Power of Commissioner to Grant Immunity from Penalty [Section 273AA]

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1. When can application be made for grant of immunity? [Section 273AA(1)]:

2. Application can not be made after imposition of penalty after abatement [Section 273AA(2)]:

3. Principal Commissioner or Commissioner may grant immunity subject to certain conditions [Section 273AA(3)]:

4. Time limit for passing order under section 273AA(3) [Section 273AA(3A) inserted by the Finance Act, 2016, w.e.f. 1.6.2016]:

5. Immunity shall stand withdrawn, if there is a failure to satisfy the conditions [Section 273AA(4)]:

6. Immunity to be withdrawn if there is concealment of particulars or any false evidence [Section 273AA(5)]:

(1) When can application be made for grant of immunity? [Section 273AA(1)]:

A person may make an application to the Principal Commissioner or Commissioner for granting immunity from penalty, if—

1. he has made an application for settlement under section 245C and the proceedings for settlement have abated under section 245HA; and

2. the penalty proceedings have been initiated under this Act.

(2) Application can not be made after imposition of penalty after abatement [Section 273AA(2)]:

The application to the Principal Commissioner or Commissioner under section 273AA(1) shall not be made after the imposition of penalty after abatement.

(3) Principal Commissioner or Commissioner may grant immunity subject to certain conditions [Section 273AA(3)]:

The Principal Commissioner or 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 this Act, if he is satisfied that the person has, after the abatement, co-operated with the income-tax authority in the proceedings before him and has made a full and true disclosure of his income and the manner in which such income has been derived.

(4)Time limit for passing order under section 273AA(3) [Section 273AA(3A) inserted by the Finance Act, 2016, w.e.f. 1.6.2016]:

The order under section 273AA(3), either accepting or rejecting the application in full or in part, shall be passed within a period of 12 months from the end of the month in which the application under section 273AA(3) is received by the Principal Commissioner or the Commissioner.

However, no order rejecting the application, either in full or in part, shall be passed unless the assessee has been given an opportunity of being heard:

Further, where any application is pending as on 1.6.2016, the order shall be passed on or before 31.5.2017.

(5) Immunity shall stand withdrawn, if there is a failure to satisfy the conditions [Section 273AA(4)]:

The immunity granted to a person under section 273AA(3) shall stand withdrawn, if such person fails to comply with any condition subject to which the immunity was granted and thereupon the provisions of this Act shall apply as if such immunity had not been granted.

(6) Immunity to be withdrawn if there is concealment of particulars or any false evidence [Section 273AA(5)]:

The immunity granted to a person under section 273AA(3) 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 this Act to which such person would have been liable, had not such immunity been granted.

(7) Power of Principal Commissioner or Commissioner to grant immunity from prosecution [Section 278AB]

Where the proceedings before the Settlement Commission abate as per section 245HA, the Commission of Income has been empowered to grant immunity for prosecution under section 278AB—

• The application for the immunity must be made by the assessee (person whose case has been abated under section 245HA) to the Principal Commissioner or Commissioner of Income-tax before institution of the prosecution proceedings after abatement.
• If prosecution proceedings were instituted before or during the pendency of settlement proceedings, then the assessee can approach the Principal Commissioner or Commissioner for immunity any time. However if the assessee has received any notice etc. from the Income tax authority for institution of prosecution, then he must apply to the Principal Commissioner or Commissioner for immunity, before actual institution of prosecution.
• Immunity can be granted by the Commissioner on his satisfaction.