Measures By CBDT For Tax Friendly Regime
CBDT has come up with certain initiatives to make the regime more tax friendly and to ensure that the rigorous measures should be used in certain limited cases. One such measure is extension of compounding procedures and other is restriction on initiating prosecution proceedings. We have explained the same below for your kind reference:
Procedure for identification and processing of cases for prosecution under Direct Tax Laws
In the light of the increase in prosecution proceedings by the Income Tax Department in the recent past, CBDT has come up with the guidelines to be followed for prosecution of income tax defaulters for defaults like delay in depositing TDS/TCS or non- filling of Income Tax Return. Circular no. 24/2019 has been issued to ensure that only deserving cases get prosecuted.
CBDT has prescribed the following norms to be followed for initiating the prosecution proceedings:
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For non-payment of TDS/TCS for upto Rs. 25 lakhs and where the delay in deposit is less than 60 days, no prosecution shall be initiated. However, in some exceptional cases such as for frequent defaulters, prosecution can be initiated with the prior approval of the collegium of two CCIT/DGIT rank officers.
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Where a person intentionally attempts to evade any tax, penalty or interest and such amount which is reported income is upto Rs. 25 lakhs, prosecution can be launched only with the prior approval of the collegium of two CCIT/DGIT rank officers.
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Where a person fails to furnish his return of income and the amount of tax which would have been evaded on non-discovery of failure is up to Rs. 25 lakhs, prosecution can be initiated only with the prior administrative approval of the collegium of two CCIT/DGIT rank officers.
The concerned authority shall seek prior approval of a collegium of two CCIT/DGIT rank officers in whose jurisdiction the case lies. In case of disagreement between the two officers, the matter will be referred to the principal CCIT (CCA) whose decision will be final.
The circular containing list of prosecutable offences under the Act and specifying the approving authority cab be accessed from this link.
One-time facility for compounding of income tax offences
The Central Board of Direct Taxes (CBDT) has noticed unintended hardships faced by the taxpayers who could not apply for Compounding of offences, where the compounding application was filed beyond 12 months. To reduce the pendency of existing prosecution cases before the court, CBDT has brought out relaxation in such cases vide Circular No. 25/2019 dated 09.09.2019.
A One-time facility for compounding of income tax offences is launched and taxpayers can avail this opportunity on or before 31.12.2019. To avail this, the application should be filed before the competent Authority i.e. Pr. CCIT/CCIT/Pr. DGIT/DGIT of Income Tax Department.
Taxpayers involved in cases like serious tax evasion, financial crime, terror financing, money laundering, conviction by any court in the past and other similar cases which are ordinarily not compoundable cannot avail the above relaxation.
The circular added that application for compounding of income tax offence can be filed in all cases where-
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prosecution proceedings are pending before any court of law for more than 12 months, or
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the compounding application filed previously was withdrawn due to the reason that such application was filed beyond 12 months, or
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the compounding application was rejected previously solely for technical reasons.
Besides, CBDT has notified the Cost Inflation Index for FY 2019-20 as “289” for the purpose of calculating the Long term capital gains for various capital assets.