In the Article on Penalties Under the Income-tax Act, we discussed various
penalties imposable under the Income-tax Act in respect of various defaults.
Apart from enacting penalty provisions, the Income-tax Act also designed
provisions empowering the Principal Commissioner of Income-tax or Commissioner
of Income-tax to grant relief from penalty to taxpayers in genuine cases. Such
power is granted under section 273A and section 273AA. In this part you can
gain knowledge about the provisions of section 273A and section 273AA.
Overview of major penalties under the
Income-tax Act
Before understanding the provisions
of section 273A and 273AA it is better to take an overview of the penal
provisions under the Income-tax Act. Table at below article highlights major
penalties imposable under the Income-tax Act.
Penalties & Prosecutions Under Income tax Act,1961
Power of Principal Commissioner or
Commissioner to reduce or waive penalty under sections 273A(1), 273A(4) and
273AA
♠ Waiver or reduction of
penalty under section 273A(1)
Section 273A(1) empowers the
Principal Commissioner or Commissioner to grant waiver or reduction from
penalty imposed or imposable under section 271(1)(c) (i.e., penalty for
concealment of particulars of income or furnishing inaccurate particulars of
income).
Initiation to be taken by Principal
Commissioner or Commissioner or the taxpayer
The waiver or reduction under section
273A(1) can be granted by the Principal Commissioner or Commissioner either on
his own motion or otherwise, i.e., on an application made by the taxpayer.
Conditions for granting relief
Relief under section 273A( 1) is
granted if following conditions are satisfied :
(1) Prior to the detection by the
Assessing Officer of the concealment of particulars of income or of the
inaccuracy of particulars furnished in respect of such income, the taxpayer
voluntarily and in good faith, makes a full and true disclosure of such
For the purpose of section 273A(1), a
person shall be deemed to have made full and true disclosure of his income or
of the particulars relating thereto in any case where the excess of income
assessed over the income returned is of such a nature as not to attract penalty
under section 271(1)(c).
(2) The taxpayer should have
co-operated in any enquiry relating to the assessment.
(3) The taxpayer either should have
paid or made satisfactory arrangements for paying any tax or interest payable
in consequence of an order passed under the Act in respect of the relevant year.
Previous approval of Principal Chief
Commissioner or Chief Commissioner or Principal Director General or Director
General
If the amount of income in respect of
which the penalty is imposed or imposable for the relevant year or, where such
disclosure relates to more than one year, the aggregate amount of such income
for those years exceeds a sum of Rs. 5,00,000, no order reducing or waiving the
penalty under section 273A(1) shall be made by the Commissioner, except with
the previous approval of the Principal Chief Commissioner or Chief Commissioner
or Principal Director General or Director General, as the case may be.
Finality of the order
Every order made under section 273A
shall be final and shall not be called into question by any Court or any other
authority.
No relief if waiver claimed earlier
As per section 273A(3), where an
order has been made under section 273A(1) in favour of any person, whether such
order relates to one or more years, he shall not be entitled to any relief
under section 273A in relation to any other year at any time after the making
of such order.
Thus, if a person has claimed relief
under section 237A(1) at any time, then he cannot claim relief under section
273A [i.e., 273A(1) as well as section 273A(4)] thereafter.
♣ Waiver or reduction of
penalty under section 273A(4)
Section 273A(4) empowers the
Principal Commissioner or Commissioner to waive or reduce any penalty imposable
under the Income-tax Act as well as to stay or compound any proceeding for the
recovery of penalty.
Initiation to be taken by the
taxpayer
For obtaining waiver or reduction or
stay or compound any proceeding for the recovery of penalty, the taxpayer has
to make an application to the Commissioner.
Conditions for granting relief
Relief under section 273A(4) is granted
if following conditions are satisfied :
1.
Levy
of penalty will cause genuine hardship on the taxpayer.
2.
The
taxpayer has co-operated in any inquiry relating to the assessment or any
proceeding for the recovery of any amount due from him.
Previous approval of Chief
Commissioner or Director General
If the amount of any penalty or,
where such application relates to more than one penalty, the aggregate amount
of such penalties exceeds Rs. 1,00,000, no order of reducing or waiving the
amount or compounding any proceeding for its recovery under section 273A(4)
shall be made by the Principal Commissioner of Commissioner, except with the
previous approval of the Principal Chief Commissioner or Chief Commissioner or
Principal Director General or Director General, as the case may be.
Finality of the order
Every order made under section 273A
shall be final and shall not be called into question by any Court or any other
authority.
No relief if waiver claimed earlier
Section 273A(1) empowers the Commissioner
to grant waiver or reduction from penalty levied under section 271(1)(c) (i.e.,
penalty for concealment of particulars of income or furnishing inaccurate
particulars of income).
As per section 273A(3), where an
order has been made under section 273A(1) in favour of any person, whether such
order relates to one or more years, he shall not be entitled to any relief
under section 273A in relation to any other year at any time after the making
of such order.
Thus, if a person has claimed relief
under section 273A(1) at any time, then he cannot claim relief under section
273A [i.e., section 273A(1) as well as section 273A(4)] thereafter.
Waiver of penalty under section 273AA
Section 273AA empowers the Principal
Commissioner or Commissioner to grant immunity from imposition of any penalty
under the Income-tax Act in a case where the taxpayer has made an application
for settlement under section 245C and the proceedings for settlement have been
abated under section 245HA and penalty proceedings are initiated under the
Income-tax Act.
Initiation to be taken by the
taxpayer
For obtaining waiver, the taxpayer
has to make an application to the Commissioner.
Other provisions applicable to the
case of waiver under section 273AA
- The application to the Commissioner for waiver shall not be made after the imposition of penalty after abatement.
- The Commissioner may, subject to such conditions as he may think fit to impose, grant to the person immunity from the imposition of any penalty under the Income-tax Act.
- Before granting the waiver, the Commissioner should be satisfied that the taxpayer has, after the abatement, co-operated with the Income-tax authority in the proceedings before him and made a full and true disclosure of his income and the manner in which such income has been derived.
- The immunity granted under section 273AA shall stand withdrawn, if such person fails to comply with any condition subject to which the immunity was granted and after the withdrawal of the immunity, the provisions of the Act shall apply as if such immunity had not been granted.
- The immunity granted under section 273AA may, at any time, be withdrawn by the Principal Commissioner or Commissioner, if he is satisfied that such person had, in the course of any proceedings, after abatement, concealed any particulars material to the assessment from the income-tax authority or had given false evidence, and thereupon such person shall become liable to the imposition of any penalty under the Act to which such person would have been liable, had not such immunity been granted.
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