Monday, March 18, 2024

Immunity from Penalty and Proceedings under Sections 276C or 276CC of the Income Tax Act

The Income Tax Act of India, equipped with a variety of provisions for penalties and prosecutions, also provides pathways for taxpayers to seek immunity from such penalties and legal proceedings under certain conditions. Sections 270AA and 273AA specifically address these provisions, offering taxpayers relief under well-defined circumstances. This article delves into the conditions, application process, and implications of seeking immunity under these sections, presenting an overview table for quick reference before concluding with key insights.

Overview of Immunity Provisions

  • Section 270AA offers immunity from penalties under section 270A and from prosecution under sections 276C or 276CC, focusing on under-reporting and misreporting of income.
  • Section 273AA provides a pathway for immunity from penalties, especially in cases where settlement proceedings have abated, and penalties have been initiated.

Conditions for Immunity under Section 270AA

  1. Payment Compliance: The taxpayer must have paid the tax and interest as per the order of assessment or reassessment under section 143(3) or section 147 within the specified period.
  2. No Appeals: The taxpayer has not filed an appeal against the order of assessment or reassessment.
  3. Timely Application: An application for immunity must be submitted within one month from the end of the month in which the assessment order was received, using Form No. 68.
  4. Exclusion for Misreporting: Immunity is not granted in cases of misreporting of income.

Application and Decision Process

  • The Assessing Officer decides on the immunity application within one month of its receipt, ensuring the taxpayer is heard before any rejection.
  • Orders under section 270AA(4) are final, and no appeal or revision is allowed against assessment orders if immunity is granted.

Conditions for Immunity under Section 273AA

  • Settlement Abatement: Applicable when an application for settlement under section 245C has abated.
  • Penalty Proceedings Initiated: After the abatement of settlement proceedings, penalty proceedings must have been initiated.
  • Full Disclosure and Cooperation: The taxpayer must have cooperated with the income-tax authority and fully disclosed their income post-abatement.
  • Timely Decision: The order for immunity must be passed within 12 months of receiving the application, with a specific opportunity for hearing provided to the taxpayer.

Withdrawal of Immunity

  • Immunity under section 273AA can be withdrawn if the taxpayer fails to comply with the conditions or if there's evidence of concealment or false evidence provided during the proceedings.

Overview Table

SectionEligibility ConditionsApplication DeadlineDecision TimelineExclusions
270AATax and interest paid, No appeals filed1 month from order receipt1 month from application receiptMisreporting of income
273AASettlement abated, Penalty proceedings initiatedNot specified12 months from application receiptApplication post-penalty imposition


The provisions for immunity from penalties and proceedings under sections 270AA and 273AA of the Income Tax Act offer a significant relief mechanism for taxpayers who meet specific criteria, including timely payment of assessed tax and interest, non-filing of appeals against assessment orders, and full cooperation with tax authorities in the aftermath of settlement abatement. However, the strict conditions and tight deadlines underscore the importance of diligence and transparency in dealings with tax authorities. Taxpayers seeking to avail of these immunities should meticulously adhere to the outlined conditions and timelines, ensuring they fully understand the implications and processes involved in securing immunity from penalties and legal proceedings under the Income Tax Act.