Answer

1. F

   Facts

   Compounding lets you close a prosecutable offence by paying compounding charges, with the department's approval. CBDT issued revised guidelines on 17 October 2024. They removed the old 36 month limit, so an application can be made even after a complaint is filed.

2. P

   Provisions and law

   • CBDT Guidelines for Compounding of Offences, 17 October 2024Revised guidelines for compounding offences, dated 17 October 2024; no fixed 36 month limit for applying
   • Sec 279, Income-tax Act 1961Prosecution needs sanction of a senior authority, and offences can be compounded
   • Sec 276CC (now Sec 479)Prosecution for wilful failure to file a return on time; jail of 3 months to 2 years, or 6 months to 7 years where tax evaded exceeds ₹25 lakh
3. A

   Analysis

   Under Sec 279 of the 1961 Act, offences can be compounded by the competent authority, and the 2024 guidelines simplified the process and the charges. Before applying, file all pending returns and pay the tax, interest and penalties due. The application goes to the competent authority named in the guidelines, with details of the offence and payments. Once compounded, the prosecution ends.

4. C

   Conclusion

   1. 1File pending returns and pay all dues.
   2. 2Prepare the compounding application as the 2024 guidelines require.
   3. 3Submit it to the competent authority.
   4. 4Pay compounding charges when the order is issued.

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