ACS Mamta Tiwari

Mamta Tiwari

Overview – Compounding of Offences under Foreign Contribution Regulation Act, 2010

Compounding in a layman’s term means an agreeable settlement for the purpose of preventing prosecution for an offence. The compounding proceedings have the intention of deterring people from making repetitive lapses; minimizing transaction costs and to take a serious view of the willful, malafide and fraudulent transactions.

Compounding of certain offences:

1. Notwithstanding anything contained in the Code of Criminal Procedure, 1973, any offence punishable under this Act (whether committed by an individual or association or any officer or employee thereof), not being an offence punishable with imprisonment only, may, before the institution of any prosecution, be compounded by such officers or authorities and for such sums as the Central Government may, by notification in the official gazette, specify in this behalf.

2. Nothing in sub-section (1) shall apply to an offence committed by an individual or association or its officer or other employee within a period of three years from the date on which a similar offence committed by it or him was compounded under this section. Explanation – For the purposes of this section, any second or subsequent offence committed after the expiry of a period of three years from the date on which the offence was previously compounded, shall be deemed to be a first offence.

3. Every officer or authority referred to in sub-section (1) shall exercise the powers to compound an offence, subject to the direction, control and supervisions of the Central Government.

4. Every application for the compounding of an offence shall be made to the officer or authority referred to in sub-section (1) in such form and manner along with such fee as may be prescribed.

5. Where any offence is compounded before the institution of any prosecution, no prosecution shall be instituted in relation to such offence, against the offender in relation to whom the offence is so compounded.

6. Every officer or authority referred to in sub-section (1), while dealing with a proposal for the compounding of an offence for a default in compliance with any provision of this Act which requires by an individual or association or its officer or other employee to obtain permission to file or register with or deliver or sent to, the Central Government or any prescribed authority any return account or other document, may, direct by order, if he or it thinks fit to do so, any individual or association or its officer or other employee to file or register with, such return, account or other document within such time as may be specified in the order.

Offences that can be compounded and the quantum of Penalties

Acceptance of foreign contribution without registration/prior permission: In terms of Gazette Notification S.O. 1976 (E) dated 26.08.2011, the quantum of penalty for compounding of offence of acceptance and utilization of foreign contribution without registration/prior permission is as under:

S. NoNature of OffenceQuantum of Penalty
(i)

 

Acceptance of cheque or draft towards foreign contribution by a ‘person’* without registration or prior permission of the Central Government even in cases where the cheque or draft has not been deposited in a Bank by the ‘person’.Rs. 10,000 or 2 per cent of the foreign contribution involved, whichever is higher.
(ii)Acceptance of cheque or draft by a ‘person’ towards foreign contribution without registration or prior permission of the Central Government and depositing the same in a Bank notwithstanding non-utilization of the amount of the foreign contribution.Rs. 25,000 or 3 per cent of the foreign contribution involved, whichever is higher
(iii)Acceptance of foreign contribution by a ‘person’ without registration or prior permission of the Central Government and utilization of the same notwithstanding any inquiry which revealed that the contribution received was not diverted towards any purpose other than the objectives or purpose for which the same was received, utilization of the contribution was as per the objectives of receipt of the same and records of receipt and utilization have been kept properly.Rs. 1, 00,000 or 5 per cent of the foreign contribution involved, whichever is higher.
(iv)Acceptance of foreign contribution in kind by a ‘person’ without registration or prior permission of the Central Government notwithstanding that nothing adverse was reported after inquiry.Rs. 10,000/- or 2 per cent of the foreign contribution involved, whichever is higher.

* “person” includes ‒ an individual; a Hindu undivided family; an association; a company registered under section 8 of Companies Act, 2013.

Non-furnishing of Annual Return within the stipulated time period: In terms of Gazette Notification S.O. 1070 (E) dated 26.04.2013, the quantum of penalty for non furnishing of annual returns is as under:

S.NoNature of offenceQuantum of Penalty
(i)Non-furnishing of return up to ninety days after 31st December every yearTwo per cent of the amount received during the Financial year or rupees ten thousand, whichever is higher.
(ii)Non-furnishing of return after ninety days up to one hundred and eighty days after 31st December every yearThree per cent of the amount received during the Financial year or rupees twenty thousand, whichever is higher.
(iii)Non-furnishing of return after one hundred and eighty days after 31st December every yearFive per cent of the amount received during the Financial year or rupees fifty thousand, whichever is higher, with rupees five hundred per day of delay after one hundred and eighty days.

Procedure for making an application for the Compounding

An application for the compounding of an offence under section 41 of FCRA, 2010 is to be made to the Secretary, Ministry of Home Affairs, New Delhi on a plain paper along with a fee of Rs.1000/- (One Thousand only) in the form of a demand draft or a banker’s cheque in favour of the “Pay and Accounts Officer, Ministry of Home Affairs”, payable at New Delhi.

In the event of failure to pay the penalty, for whatever reason, necessary action for prosecution of the person shall be initiated.

The Central Bureau of Investigation or the investigating agencies (Crime Branch) of the State Governments, cause of action of which arises in their respective States, are the designated agencies for investigating and prosecuting a person for violation of FCRA.

Disclaimer: The entire contents of this document have been developed on the basis of relevant information and are purely the views of the authors. Though the authors have made utmost efforts to provide authentic information however, the authors expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.

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