CHAPTER XXII

Offences &
Prosecutions-
I.T. Act 1961
V.K. CHATURVEDI
DTRTI
Ahmedabad
 Why Prosecution ?
• There are three modes built in the fiscal
legislation for encouraging tax
compliance: (a) Charge of Interest, (b)
imposition of penalty (c) launching of
prosecution against tax delinquents.
While charging of interest is
compensatory in character, the imposition
of penalty and institution of prosecution
proceedings act as strong deterrents
against potential tax delinquents.
• Tax evasion in the seventies increased out
of proportions and to effectively handle
the problem the matter was referred to2
 Why Prosecution ?
• Need for vigorous prosecution policy
In the fight against tax evasion, monetary
penalties are not enough. Many a
calculating tax dodgers find it a profitable
proposition to carry on evading taxes over
the years, if the only risk to which he is
exposed is a monetary penalty in the year
in which he happens to be caught. The
public in general also tends to lose faith
and confidence in the tax administration
once it knows that even when a tax evader
is caught, the administration lets him get
away lightly after paying only a monetary3
 Why Prosecution ?
• Unfortunately, in the present social
milieu, such penalties carry no stigma
either. In these circumstances, the
provisions for imposition of penalty fail to
instill adequate fear of the law in the
minds of tax evaders. Prospect of landing
in jail, on the other hand, is a far more
dreaded consequence -to operate in
terrorem upon the erring taxpayers.
Besides, a conviction in a court of law is
attended with several legal and social
disqualifications as well. In order,
therefore, to make enforcement of tax4
 Some Important Terms
• For understanding the nuances and
implications of the Chapter XXII of the I.T.
Act, it is necessary to take note of
abbreviations used and understand some
legal terms.
• Cr.P.C. = The Code of Criminal
Procedure, 1973.

• I.T. Act = Income Tax Act, 1961.

• RI = Rigorous Imprisonment.

• "Mens rea" shall mean and include

5
intention, motive, knowledge of a fact,
 Some Important Terms
The onus of proof that there was no Mens
rea, shall be on the accused.
• 'Bailable Offence' shall mean an offence
which is made Bailable, and in case of
such offence, bail can be claimed as a
matter of right, which is subject to
fulfillment of certain conditions like
furnishing a bail bond, and surety, etc. to
the satisfaction of the officer concerned.
• 'Non-Bailable Offence' shall mean an
offence which is not a Bailable offence (all
offences which are not made Bailable by
any Statute), and in which bail cannot be
6
 Some Important Terms
• 'Cognizable Offence' means an offence
in which, a Police officer may arrest
without any warrants or orders of the
court.
• 'Non-cognizable Offence' means an
offence in which a Police Officer has no
authority to arrest without warrants.
• 'Summons-Case' means a case relating
to an offence, or a case which is declared
to be a Summons-Case, by any Statute.
• 'Warrant-Case' means a case relating to
an offence, punishable with death,7
Judicial Presumption of Mens Rea in
case of Prosecution Under Chapter
XXII of the I.T. Act
• It is utmost important to note that with
respect to all the offences under Chapter
XXII of the I.T. Act, a judicial presumption,
under Sec. 278E of the I.T. Act, as to the
culpable state of mind i.e. Mens rea, is
raised against all accused in relation to all
offences.
• The onus of proof has been put on the
accused to prove that the accused had no
Mens rea which include intention, motive
or knowledge of a fact or belief in, or
reason to believe a fact, to commit any8
Offences liable for
prosecution and the
punishments are
discussed in the
subsequent slides.
9
 Contravention of order made u/s.
132(1) or u/s. 132(3) in case of
search and seizure
• In certain cases it may not be
possible or practicable for the
tax authorities to take physical
possession of the seized article
or to remove it to a safe place
due to its volume, weight or
other physical characteristics.
• Second proviso to section 132(1)
empowers the tax authorities to
seize the asset by keeping the
• Many times, during the course of
search it may not be practicable
to seize any books of account,
other documents, money, bullion,
jewellery or other valuable article
or thing. In such cases, as per
section 132(3), the tax authorities
may serve prohibitory order on
the owner or the person who is in
immediate possession or control
thereof that he shall not remove,
• Section 275A provides for
prosecution in the case of
contravention of any of the above
discussed provisions by the taxpayers.

• As per section 275A, whoever

contravenes any of the above
provisions shall be punishable with
rigorous imprisonment of upto a
period of 2 years and shall also be
liable for fine.
Failure to afford necessary facility to
authorised officer to inspect books of
account or other documents as is
required u/s 132(1)(iib)
• In a case where a search is conducted, the
tax authorities as per Section 132(1)(iib)
may require any person who is found to
be in possession or control of any books of
account or other documents maintained in
the form of electronic record, to afford the
authorised officer the necessary facility to
inspect such books of account or other
documents.
• Section 275B provides for
prosecution of the person who fails to
Removal, concealment, transfer or
delivery of property to thwart tax
recovery
• The tax authority can recover the tax dues
by attaching movable and immovable
property. If the taxpayer fraudulently
removes, conceals, transfers or delivers to
any person, any property or any interest
therein , intending thereby to prevent that
property or interest therein from being
attached for recovery of tax, then
prosecution proceedings can be initiated
u/s 276 of the Act.
• As per section 276, a taxpayer shall be
punished with rigorous imprisonment for
 Failure to comply with provisions
of section 178(1) and (3) dealing
with company-in -liquidation
• As per section 178(1) every person:
– (a) who is the liquidator of any
company which is being wound up,
whether under the orders of a Court
or otherwise; or
– (b) who has been appointed the
receiver of any assets of a company,
shall, within 30 days after he has
become such liquidator give notice
of his appointment to the assessing
officer of the company.
• As per section 178(3) the liquidator:-
– (a) shall not, without the leave of the
Principal Chief Commissioner or Chief
Commissioner or Principal
Commissioner or Commissioner, part
with any of the assets of the company
or the properties in his hands until he
has been notified by the Assessing
Officer in this regard; and
– (b) on being so notified, shall set aside
an amount, equal to the amount
notified and, until he so sets aside
such amount, shall not part with any
• Section 276A provides for prosecution
in the case of failure to give notice or
setting aside the sum in compliance
with the above provisions of sections
178(1)/178(3) as well as prosecution
in case the liquidator parts with any
of the assets of the company in
contravention of the provision of
section 178(3).
• A person who fails to comply with
these provisions shall be punishable
with rigorous imprisonment for a
 Failure to pay tax deducted at
source or the tax payable u/s 115-
O(2) or second proviso to section
194B:
• If a person fails to pay to the credit of the
Central Government: (i) the tax deducted
by him (i.e. TDS) or (ii) the dividend
distribution tax (DDT) as per section 115-
O(2) or (iii) tax in respect of winning from
lottery or crossword puzzle as per section
194B, then such person shall be punishable
with rigorous imprisonment which shall
not be less than 3 months but which
may extend to 7 years and with fine.
• Section 276B of the Act.
Failure to pay the tax collected
under the provisions of section
206C
• Section 206C governs the provisions
relating to collection of tax at source. If
a person fails to pay the tax collected by
him to the credit of the Government,
then as per section 276BB he shall be
punishable with rigorous imprisonment
for a period of which shall not be less
than 3 months but which may extend
to 7 years and with fine.
• Section 276BB.
 Wilful attempt to evade tax,
penalty or interest
• As per section 276C(1) if a
person wilfully attempts to evade tax,
penalty or interest or under-reports his
income, then he shall be punished as
follows:
– With rigorous imprisonment which shall
not be less than 6 months but which
may extend to seven years and with fine
where tax sought to be evaded exceeds
Rs. 25 lakh.
– With rigorous imprisonment which shall
not be less than 3 months but which
 Wilful attempt to evade
payment of tax, penalty or
interest

• As per section 276C(2) if a

person wilfully attempts to evade
payment of any tax, penalty or
interest under this Act, then he shall
be punished as follows:
– With rigorous imprisonment which
shall not be less than 3 months but
which may extend to 2 years and
with fine.
Wilful failure to furnish return
of income
• Section 276CC provides for
imprisonment in case of failure to file
the return of income. Section 276CC is
attracted for any of the following
defaults by the taxpayer :
– Failure to file the return of income as
per section 139(1).
– Failure to file the return of income in
response to a notice issued under
section 142(1)(i) or section 148 or
section 153A.
• Punishment for the above failures shall be
as under:
– R.I. which shall not be less than 6 months but
which may extend to seven years and with fine
where tax sought to be evaded exceeds Rs. 25
lakh.
– R.I. which shall not be less than 3 months but
which may extend to two years and with fine
in other cases
– The taxpayer shall not be proceeded against
under this section for failure to furnish in due
time the return of income under section
139(1), if:
• (a) the return is furnished by him before the
expiry of the assessment year; or
Wilful failure to produce accounts and
documents u/s142(1) or to comply
with a direction issued u/s. 142(2A)

• Section 142(1) deals with the general

provisions relating to an inquiry before
assessment. Under section 142(1), the
Assessing Officer can issue notice asking
the taxpayer to file the return of income, if
he has not filed the return of income or to
produce or cause to be produced such
accounts or documents as he may require
and to furnish in writing and verified in the
prescribed manner information in such
form and on such points or matters as he
• As per section 142(2A) if the
conditions justifying special audit
given in section 142(2A) are satisfied,
the Assessing Officer may direct the
taxpayer to get his accounts audited
or re-audited from a chartered
accountant as nominated by the
Principal Chief Commissioner or Chief
Commissioner or Principal
Commissioner or Commissioner and
to furnish a report of such audit in the
• Section 276D provides for prosecution
in the case of wilful failure by the taxpayer to
produce accounts and documents under
section 142(1) or to comply with a direction
issued under section 142(2A).
• As per section 276D, if a person wilfully fails to
produce accounts and documents as required
in any notice issued under section 142(1) or
wilfully fails to comply with a direction issued
to him under section 142(2A), he shall be
punishable with rigorous imprisonment for a
term which may extend to one year and
with fine.
False statement in verification
or delivery of false account,
etc.
• Section 277 provides for prosecution for
making false statement or producing false
accounts / documents. If a taxpayer makes
statement in any verification under the Act
or under any rules made there under, or
delivers an account or statement which is
false, and which he either knows or believes
to be false, or does not believe it to be true,
he shall be punishable:
– With rigorous imprisonment which shall not be
less than 6 months but may extend to seven years
and fine where tax which would have been
evaded exceeds Rs. 25 lakh.
 Falsification of books of account or
document, etc., to enable any other
person to evade any tax, penalty or
interest chargeable/leviable under the
Act
• Section 277A provides for
prosecution in the case of
falsification of books of account or
document etc.
• As per section 277A, if any person
(hereafter referred to as the first person)
wilfully and with an intent to enable any
other person (hereafter referred to as the
second person) to evade any tax or
interest or penalty chargeable and
imposable under the Act, makes or causes
to be made any entry or statement which
is false and which the first person either
knows to be false or does not believe it to
be true, in any books of account or other
document relevant to or useful in any
proceedings against the first person or
the second person under the Act, then the
 Abetment to make a false
return, etc.
• As per section 278 if a person abets or
induces in any manner another person to
make and deliver an account or a statement
or declaration relating to any income
chargeable to tax which is false and which
he either knows to be false or does not
believe it to be true or to commit an offence
under section 276C(1), he shall be punished
as under:
– With rigorous imprisonment which shall not be
less than 6 months but which may extend to
seven years and with fine where tax sought to be
evaded exceeds Rs. 25 lakh.
 Second and subsequent offences
under sections 276B, 276C(1),
276CC, 277 or 278
• Section 278A provides for
prosecution in the case of second or
subsequent offence under those
sections. As per section 278A, a
person shall be punishable with
imprisonment for a period which
shall not be less than 6 months
but which may extend to 7 years
and with fine.
Punishment in case of offence by a
company
• As per section 278B, where an offence under
the Income-tax Act has been committed by a
company, then every person who, at the time the
offence was committed, was in charge of and was
responsible to the company for the conduct of the
business of the company as well as the company
shall be deemed to be guilty of the offence and
shall be liable to be proceeded against and
punished accordingly.
• Where an offence under the Income-tax Act has
been committed by a company and it is proved
that the offence has been committed with the
consent or connivance of, or is attributable to any
neglect on the part of, any director, manager,
secretary or other officer of the company, such
• Where an offence under the Income-tax Act has been
committed by a person, being a company, such
company shall be punished with fine and every
person referred to above or the director, manager,
secretary or other officer of the company referred to
above, shall be liable to be proceeded against and
punished in accordance with the provisions of the
Act.
• For the purposes of this section:
(a) "company" means a body corporate, and includes
:-
(i) a firm; and
(ii) an association of persons or a body of
individuals whether incorporated or not; and
(b) "director" in relation to :-
 Punishment in case of offence by
Hindu Undivided Family
• As per section 278C, where an offence under
the Income-tax Act has been committed by a
Hindu Undivided Family, the karta shall be
deemed to be guilty of the offence and shall be
liable to be proceeded against and punished
accordingly.
• Where an offence has been committed by a Hindu
Undivided Family and it is proved that the
offence has been committed with the consent or
connivance of, or is attributable to any neglect on
the part of any member of the Hindu Undivided
Family, such member shall also be deemed to be
guilty of that offence and shall be liable to be
proceeded against and punished accordingly.
Disclosure of particulars by public
servant
• Section 138(1) deals with disclosure of information
by the tax authorities to other officer, authority,
etc. Section 138(2) relates to restriction on
declaring of information by the public servant.
Section 280 provides for prosecution in the case
of disclosure of information by the public servant
in contravention of section 138(2). In such a case
the public servant shall be punished with
imprisonment for a term which may extend to 6
months and with fine.
• However, no prosecution shall be instituted against
a public servant as discussed above except with
the previous sanction of the Central Government.
 No imprisonment in case of
reasonable cause for failure
• As per section 278AA no person is
punishable for any failure under
section 276A and 276B if he proves
that there was reasonable cause for
such failure.
 Initiating prosecution with the
previous sanction of tax
authorities
• As per section 279, prosecution for offences under
section 275A, section 275B, section 276, section
276A, section 276B, section 276BB, section 276C,
section 276CC, section 276D, section 277, section
277A and section 278 are to be instituted with the
previous sanction of Principal Commissioner or
Commissioner or Commissioner (Appeals). The
Principal Chief Commissioner or Chief
Commissioner or, as the case may be, Principal
Director General or Director General may issue
such instructions or directions to the aforesaid
income-tax authorities as he may deem fit for
institution of proceedings under this sub-section.
 Immunity from prosecution

• As per section 278AB, a person may apply to

the Principal Commissioner or Commissioner
for granting immunity from prosecution, if he
has applied for settlement under section 245C
and the proceedings have abated under
section 245HA. However, the application for
immunity shall not be made after institution of
prosecution proceedings.

• No prosecution shall ordinarily be

launched if the individual concerned had
attained the age of 70 years at the time of
commission of offence.
 PROCEDURE FOR
LAUNCHING PROSECUTION

• The officer concerned shall initiate the

process if he finds it to be a fit case for
prosecution on the basis of evidence
available.
• Once the case be identified, he shall send
a proposal containing the brief facts of the
case and the offense committed alongwith
the case record to the Jurisdictional PCIT
for his approval.
• If the PCIT finds the proposal prima facie
fit to be proceeded with, he shall issue a
show cause notice u/s. 279(1) of the Act to39
 PROCEDURE FOR
LAUNCHING PROSECUTION

• On consideration of the reply of the

assessee, if the PCIT finds it to be a fit
case to proceed further, he shall seek
opinion of the Prosecution Counsel.
• Taking into consideration the facts and
circumstances of the case and the opinion
of the Counsel, if the PCIT concludes that
it is a fit case for launching of
prosecution, he shall accord sanction
u/s.279(1) of the Act.
• Sanction u/s. 279 should be separate for
each assessment year specifying each and 40
 PROCEDURE FOR
LAUNCHING PROSECUTION

 On receipt of the sanction the AO shall

forward the proposal, the sanction order,
the case record and the evidences relied
upon to the Prosecution Counsel for
drafting the complaint.

 The draft complaint shall be vetted by the

PCIT and thereafter the AO shall file the
complaint in the appropriate jurisdictional
court with the help of Prosecution 41
 COMPOUNDING OF OFFENCES

• u/s 279(2) of the Act, any offence under

Chapter XXII (containing sections 275A to
280 may be compounded by the competent
authority either before or after the
institution of proceedings. It is not
necessary that an actual proceeding against
the accused must be going on. All that is
necessary is that the person applying for a
composition must be alleged to have
committed an offence.
• Compounding of an offence is not a right of
the accused nor is it his unilateral act. It can
only be done with the consent of 42 the
authorities enumerated in the provision.
 COMPOUNDING OF OFFENCES

• The guidelines for compounding of

offences under the Direct Tax Laws 2014
dated 23.12.2014 have been issued by the
CBDT. These guidelines are effective from
01.01.2015 and are applicable to
applications for compounding received on
or after 01.01.2015. The applications
received before 01.01.2015 continue to be
dealt with as per guidelines dated
16.05.2008.

Classification of Offences:
• The offences under Chapter-XXII of the Act
43
 COMPOUNDING OF OFFENCES

• Category 'A'
• Offences punishable under the following sections
are included in Category 'A':
S. N. Section Description / Heading or Section
I 276B Failure to pay tax deducted at source under chapter XVII-B
or tax payable under section 115 -O or 2nd proviso to
section 194B to the credit of the Central Government.

II 276BB Failure to pay the tax collected at source

III 277 False statement in verification etc. with reference to
Category 'A' offences

IV 278 Abetment of false return etc. with reference to Category 'A'

offences

44
 COMPOUNDING OF OFFENCES

• Category ‘B'
• Offences punishable under the following sections
are included in Category ‘B':
S.
Section Description / Heading or Section
No.
I 275A Contravention of order made u/s.132(3)
II 275B Failure to comply with the provisions of section 132(1)(iib)

Removal, concealment, transfer or delivery of property to

III 276
thwart tax recovery

Failure to comply with the provision of sections 178(1) and

IV 276A
178(3) – Official Liquidator

V 276C(1) Willful attempt to evade tax etc.

45
 COMPOUNDING OF OFFENCES

S.
Section Description / Heading or Section
No.

VI 276C(2) Willful attempt to evade payment of taxes etc.

VII 276CC Failure to furnish returns of Income

VIII 276D Failure to produce accounts and documents

False statement in verification etc. with reference to

IX 277
Category 'B' offences

X 277A Falsification of books of account or documents etc.

Abetment of false return etc. with reference to Category 'B'

XI 278
offences

46
 Eligibility Conditions for
Compounding:
The following conditions should be satisfied
for considering compounding of an offence:

• The person makes an application to the

CCIT/DGIT having jurisdiction over the case
for compounding of the offence(s) in the
prescribed format

• The person has paid the outstanding tax,

interest, penalty and any other sum due,
relating to the offence for which compounding
has been sought.
47
 Eligibility Conditions for
Compounding:
• The person undertakes to pay the
compounding charges including the
compounding fee, the prosecution
establishment expenses and the litigation
expenses including counsel's fee, if any,
determined and communicated by the
CCIT/DGIT concerned.
• The person undertakes to withdraw
appeal filed by him, if any, in case the
same has a bearing on the offence sought
to be compounded. In case such appeal
has mixed grounds, some of which may 48
 Offences generally not to be
compounded:
• Category 'A' offence sought to be
compounded by an applicant in whose
case compounding was allowed in the
past, in an offence under the same section
for which the present compounding has
been requested, on 3 occasions or more.
• Category 'B’ offence other than the first
offence as defined herein below:
• First offence means offence under any of
the Direct Tax Laws committed prior to
(a) the date of issue of any show-cause
notice for prosecution or (b) any
intimation relating to prosecution by the49
 Offences generally not to be
compounded:
• Offence not detected by the department but
voluntarily disclosed by a person prior to the
filing of application for compounding of offence in
the case under any Direct Tax Acts. For this
purpose, offence is relevant if it is committed by
the same entity. The first offence is to be
determined separately with reference to each
section of the Act under which it is committed.
• Offences committed by a person who, as a result
of investigation conducted by any Central or State
agency and as per information available with the
CCIT/DGIT concerned, has been found involved,
in any manner, in anti-national/terrorist
activity.
50
 Offences generally not to be
compounded:
• Offences committed by a person who, was
convicted by a court of law for an offence
under any law, other than the Direct Taxes
laws, for which the prescribed
punishment was imprisonment for two
years or more, with or without fine, and
which has a bearing on the offence sought
to be compounded.
• Offences committed by a person which, as
per information available with the
CCIT/DGIT concerned, have a bearing
on a case under investigation (at any 51
 Offences generally not to be
compounded:
• Offences committed by a person for which
he was convicted by a court of law
under Direct Taxes laws.
• Offences committed by a person for which
complaint was filed with the
competent court 12 months prior to
receipt of the application for
compounding.

52
 Offences generally not to be
compounded:
• Any other offence, which the CCIT/DGIT
concerned considers not fit for
compounding in view of its nature and
magnitude.

• Notwithstanding anything contained in

these Guidelines, the Finance Minister
may relax restrictions in para 8 above for
compounding of an offence in a deserving
case, on consideration of a report from
the Board on the petition of an applicant.
53
Authority Competent to Compound an Offence:
• The CCIT/DGIT having jurisdiction over the
person, seeking compounding of an offence,
is the competent authority for compounding
of all Category 'A' and Category 'B' offences.
However, an order in case of an application
for compounding of an offence appearing in
Category 'B’, involving compounding
charges in excess of Rs.10,00,000 (Rs.
Ten Lakhs) shall be passed by the
CCIT/DGIT concerned only on the
recommendation of a committee comprising
of 3 officers of the region concerned, namely
(i) Principal CCIT, (ii) DGIT(Inv.) and (iii)
CCIT/DGIT having jurisdiction over the case.
54
 Compounding Procedure:
• On receipt of the application for
compounding, the same shall be
processed by the Assessing
Officer/Assistant or Deputy Director
concerned and submitted promptly along-
with duly filled in check-list, to the
authority competent to compound,
through proper channel.
• The competent authority shall duly
consider and dispose of every application
for compounding through a speaking
order in the prescribed format within the
time limit prescribed by the Board from 55
 Compounding Procedure:
• Where compounding application is found
to be acceptable, the competent authority
shall intimate the amount of compounding
charges to the applicant requiring him to
pay the same within 60 days of receipt of
such intimation. Under exceptional
circumstances and on receipt of a written
request for further extension of time, the
competent authority may extend this
period up-to further period of 120 days.
Extension beyond this period shall not be
permissible except with the previous
approval of the Member (Inv), CBDT on a 56
 Compounding Procedure:
• However, wherever the compounding
charges are paid beyond 60 days as
extended by the competent authority, the
applicant shall have to pay additional
compounding charge at the rate of 2% per
month or part of the month of the unpaid
amount of compounding charges.
• The competent authority shall pass the
compounding order within 30 days of
payment of compounding charges. Where
compounding charge is not deposited within
the time allowed, the compounding
application may be rejected after giving the
applicant an opportunity of being heard. The
57
 Fees for compounding:

Description / Heading or Compounding fee

S. N. Section
section
I 276B Failure to pay tax deducted 3% per month of the
at source under chapter amount of tax in default for
XVII-B or tax payable under the period from date of
section 115 -O or 2nd deduction to date of
proviso to section 194B to deposit. For subsequent
the credit of the Central offence rate applicable
Government (w.e.f. shall be 5% per month.
01/06/1997)
II 276BB Failure to pay the tax - do -
collected at source

58
 Fees for compounding:

Description / Compounding fee

S.N. Section
Heading or section
III 277 False statement in No compounding fee has been
verification etc. with prescribed. The authority competent to
reference to compound may determine the amount of
Category 'A' compounding fee having regard to the
offences nature and magnitude of the offence
subject to levy of a minimum
compounding fee of Rs.25,000/- for each
such offence.
IV 278 Abetment of false 10% of the compounding fee for the main
return etc. with offence from each of the person charged
reference to u/s. 278B or 278C. Compounding fee from
Category 'A' co-accused shall be in addition to the
offences compounding fee chargeable from main
accused

59
 Fees for compounding:

Offences punishable under the following sections are

included in Category 'B':

Description / Compounding fee

S. N. Section
Heading or section
No compounding fee has been
prescribed. The authority
competent to compound may
Contravention of determine the amount of
I 275A order made u/s 132 compounding fee having regard to
(3) the nature and magnitude of the
offence subject to levy of a
minimum compounding fee of
Rs.25,000/- for each such offence.

60
 Fees for compounding:

S. Sectio Description / Heading Compounding fee

N. n or section
Failure to comply No compounding fee has
II 275B with the provisions been prescribed. The
of section 132(1)(iib) authority competent to
Removal, compound may
concealment, determine the amount of
III 276 transfer or delivery of compounding fee having
property to thwart tax regard to the nature and
recovery magnitude of the offence
Failure to comply subject to levy of a
with the provision of minimum compounding
IV 276A
sections 178(1) and fee of Rs.25,000/- for
178(3) each such offence.
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 Fees for compounding:

S. Description / Heading or Compounding fee

Section
N. section
Wilful attempt to evade 100% of the amount sought to
V 276C(1)
tax etc. be evaded
3% per month of the amount of
Wilful attempt to evade
VI 276C(2) tax sought to be evaded for
payment of taxes etc.
the period of default

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 Fees for compounding:

Description / Compounding fee

S.
Sec. Heading or
N. section
2% per month of the tax and interest determined on
assessment as reduced by TDS and advance tax, from
the due date of filing return to the actual date of filing the
return
Where, before the date of furnishing of the return or
where no return was furnished before the date of
Failure to completion of assessment, any tax is paid by the person
furnish u/s 140A, compounding fee shall be calculated in the
VII 276CC manner prescribed above up-to the date on which the tax
returns of
Income is so paid; and thereafter, the fee shall be calculated at
the aforesaid rate on the amount of tax and interest
determined on the assessment or re-assessment as the
case may be, determined after rectification u/s 154 of the
Act, if any, as reduced by the TDS, TCS, advance tax and
tax paid u/s 140A before filing of the return of income or
where no return was furnished from the date of
completion of assessment or reassessment.
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 Fees for compounding:

Description / Heading or Compounding fee

S. N. Section
section

Failure to produce No compounding fee has been

VIII 276D
accounts and documents prescribed. The authority
competent to compound may
False statement in determine the amount of
verification etc. with compounding fee having regard
IX 277
reference to Category 'B'
to the nature and magnitude of
offences
the offence subject to levy of a
Falsification of books of minimum compounding fee of
X 277A account or documents Rs.25,000/- for each such
etc. offence.

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 Fees for compounding:

Description / Compounding fee

S.
Section Heading or
N. section
Where same set of facts and circumstances attract
prosecution under any offence as well as u/s 277
and /or 278, normally, a compounding fee@10% of
the 'compounding fee for the main offence' shall
be charged from each of the person charged under
Abetment of sections 278B or 278C. However, the authority
278, false return etc.
competent to compound, after considering the
XI 278 B, with reference
extent of involvement of any or all co-accused,
278C to Category 'B'
offences may enhance or reduce or waive the amount of
compounding fee to be charged from any or all the
co-accused. The compounding fees chargeable
from the co-accused shall be in addition to the
compounding fees which may be chargeable from
the main accused.

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 Fees for compounding:
In addition to the compounding fee
determined as above, the following charges
are also payable:

Prosecution Establishment Expenses – 10% of

the Compounding Fee subject to minimum of
Rs.25,000/-.

Litigation Expenses - Litigation expenses

including fees paid/ payable to the Counsel.
Once the offence is compounded, the
complaint filed before the court of law in
respect of such offence is to be withdrawn.

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Thanks …. !!!

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