classes, Category 'A' and Category 'B'; Category 'B' covers the graver offences and is not compounded as freely. A separate paragraph lists the offences that are normally not to be compounded, and it takes in a Category 'A' offence already compounded on three occasions and a Category 'B' offence beyond the first occasion. The Principal Chief Commissioner, Chief Commissioner, Principal Director General or Director General having jurisdiction over the person seeking compounding is the competent authority. The guidelines govern applications received on or after 17 June 2019.
Prosecution under Chapter XXII was being used more, and applications to compound came with it. The 2014 guidelines had been in force for over four years and the Board records that they had been reviewed. A fresh set was needed so that the discretion under section 279(2) is exercised on the same footing across charges, so that the graver offences are not compounded as a matter of course, and so that an applicant knows in advance what will and will not be entertained.
These guidelines control the officers who decide compounding applications: this is the Board telling its own subordinates how to use a statutory discretion. They give no one a right to have an offence compounded. Where an application is refused, the refusal is tested against section 279 and against the guidelines as the department's own stated policy — but a court is not bound by the Board's view of when compounding is fit, and neither is the applicant.
Applies to applications received on or after 17 June 2019. Supersedes the compounding guidelines dated 23 December 2014.
The line between Category 'A' and Category 'B' decides most applications, and the occasion-counting rules in the 'normally not to be compounded' paragraph bite hard on repeat defaults. It is the date of receipt of the application, not the date of the offence, that decides which set of guidelines applies. Read the full text before advising — the classification, the eligibility conditions and the fee provisions are detailed.
the existing Guidelines on Compounding of Offences under the Income-tax Act, 1961 (the Act) have been reviewed
— the Central Board of Direct Taxes, guidelines F. No. 285/08/2014-IT(Inv.V), 14 June 2019. Read it in the department’s own PDF.
| Under the Income-tax Act, 1961 | Now, in the Income-tax Act, 2025 |
|---|---|
| section 279 | section 491, section 532 |
| section 119 | section 239 |
I deposited the TDS late but with interest. Can the company and its directors still be prosecuted?
The complaint under s.276C and s.277 was filed while my reassessment is still running. Is it premature?
The Tribunal cancelled my concealment penalty, but the prosecution under section 276C is still running. Does the penalty finding help me in the criminal court?
The firm never filed its returns and the assessments were made under s.144. Can we get the s.276CC complaint discharged because the assessment was still being fought?
The Settlement Commission accepted my disclosure. Can the department still prosecute me for evasion?
I filed my return late. When is the 276CC offence committed, and is it still a first offence?
What here is the Board’s and what is ours. The document is the Central Board of Direct Taxes’ own. Its number, its date and the words quoted above are reproduced from the Board’s own PDF, which is here. Everything else on this page is ours: the plain-English account of what the document is and what it does, the reading of which provision it turns on, the note on what to watch, and the choice of cases. Where our account and the document part, the document governs.
An order of the Board binds the department, not you and not a court. The Board writes to its own officers. An assessee may hold the department to an order or an instruction 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. This is the most common mistake made with this material, and it is worth making twice: a direction of the Board is not a section of the Act.
We did not read all of it. The department’s file returned only part of this document to us, so what is written above is written from the part we could read. Open the PDF before you rely on it.
What we could not settle. This is a long document and only part of it was reached: the introduction, the classification paragraph, the 'normally not to be compounded' paragraph and the competent-authority paragraph. The classification tables, the compounding fee provisions, the procedure and the time limit for filing an application were not read. The F. No. is transcribed from a scan that renders the first digits imperfectly.