The apex policy-making body of the Tax Department has recently issued a directive in this regard to all I-T offices in the country after the latter raised 'doubts' over the applicability of the provisions of the 'Compounding of Offences' under the Income Tax Act, 1961 in these cases.

"Such cases (where a person has been found to be holding illegal assets abroad) can be compounded only after filing the prosecution complaint and shall not be compounded at the stage of show cause notice and/or without filing the complaint in the court," the new directives, accessed by reporter, said.

The Central Board of Direct Taxes, sources added, also obtained the opinion of the Special Investigation Team (SIT) on blackmoney on the subject and after obtaining its approval it subsequently gave a directive to the I-T Department that launching of court cases in such offences is a must.

The Compounding of Offences is undertaken under section 279(2) of the I-T Act by a panel of senior I-T officers in an assessment range keeping in view factors such as conduct of the person, nature and magnitude of the offence and facts and circumstances of each case.

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