Scared Of Tax Penalties And Imprisonment On Black Money? This May Help You Get Immunity

If you deposit large amount of cash in your bank account then the tax department is likely to send you a notice asking you to explain the source from where you have got this amount. If you are unable to produce appreciate proof and satisfy the assessing officer (A.O) about the authority of your cash then you are likely to face penalties and execution as per the Income Tax Act. Therefore, there is some hope. Here are the immunities available from the penalties and execution as per the provisions under the income tax act and how you can try to get them.

It has been recognized in the past that if a person fully co-operates with the Income Tax department in the disclosure of the previously hidden income and administers all the information and confirmation required then the Assessing Officer (A.O) normally grants the immunity as permitted under the Income Tax Act. Therefore, the final decision on whether to grant the immunity or not rests with the concerned tax authority where you have urged for the same.

1.Section 270AA - Immunity from penalty under section 270A, execution under section 276C and 276CC 

In order to get immunity from the harsh penalty under the section 270A and from execution proceedings under the section 276C and 276CC, you will have to agree with the income as determined by the A.O under the section 143(3) or 147, as the case may be. You will have to agree to the amount determined as your income by the A.O and pay the tax and interest on it within the time period stated in the notice of demand received under the section 156. Further, you will not challenge the assessment order by filing any plead against it. Finally file an application to the A.O to explore immunity from penalty and execution. 

The A.O will pass an order after accepting the application only if you have complied with all the conditions mentioned above. The order will be passed within 1 month from the end of the month in which he receives the application exploring immunity and you will be immune from the penalty and execution proceedings. 

The A.O will deny the immunity if any of the above mentioned conditions are not complied or where the penalty initiated under the section 270A is collected @ 200% i.e. a case of distorting of income.

2. Section 273A - Waiver from any penalty 

Even if the section 270AA does not explore the immunity from penalty of 200% collected under the section 270A, but still the Commissioner of Income tax (CIT) has the power to diminish or waive the whole penalty of 200% if you voluntarily disclose the particulars of your unaccounted income and pay the taxes and interest payable on such income before the A.O exposes such income. A full and true disclosure by you is required along with the cooperation in any enquiry made by the A.O relating to your assessment. This waiver can be attained only once in a lifetime and it is the best time to make use of this opportunity. To get this immunity you have to file an application to the CIT pursuing waiver under the section 273A. Further, the CIT has power to diminish or waive any other penalty collected on you if he is satisfied that not giving a waiver would cause genuine hardship to you based on your circumstances and cooperation level in all the enquiries made from you for improvement of the amount due from you.
CIT is the only one who has the final authority to granting immunity.

3. Section 245C to Section 245L - Apply to Income Tax Settlement Commission (ITSC) 

The Settlement commission is the only substitute available to you. You can apply to the ITSC for settlement of your case after disclosing your true and fair income in the application and after depositing the tax and interest thereon. The application must be conducted with a fee of Rs 500 and the application will be acknowledged by the ITSC only if your tax payable on the disclosed income crosses Rs 10 lakhs. 

The ITSC has the power to grant the immunity from all the penalty and execution proceedings proposed against you. Therefore, in case the ITSC judges your declaration of the income to be not completely true and fair and however enforces penalty on you on the grounds of concealment of income, then you cannot go to the ITSC for any kind of settlement. 

4. Section 273AA- Immunity from all penalties 

If you have applied to the ITSC for settlement of your case and the ITSC has rejected your application or settlement proceedings are abated i.e. nullified and the penalty proceedings under the Income Tax Act have been started, then you can make an application to the CIT pursuing for immunity from the penalty before any order for imposing penalty is issued.

If the CIT feels that you have co-operated with the income-tax authority in the proceedings and have made a full and true disclosure of your income and its source, then he may grant you immunity from the penalty. 

The immunity granted by the CIT would be withdrawn if it is found that you have not complied with any of the conditions which were a mandatory for granting immunity to you, or where it is found that you have taken the immunity by suppressing some material facts and administering false information.

5. Section 273B- Penalties not to be imposed if reasonable cause of failure 

You may be able to avoid all the numerous penalties which may be enforced on you under the income tax act, except under the section 270A, if you are able to prove that the failure, for instance, not filing the Income Tax Return, not getting tax audit done, not deducting TDS etc. under the respective sections of the act was due to a sensible cause. 

Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.

With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.