Blackmoney: No compounding of cases falling under new Act

Indians holding funds stashed abroad and falling under the purview of the new anti-black money law cannot enjoy the facility of compounding of the offence provided under the Income Tax Act, the Central Board of Direct Taxes (CBDT) has said.

This follows the enactment of a new tough law to unearth black money abroad which does not have such a provision.

Compounding of offences, under section 279(2) of the I-T Act allows easing of the case keeping in view factors such as the conduct of the person, nature and magnitude of the offence, cooperation extended by the assessee to the department during probe and facts and merits of each case.

Once a tax evasion offence is compounded, the accused is given relief by way of exempting him or her from paying penalty or reduction or abolishing of a jail term.

"The CBDT has made it clear in a recent directive to all the assessment and investigation ranges of the I-T department that the provision of compounding or to say settlement of an overseas tax evasion case under the new anti-black money Act is not to be allowed as the scheme of the Act does not have such a feature," a senior I-T officer said.

The government has enacted the Blackmoney (Undisclosed Foreign Income and Assets) and Imposition of Tax Act to deal with instances of Indians holding black money in foreign shores that will be in force from July 1, 2015.

The new Act provides for tax and penalty of 120 per cent and jail term of up to 10 years for holding undisclosed foreign assets.

It has also provided for a 90-day compliance window to escape the harsh punishment by declaring the assets and paying 60 per cent tax and penalty, which can be availed till this month only.

“A simple reading of the new Act will tell you that the provision of compounding has been removed. The new directives by the apex policy-making body of the tax department (CBDT) have just reinforced that, in case the taxman has any doubt,” the official said.