A one-time facility to apply for compounding of income tax offences has been launched and taxpayers can avail this opportunity by December 31, a latest CBDT directive said.

It said this "one-time measure" is being undertaken to mitigate unintended hardship to taxpayers in deserving cases and to reduce the pendency of existing prosecution cases before the courts."

"Cases have been brought to the notice of CBDT where the taxpayers could not apply for compounding of the offence as the compounding application was filed beyond 12 months," the directive accessed by PTI said.

A taxpayer or an assessee, in order to avail the facility, will have to file an application for compounding a tax offence before the competent authority, that is a Principal Chief Commissioner or Chief Commissioner, Principal Director General or Director General of Income-tax department "on or before December 31, 2019", the CBDT directive issued on September 9 said.

It, however, added that the relaxation shall not be available in respect of an offence which is generally or normally not compoundable indicating to instances of serious tax evasion, financial crime, terror financing, money laundering, possession of illegal foreign assets, benami properties or has been convicted by a court in the past.

The CBDT circular added that application for compounding of an income tax offence can be filed in cases where:

Prosecution proceedings are pending before any court of law for more than 12 months or any compounding application for an offence filed previously was withdrawn by the applicant solely for the reason that such application was filed beyond 12 months or any compounding application for an offence had been rejected previously solely for technical reasons. 

Compounding in I-T parlance means that the taxman does not file a prosecution case against the offender or tax evader in the court in lieu of payment of due taxes and surcharges.

The CBDT, that frames policy for the tax department, has earlier said that compounding of offences is "not a matter of right" and the department can extend such a relief only in certain cases keeping in view factors like "conduct of the person, the nature and magnitude of the offence on the context of the facts and circumstances of each case."