Income Tax Appeals & Revision across different Appellate Levels

Income Tax Department
Ministry of Finance, Government of India

Appeals & Revision

Introduction

The Income-tax Act provides a structured mechanism for appeals and revision to address grievances arising from orders passed by tax authorities. These provisions are detailed in Chapter XX of the Act and are categorized across different appellate levels and revisionary powers.

Manner of Filing Appeal to JCIT (A)

Manner of Filing Appeal to JCIT (A)

• Form and Mode of Filing
  • • The appeal shall be filed in Form 35.
    • Appeals are to be filed through the e-filing portal in accordance with the e-Appeal Scheme, 2023, which came into effect on 29-05-2023 and mandates faceless disposal.
    • If the return was e-filed using a digital signature, the appeal must be verified using a digital signature.
    • If the return was e-filed using Electronic Verification Code (EVC), Form 35 must be verified using EVC.
    • If the return was filed in paper form, Form 35 may be filed either electronically or in paper format.
• Preconditions for Admission of Appeal-The JCIT(A) shall not admit an appeal if:
  • • The return has been filed but the tax due on the returned income has not been paid.
    • The return has not been filed, and the amount equivalent to the advance tax liability has not been paid, unless the JCIT(A) admits the appeal for recorded reasons.

However, the Assessing Officer may, under Section 220(6), treat the assessee as not being in default in respect of the disputed demand during the pendency of the appeal.

• Verification and Supporting Documents
  • • Form 35 must be verified by a person authorised to verify the return.
    • The appeal should be submitted in duplicate with:

➢ Memorandum of appeal,

➢ Statement of facts,

➢ Grounds of appeal,

➢ Copy of the order appealed against,

➢ Original notice of demand (if any).

• Filing Fee– The appeal must be accompanied by proof of fee payment as follows:

Assessed Total Income	Fees
Rs. 1,00,000 or less	Rs. 250
More than Rs. 1,00,000 but up to Rs. 2,00,000	Rs. 500
More than Rs. 2,00,000	Rs. 1,000
Other matters	Rs. 250

• Time Limit for Filing Appeal
  • • Assessment or Penalty Orders: Within 30 days from the date of service of the notice of demand.
    • Other Cases: Within 30 days from the date of service of the order.
    • Exclusions from the 30-day Time Limit

➢ The date of service is excluded as per Section 268.

➢ If the order copy was not provided with the notice, the time taken to obtain it is excluded.

➢ Where an assessee has applied for immunity from penalty under Section 270A, the period from the date of application to the date of service of the rejection order shall be excluded.

• Condonation of Delay– The JCIT(A) may condone delay in filing the appeal beyond 30 days, if he is satisfied that there was sufficient cause. A request for condonation, citing reasons and supporting documents, must be submitted along with Form 35.

e-Appeals Scheme, 2023 – Appeals before JCIT (A)

e-Appeals Scheme, 2023 – Appeals before JCIT (A)

• Scope and Applicability – This scheme applies to appeals covered under Section 246.CBDT may exclude certain classes of cases from this scheme.
• Authorities under the Scheme – JCIT(A) is the appellate authority. Assisted by income-tax officers, staff, executives, or consultants as designated by the Board.
• Procedural Framework
  • • Assignment of Appeals – Appeals are randomly allocated by the Principal DGIT (Systems) or DGIT (Systems) with CBDT approval.
    • Condonation of Delay – JCIT(A) may condone delay in appeal filing after the expiry of the time limit under Section 249, with reasons recorded.
    • Notice for Submission – JCIT(A) issues a notice to the appellant to file submissions by a specified date, with a copy to the Assessing Officer (AO).
    • Further Enquiries and Reports – JCIT(A), upon admitting the appeal, may:

➢ Call for additional information, document or evidence from the appellant or any other person;

➢ Seek AO’s report on the grounds of appeal or submissions;

➢ Request AO to conduct further inquiry under Section 250(4) and submit a report.

o Additional Grounds of Appeal

➢ May be admitted where the order appealed is under Section 143(1), Section 200A, or passed by CPC.

➢ In other cases, comments of AO are sought before admission.

➢ Grounds are admitted if the omission was not willful or was due to sufficient cause.

➢ JCIT(A) must record reasons for admitting or rejecting such grounds.

• • • Additional Evidence

➢ JCIT(A) may admit additional evidence where the order appealed is under Section 143(1), Section 200A, or issued by CPC.

➢ Elsewhere, AO’s report on admissibility is required.

➢ Admission or rejection must be reasoned and recorded.

➢ If admitted, the AO is allowed to examine the evidence/witnesses or produce rebuttal evidence or witnesses and furnish a report.

• • • Production of Documents or Witnesses – AO may request JCIT(A) to direct the appellant to produce specific evidence or examine witnesses.
    • Enhancement of Assessment or Penalty – If intending to enhance the assessment, penalty, or reduce the refund:

➢ JCIT(A) shall issue a show-cause notice with reasons.

➢ Appellant must respond within the prescribed time.

• • • Final Order – This shall be in writing, stating points for determination, decision, and reasoning. A digitally signed order is sent to Appellant, PCCIT/CCIT/PCIT/CIT, AO, and a penalty initiation notice is issued where applicable.
• Penalty and Rectification Proceedings
  • • Penalty Proceedings

➢ Initiated for non-compliance with any notice or direction;

➢ A show-cause notice is issued;

➢ Based on the reply and material, JCIT(A) may pass a digitally signed penalty order or drop the proceedings with reasons.

• • • Rectification of Mistake

➢ On application by appellant, any other person, AO, JCIT(A) may rectify mistakes apparent from the record;

➢ Opportunity is granted to the affected party before rectification;

➢ Order is passed digitally and sent to the relevant parties.

• Personal Hearing and Communication Protocol
  • Personal Appearance – Not required in faceless proceedings. However, the appellant may request a personal hearing, which shall be:

➢ Allowed by JCIT(A);

➢ Conducted via video conferencing or telephony;

➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.

• • Mode of Communication—All communications between JCIT(A) and the appellant/authorised representative shall be exchanged by electronic mode wherever feasible, and internal communications with AO, PCCIT/CCIT/PCIT/CIT, shall be exchanged exclusively through electronic mode. Electronic records are authenticated by JCIT(A) through digital signature or by others through digital signature, EVC, or login via registered account.

All communication is authenticated through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The appellant’s response is deemed authenticated once acknowledged via the registered account.

• Transfer of Appeal and Remand Cases
  • Transfer of Case – Appeal may be transferred to another JCIT(A) under Section 120 at any stage of proceedings.
  • Remand Cases – If an order of JCIT(A) is set aside and remanded by the ITAT or Court, it is reassigned under this Scheme for further action.
• Administrative Framework
• Functions of the PCCIT (NFAC) – The PCCIT (NFAC), with Board approval, shall perform the following functions:

➢ Allocation/transfer of cases;

➢ Coordination with PDGIT/DGIT(Systems) for appeal allocation processes;

➢ Approval of notice and letter formats;

➢ Issuance of SOPs, including for Video Conferencing; and

➢ Other procedural roles assigned by the Board.

• Power to specify format, mode, procedure, and processes – The PDGIT/DGIT (Systems), in consultation with the PCCIT (NFAC), with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of JCIT(A) in an automated environment, including:
  • • Service of notices, orders, or other communications;
    • Receipt of information or documents in response;
    • Issuance of acknowledgements for responses received;
    • Provision of e-appeal facilities (login, status tracking, downloads);
    • Access, verification, and authentication of submissions during appeal proceedings;
    • Centralised receipt, storage, and retrieval of information or documents; and
    • Other functions assigned by the Board.

Appeal before the Commissioner (Appeals)

Appeal before the Commissioner (Appeals)

• Appealable Orders before CIT(A) – The following orders are specifically appealable before CIT(A):
  • Intimations under Section 143(1) where adjustments are objected to;
  • Assessment orders under Sections 143(3), 144, 147, 150, 153A, or 158BC;

Note: Appeals cannot be filed against orders passed in pursuance of DRP directions or under GAAR.

• • • Orders under Section 92CD;
    • Order for TDS/TCS matters, including intimations under Sections 200A, 206CB, 206C(6A), and orders under Section 201;
    • Penalty orders under Chapter XXI, Section 158BFA(2) and Section 221;
    • Rectification orders under Sections 154 or 155 that enhance liability or reduce refund.
    • Other orders under Sections 239A, 163, 170(2)/(3), 171, 115VP, or 237;
    • Order passed where the assessee has denied liability to be assessed under the Income-tax Act;
    • Where the application to the DRC has not been allowed to proceed; or
    • Order passed by an AO, other than a Deputy Commissioner, in cases directed by the Board considering the nature, complexity, or other relevant aspects.
• Transfer of Pending Appeals – Pending appeals may be transferred:
  • From CIT(A) to JCIT(A), where filed against orders appealable to JCIT(A) and pending as on 01.04.2023.
  • From JCIT(A) to CIT(A), if deemed appropriate by the Board or authorised income-tax authority.

In both cases, the appellant shall be given an opportunity of being reheard. The authority receiving the appeal may proceed from the stage it was before the transfer.

• Appeal Filing Process – Appeals must be filed electronically in Form 35 within 30 days from the date of service of the order or demand notice. The filing and disposal of appeals shall be governed by the Faceless Appeal Scheme, 2021, notified with effect from 28.12.2021. Appeals are disposed of electronically, without interface, except for serious fraud, major tax evasion, sensitive & search-related cases, and Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or international tax cases.
• Procedure before CIT(A)
  • Notices are issued to fix a hearing date and place.
  • CIT(A) may adjourn hearings and conduct or direct enquiries.
  • Additional grounds may be admitted if the omission was not willful or unreasonable.
  • Orders must be in writing, stating points of determination, decisions, and reasons.
  • Appeals should, if possible, be disposed of within 1 year from the end of the financial year in which the appeal was filed, and an order should be issued within 15 days of the last hearing.
• Priority Disposal of Appeal – The CBDT has issued guidelines [Office Letter F.No. 279/Misc./M-102/2021-ITJ, dated 07.03.2024] for priority/out-of-turn disposal of pending appeals at the level of CIT(A) in genuine and exceptional circumstances, which are given below:
  • cases having demand exceeding Rs. 1 crore;
  • cases where VIP/PMO references were received;
  • cases with Court directions;
  • cases where senior citizens/super senior citizens request;
  • Other cases of genuine hardship.

Final approval for such disposal lies with Principal CCITs, CCITs, or DGITs based on recommendations of the jurisdictional Principal CIT or Principal CIT(Central) or CIT(IT).

• Communication of Order and Stay of Demand– CIT(A) shall communicate the order to both the assessee and the CCIT or CIT.
• Stay of Demand– the assessing officer can grant stay of demand till the disposal of appeal by CIT(A) if the assessee makes payment of 20% of the disputed demand [Office Memorandum No. 404/72/93-ITCC dated 29.02.2016].
• Right to be Heard and Filing of Additional Evidence– The assessee and AO have the right to be heard personally or through authorised representatives. Further, filing new evidence before CIT(A) is restricted unless specific exceptions are satisfied.

The CIT(A) must record written reasons for admitting any additional evidence. Before doing so, the CIT(A) shall provide the Assessing Officer an opportunity to examine or cross-examine the evidence or witness produced by the assessee or produce evidence or a witness in response.

• • Power of CIT(A) – The Commissioner (Appeals) is vested with the following powers while disposing of an appeal. However, before enhancing an assessment or penalty or reducing a refund, a show-cause opportunity must be provided to the assessee:
  • Relating to Assessment Order – CIT(A) may confirm, reduce, enhance, or annul the assessment. He cannot set aside the assessment or refer the case back to the Assessing Officer for fresh assessment except where an appeal is filed against an assessment order made under Section 144.
  • Relating to Penalty Order – CIT(A) may confirm, cancel, increase, or reduce the penalty imposed.
  • Relating to Other Matters – In any other appealable matter, CIT(A) may pass such order as deemed fit.
  • Power to Levy Penalty – CIT(A) may impose penalty under the following provisions:

➢ Section 270A (under-reporting/misreporting of income)

➢ Section 271A (failure to maintain or retain books of account)

➢ Section 271AA (failure to maintain documentation for international transactions)

➢ Section 271AAB (undisclosed income detected during search)

➢ Section 271AAC (tax on undisclosed income)

➢ Section 271AAD (false or omitted entries)

➢ Section 271G (failure to furnish documents for international transactions)

➢ Section 271J (incorrect information in reports or certificates)

➢ Section 272A (failure to cooperate with tax authorities or file TDS/TCS statements)

• • Power to Consider Additional Matters – CIT(A) may decide on any issue arising from the original proceedings, even if not raised by the appellant.
  • Power to Admit Additional Evidence – CIT(A) may admit additional evidence under permitted circumstances. This does not restrict his powers to:

➢ Direct the production of documents or examination of witnesses; or

➢ Enhance, confirm, reduce, or annul the assessment or penalty order, either suo motu or at the Assessing Officer’s request.

• Faceless Appeal Scheme, 2021 [Notification No. 139/2021, dated 28-12-2021] – The Central Government is empowered to introduce a scheme for electronic filing and disposal of appeals by CIT(A) to enhance efficiency, transparency, and accountability by:
  • Minimising physical interface during appellate proceedings;
  • Optimising resource utilisation through scale and specialisation; and
  • Implementing dynamic jurisdiction for appeal disposal.

In exercise of its powers, the CBDT initially notified the Faceless Appeal Scheme, 2020 for the electronic disposal of appeals by CIT(A). This scheme was later superseded by the Faceless Appeal Scheme, 2021, effective from 28-12-2021.

Manner of Filing Appeal to CIT(A)

Manner of Filing Appeal to CIT(A)

• Form and Mode of Filing
  • The appeal shall be filed in Form 35.
  • Appeals are to be filed through the e-filing portal in accordance with the Faceless Appeal Scheme, 2021, which came into effect on 28-12-2021 and mandates faceless disposal.
  • If the return was e-filed using a digital signature, the appeal must be verified using a digital signature.
  • If the return was e-filed using Electronic Verification Code (EVC), Form 35 must be verified using EVC.
  • If the return was filed in paper form, Form 35 may be filed either electronically or in paper format.
• Preconditions for Admission of Appeal-The CIT(A) shall not admit an appeal if:
  • The return has been filed but the tax due on the returned income has not been paid.
  • The return has not been filed, and the amount equivalent to the advance tax liability has not been paid, unless the CIT(A) admits the appeal for recorded reasons.

However, the Assessing Officer may, under Section 220(6), treat the assessee as not being in default in respect of the disputed demand during the pendency of the appeal.

• Verification and Supporting Documents
  • Form 35 must be verified by a person authorised to verify the return.
  • The appeal should be submitted in duplicate with:

➢ Memorandum of appeal,

➢ Statement of facts,

➢ Grounds of appeal,

➢ Copy of the order appealed against,

➢ Original notice of demand (if any).

• Filing Fee– The appeal must be accompanied by proof of fee payment as follows:

Assessed Total Income	Fees
Rs. 1,00,000 or less	Rs. 250
More than Rs. 1,00,000 but up to Rs. 2,00,000	Rs. 500
More than Rs. 2,00,000	Rs. 1,000
Other matters	Rs. 250

• Time Limit for Filing Appeal
  • Assessment or Penalty Orders: Within 30 days from the date of service of the notice of demand.
  • Other Cases: Within 30 days from the date of service of the order.
  • Exclusions from the 30-day Time Limit

➢ The date of service is excluded as per Section 268.

➢ If the order copy was not provided with the notice, the time taken to obtain it is excluded.

➢ Where an assessee has applied for immunity from penalty under Section 270A or prosecution under Section 276C/276CC, the period from the date of application to the date of service of the rejection order shall be excluded.

• Condonation of Delay– The CIT(A) may condone delay in filing the appeal beyond 30 days, if he is satisfied that there was sufficient cause. A request for condonation, citing reasons and supporting documents, must be submitted along with Form 35.

Faceless Appeal Scheme, 2021 – Appeals before CIT (A)

Faceless Appeal Scheme, 2021 – Appeals before CIT (A)

• Scope and Applicability – Under this Scheme, appeals are disposed of for specified territorial areas, persons, classes of persons, incomes, or cases. As clarified by CBDT Circular F. No. 279/MISC./M-44/2018-ITJ, dated 23-03-2021, all income-tax appeals shall be finalised in a faceless manner, except for those involving:

(a) Serious frauds;
(b) Major tax evasion;
(c) Sensitive and search-related matters;
(d) International Tax and cases under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

• Faceless Appeal Centres – The CBDT may establish the following for implementing this scheme:
  • National Faceless Appeal Centre (NFAC) – Facilitates centralised conduct of e-appeal proceedings. All communication between the Commissioner (Appeals), appellant, Assessing Officer, or any other party shall be routed through NFAC.
  • Appeal Units – Responsible for disposing of faceless appeals and undertaking the following functions:

➢ Admission of additional grounds;

➢ Conduct of further inquiries;

➢ Directing further inquiry or information collection on admitted grounds via NFAC or AO;

➢ Providing the appellant with an opportunity of being heard;

➢ Analyzing submitted materials; and

➢ Performing any other function required under the Scheme.

• Authorities in the Appeal Units – Each Appeal Unit shall consist of:

➢ One Commissioner (Appeals); and

➢ Income-tax authorities, ministerial staff, executives, or consultants as deemed necessary by the Board.

• Procedural Framework
  • Assignment of Appeals – The NFAC shall assign each appeal to a Commissioner (Appeals) within a specific Appeal Unit through an automated allocation system.
  • Condonation of Delay – CIT(A) may condone delay in appeal filing after the expiry of the time limit under Section 249, with reasons recorded.
  • Notice for Submission – CIT(A) through NFAC issues a notice to the appellant to file submissions by a specified date, with a copy to the Assessing Officer (AO).
  • Further Enquiries and Reports – CIT(A) through NFAC, upon admitting the appeal, may:

➢ Call for additional information from the appellant or any other person;

➢ Seek AO’s report on the grounds of appeal or submissions;

➢ Request AO to conduct further inquiry under Section 250(4) and submit a report.

• • Issuance of Notice and its response – The Commissioner (Appeals) may issue a notice through NFAC to the appellant, Assessing Officer, or any other person, seeking relevant information or documents. The response or report must be filed within the specified or extended time.
  • Additional Grounds of Appeal – The appellant may file additional grounds of appeal through NFAC, stating reasons for omission in the original appeal.

➢ NFAC forwards the additional grounds to the AO for comments.

➢ The AO must respond within the specified or extended time.

➢ Comments are shared with the Commissioner (Appeals); if no comments are received, this is also informed.

➢ The Commissioner (Appeals) may admit the additional ground if satisfied that the omission was neither willful nor unreasonable.

➢ Rejection must be supported with written reasons in the appeal order.

• • Additional Evidence – The appellant may submit additional evidence through NFAC, along with justification under Rule 46A(1). If submitted:

➢ NFAC forwards the evidence to the Assessing Officer for a report on admissibility.

➢ The AO submits the report within the specified or extended time.

➢ NFAC sends the report to the Commissioner (Appeals).

➢ Commissioner (Appeals) may admit or reject the evidence, recording reasons in the appeal order.

➢ If additional evidence is admitted, the Commissioner (Appeals) issues a notice through NFAC to allow the AO to examine or cross-examine the evidence/witness produced by the appellant, or submit rebuttal evidence or witness. AO must respond within the specified or extended time. NFAC forwards the report to the Commissioner (Appeals) or informs of non-submission of report.

• • Production of Documents or Witnesses – AO may request CIT(A) through NFAC to direct the appellant to produce specific evidence or examine witnesses.

➢ The Commissioner (Appeals) prepares a notice and sends it to NFAC.

➢ NFAC serves the notice to the appellant or witness.

➢ The response must be submitted within the specified or extended time.

➢ NFAC forwards the response to the Commissioner (Appeals) or informs of non-compliance.

• • Enhancement of Assessment or Penalty – If intending to enhance the assessment, penalty, or reduce the refund:

➢ CIT(A) shall issue a show-cause notice with reasons through NFAC.

➢ Appellant must respond within the prescribed time, and NFAC shall forward the same to CIT(A).

• • Final Order—This shall be in writing, stating points for determination, decision, and reasoning. A digitally signed order is sent to NFAC, along with a penalty initiation notice, if applicable. NFAC shall communicate such an order to the appellant, PCCIT/CCIT/PCIT/CIT, and AO for required action.

If penalty initiation is recommended in the order, the NFAC shall serve a notice on the appellant to show cause why penalty should not be imposed.

• Penalty and Rectification Proceedings
  • Penalty Proceedings

➢ Initiated for non-compliance with any notice or direction;

➢ A show-cause notice is issued;

➢ Based on the reply and material, CIT(A) may pass a digitally signed penalty order or drop the proceedings with reasons.

➢ NFAC shall communicate the order for imposing or dropping the penalty to the appellant, or any other person, and the AO for required action.

• • Rectification of Mistake

➢ CIT(A) may rectify mistakes apparent from the record on application by the appellant or any other person, the Commissioner (Appeals), who has passed the appeal order, or the AO;

➢ Opportunity is granted to the affected party before rectification;

➢ Order is passed digitally and sent to the relevant parties through NFAC.

• Personal Hearing and Communication Protocol
  • Personal Appearance – Not required in faceless proceedings. However, the appellant may request a personal hearing through NFAC, which shall be:

➢ Allowed by CIT(A);

➢ Conducted via video conferencing or telephony;

➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.

• • Mode of Communication—All communication between the NFAC, the National Faceless Assessment Centre, the AO, and the Appeal Unit is by electronic mode. Electronic records are authenticated by CIT(A) through digital signature or by others through digital signature, EVC, or login via registered account.

All communication is authenticated through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The appellant’s response is deemed authenticated once acknowledged via the registered account.

• Transfer of Appeal and Remand Cases
  • Transfer of Case – Appeal may be transferred to another CIT(A) under Section 120 at any stage of proceedings.
  • Remand Cases—If an order of CIT(A) is set aside and remanded by the ITAT, High Court, or Supreme Court, NFAC reassigns it under this Scheme for further action.
• Power to specify format, mode, procedure, and processes – The PCCIT (NFAC) or the PDGIT(NFAC), with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of NFAC and the Appeal Unit in an automated environment, including:
  • Service of notices, orders, or other communications;
  • Receipt of information or documents in response;
  • Issuance of acknowledgements for responses received;
  • Provision of e-appeal facilities (login, status tracking, display, downloads);
  • Access, verification, and authentication of submissions during appeal proceedings;
  • Centralised receipt, storage, and retrieval of information or documents;
  • General administration and grievance redressal mechanism in the respective Centres and units; and
  • Filing of additional grounds of appeal or additional evidence.

Appeal before Income Tax Appellate Tribunal (ITAT)

Appeal before Income Tax Appellate Tribunal (ITAT)

The Income Tax Appellate Tribunal (ITAT) is the second appellate authority under the Income Tax Act. Appeals against orders passed by the Joint Commissioner (Appeals) or Commissioner (Appeals) lie before the ITAT. Its decision is final on questions of fact, but an appeal may be made to the High Court on questions of law.

• Appealable Orders before ITAT – Appeals can be filed by both the assessee and the Commissioner/Principal Commissioner. The Commissioner may, if he objects to any order passed by the JCIT(A) or CIT(A) under Sections 250or 154, direct the Assessing Officer to file an appeal only where the tax effect exceeds the prescribed monetary limits. An assessee aggrieved by the following orders may appeal to the Appellate Tribunal.
  • Orders of the Joint Commissioner (Appeals):

➢ Orders under Section 250 or rectification under Section 154;

➢ Penalty orders under Sections 270A, 271A, 271AAC, 271AAD, 271J.

• • Orders of the Commissioner (Appeals):

➢ Orders under Section 250 or rectification under Section 154;

➢ Penalty orders under Sections 158BFA, 270A, 271A, 271AAB, 271AAC, 271AAD, 271J, 272A.

• • Orders of Tax Authorities:

➢ AO’s order under Section 115VZC(1);

➢ PCIT/CIT orders under Sections 12AA, 12AB, 80G(5)(vi), 263, 270A, 272A or 154 (amending any such order);

➢ PCCIT/CCIT/PDGIT/DGIT/PDIT/DIT orders under Sections 263, 272A or 154 (amending any such order);

➢ Orders under Section 10(23C)(iv) to (via).

• • Assessment orders based on directions of DRP under Sections 143(3), 147, 153A, 153C, and related rectifications under Sections 154.
  • Assessment orders invoking GAAR under Sections 143(3), 147, 153A, 153C, with approval under Section 144BA(12), and related rectifications under Sections 154/155.
• Appeal Filing Process—An appeal to ITAT must be filed in Form 36 within 2 months from the end of the month in which the order is communicated. A memorandum of cross-objections in Form 36A can be filed within 30 days of receiving notice of the appeal.
• Constitution of Benches – The Power and Functions of the ITAT may be exercised and discharged by Benches constituted by the President of the Tribunal.
  • Its President constitutes benches of ITAT and generally comprises one Judicial Member and one Accountant Member.
  • Cases involving total income not exceeding Rs. 50 lakh may be disposed of by a single member authorized by the Central Government.
  • The President may also constitute Special Benches of three or more members for complex cases.
  • If the Bench members differ on any point, the matter is decided by majority opinion. However, if the member’s decision is equally divided, the President refers the matter to one or more additional members, and the decision is made by the majority, including the original and additional members.
• Stay of Proceedings – On application, the Tribunal may grant a stay on recovery proceedings for a specified period. The appeal must be disposed of within that stay period.
• Grounds of Appeal – The appellant may not urge grounds not outlined in the memorandum unless permitted by the Tribunal. The Tribunal is not restricted to stated grounds, but must give affected parties an opportunity to be heard on any new grounds considered.
• Time limit for Disposal of Appeal – The Tribunal may dispose of the appeal within 4 years from the end of the financial year in which the appeal was filed.
• Order of the ITAT– ITAT may pass any appropriate order after granting an opportunity of hearing to both parties. The cost of appeal is at the discretion of the Tribunal. The order is communicated to both the assessee and the PCIT/CIT.
• Rectification of Mistake– Rectification application can be made within 6 months from the end of the month in which the order was passed.
  • Mistakes must be apparent from the record, not involving long-drawn arguments or debatable points of law.
  • Rectification is allowed only after giving the assessee an opportunity to be heard.
  • Where the assessee applies for rectification, such application shall be accompanied by a fee of Rs. 50.
• Filing of Additional Evidence– Additional evidence is not generally allowed. However, the Tribunal may allow it if it is required to enable the order to pass, or the Income-tax Authorities did not provide a fair opportunity to the assessee to adduce evidence.
• Faceless Disposal of Appeals by ITAT– The Central Government is empowered to notify a scheme for faceless ITAT proceedings to improve transparency and efficiency.
• Powers of ITAT – The Tribunal may regulate its own procedure and exercise powers vested in income-tax authorities under Section 131.Proceedings before the ITAT are deemed judicial proceedings, and the ITAT is deemed a civil court.

Manner of Filing Appeal to ITAT

Manner of Filing Appeal to ITAT

• Form and Time Limit of Filing
  • Appeals to ITAT must be filed in Form 36 within 2 months from the end of the month in which the impugned order is communicated to the assessee or the PCIT/CIT, as applicable.
  • A memorandum of cross-objection is to be filed in Form 36A within 30 days from the date of receipt of notice of appeal filed before the ITAT.
  • The ITAT may condone delay in filing if it is satisfied that there was sufficient cause.
  • A memorandum of cross-objection can be filed even if no appeal has been filed by the party submitting the memorandum. It is treated as an appeal filed before the ITAT and disposed of accordingly.

• Documents to be Submitted and Verification
  • As per Rule 9 of Income-tax (Appellate Tribunal) Rules, 1963, every memorandum of appeal must be filed in triplicate and accompanied by:

➢ 2 copies (one certified) of the order appealed against,

➢ 2 copies of the AO’s order,

➢ 2 copies of the grounds of appeal before the first appellate authority,

➢ 2 copies of the statement of facts, if filed earlier,

• • ITAT may accept appeals not accompanied by all or any of the documents at its discretion.
  • Any party intending to rely on documents or statements referred to in the assessment or appellate orders must submit a paper book in duplicate, indexed and paginated. Filed at least 1 day before the hearing, and a copy of it must be served to the opposite party at least seven days before.
  • Additional Documents (Case-Specific)

➢ Appeal against Penalty Order: Memorandum of appeal must be accompanied by 2 copies of the assessment order.

➢ Appeal against assessment under Section 143(3) read with 144A: Memorandum of appeal must be accompanied by 2 copies of the directions of the Deputy Commissioner.

➢ Appeal against assessment under Section 143 read with 147: Memorandum of appeal must include two copies of the original assessment order, if available.

• • All appeal-related documents must be signed by a person authorised to verify the return of income. Verification required for:

➢ In case of Appeal: Form 36, grounds of appeal, verification form;

➢ In case of Memorandum of Cross Objection: Form 36A, grounds of cross objection, verification form.

• Filing Fee– The appeal must be accompanied by proof of fee payment as follows:

Assessed Total Income	Fees
Rs. 1,00,000 or less	Rs. 500
More than Rs. 1,00,000 but up to Rs. 2,00,000	Rs. 1,500
More than Rs. 2,00,000	1% of assessed income (max. Rs. 10,000)
Other matters	Rs. 500

• Faceless Appeal before ITAT – The Central Government is empowered to formulate a scheme for the filing of departmental appeals before ITAT to enhance efficiency, transparency, and accountability by:
  • Optimising resource utilisation through scale and specialisation; and
  • Team-based appeal mechanism to ITAT with dynamic jurisdiction.

The Central Government may notify exceptions, modifications, or adaptations to provisions of the Act for implementing the scheme. Such notifications must be laid before both Houses of Parliament.

Appeal before the High Court

Appeal before the High Court

The High Court functions as the third appellate authority under the Income Tax Act. An appeal against the order passed by the Income Tax Appellate Tribunal (ITAT) lies before the High Court. However, such an appeal can be filed only when the High Court is satisfied that the case involves a substantial question of law.

• Filing of Appeal before the High Court
  • An appeal may be filed by the PCCIT/CCIT/PCIT/CIT (“Commissioner”), or by the assessee aggrieved by the order passed by the ITAT.
  • The appeal must relate to a matter involving a substantial question of law.
  • The Department may file an appeal only in cases where the tax effect exceeds the monetary limits prescribed by the CBDT.
• Manner and Time Limit for Filing Appeal
  • The appeal is to be filed as a Memorandum of Appeal, clearly stating the substantial question(s) of law involved in the case.
  • Appeal to the High Court must be filed within 120 days from the date on which the order of ITAT is received by the Commissioner or assessee, as applicable.
  • The High Court may condone delay in filing the appeal if it is satisfied that there was sufficient cause for not filing the appeal within the prescribed time.
• Formulation of Question of Law
  • If the High Court is satisfied that a substantial question of law arises, it shall formulate the question(s) and the appeal shall be heard on such question(s) only.
  • During the hearing, the respondent may argue that the case does not involve the stated question(s) of law.
  • The Court may consider additional question(s) of law not formulated earlier, provided reasons for doing so are recorded.
  • The High Court may also decide an issue not determined by ITAT, or correct a finding wrongly determined by ITAT due to an incorrect legal interpretation.
• Judgment by the High Court – The High Court shall render its decision on the question(s) of law and deliver a reasoned judgment. It may award such cost as it deems fit.
• Fees for Filing Appeal – The fee for filing an appeal before the High Court shall be governed by the relevant law relating to Court fees for filing of appeals to the High Court.
• Hearing by Division Bench
  • Appeals before the High Court are heard by a bench of 2 or more judges.
  • If judges differ in opinion, the matter is decided by the majority opinion.
  • If there is no majority, the disputed point is referred to one or more additional judges and decided based on the majority of all judges who heard the case.
• Effect of High Court Judgment – The Assessing Officer shall give effect to the High Court’s decision on the basis of a certified copy of the judgment.

Appeal before the Supreme Court

Appeal before the Supreme Court

The Supreme Court is the fourth and final appellate authority under the Income Tax Act. An appeal against the order of a High Court lies with the Supreme Court. However, no such appeal can be filed unless the High Court certifies that the case is fit for appeal to the Supreme Court.

• Time Limit for Filing Appeal – The Income-tax Act does not prescribe any specific time limit for filing an appeal to the Supreme Court. However, The provisions of the Code of Civil Procedure, 1908 relating to appeals to the Supreme Court apply mutatis mutandis to appeals under the Income-tax Act filed before the Supreme Court.
• Cost of Appeal – The cost of appeal is at the discretion of the Supreme Court, which may award costs to either party as it deems appropriate.
• Effect of the Supreme Court Judgment – Where the Supreme Court reverses or modifies the judgment of the High Court, the Assessing Officer must give effect to such judgment based on a certified copy of the decision. Such effect must be given in the assessment records in accordance with the final decision rendered by the Supreme Court.
• Matter Remanded to Appellate Tribunal– Where the Supreme Court finds that the case record or statement is inadequate for deciding the question of law, it may remand the matter back to the Appellate Tribunal. The Tribunal is required to add or modify the statement of case as directed by the Supreme Court, enabling a proper adjudication of the legal question.

Monetary Limit for Filing of Appeal by the Department

Monetary Limit for Filing of Appeal by the Department

To reduce litigation and focus on complex or high-tax effect matters, the CBDT has prescribed monetary thresholds for the Department’s filing of appeals before appellate forums.

• Prescribed Monetary Limits – The CBDT has specified the latest monetary thresholds [Circular No. 9/2024, dated 17-09-2024] as follows:

Appellate Forum	Monetary Limit
ITAT	Rs. 60,00,000
High Court	Rs. 2,00,00,000
Supreme Court	Rs. 5,00,00,000

These limits apply to appeals, Special Leave Petitions (SLPs), cross objections, and references and are also applicable retrospectively to pending matters. Where appeals are below the limits, the Department may withdraw or not press them.

The existence of monetary threshold does not mandate the filing of an appeal in every eligible case. The decision must be based on merits and overall objective of reducing unnecessary litigation.

• Exceptions to Monetary Limits – The Department may file appeals irrespective of tax effect in the following cases [Circular No. 5/2024, dated 15-03-2024]:
  • Constitutional Issues – Challenge to the constitutional validity of an Act, Rule, Notification, Circular, Instruction or Order.
  • TDS/TCS Disputes – Matters involving liability to deduct or collect tax at source, including international taxation.
  • DTAA or Foreign Assets/Income:

➢ Applicability of tax treaties;

➢ Cases involving undisclosed foreign assets, income, or bank accounts.

• • Deferral of Appeals under Section 158AB – Where the identical issue is pending and a final decision favours Revenue, the deferred appeal may be filed regardless of tax effect.
  • Non-Quantifiable Tax Effect – E.g. orders under Section 263, registration of trusts/institutions, etc.
  • Prosecution Matters – Where prosecution is initiated and the trial is pending in any court, or a conviction order is passed but not compounded.
  • Adverse Judicial Comments – Where courts pass strictures or adverse remarks or impose costs against the Department.
  • Organised Tax Evasion – including penny stock transactions and accommodation entries.
  • Court-Directed Appeals – Where the court mandates the filing of the appeal.
  • Writ Petitions – No monetary limit applies.
  • Assessment Based on Law Enforcement Information – Information from CBI, ED, DRI, SFIO, NIA, NCB, DGGI, State Law Enforcement Agencies, or GST Department.
  • Matters Related to Other Tax Laws – Cases under Wealth Tax, FBT, Equalisation Levy, or laws other than the Income-tax Act.
  • Other Cases Specified by CBDT – Any case or class of cases notified by CBDT in the interest of justice or Revenue.
• Computation of ‘Tax Effect’

The Board has prescribed the following mode for computation of the tax effect [Circular No. 3/2018, dated 11-07-2018].

• • General Cases

Tax Effect = Tax on assessed income − Tax on reduced income (assessed income – disputed income)

This includes surcharge and cess but excludes interest. For cases with returned loss assessed as income, the tax effect includes notional tax on the disputed additions.

• • Cases Under MAT/AMT (Sections 115JB/115JC) – A combined formula is used, considering both general provisions and MAT/AMT provisions.
  • Interest Disputes – Tax effect equals the disputed amount of interest.
  • TDS/TCS Cases – Tax effect includes cumulative demand, including interest under Section 201(1A), for a given assessment year.
  • Penalty Orders – Tax effect equals the amount of penalty deleted or reduced.
  • Composite Orders – In case of a common order involving:

➢ Multiple assessment years: Tax effect to be calculated year-wise;

➢ Multiple assessees: Each assessee is to be considered individually.

Appeal to be filed only for year/assessee where the tax effect exceeds the limit.

• Effect of Non-Filing of Appeal
  • Non-filing due to low tax effect does not mean acceptance of the decision by the Department.
  • PCIT/CIT must record reasons that the appeal is not filed solely due to the low tax effect as per the CBDT Circular.
  • The Department may still file an appeal on the same issue in other years or for other assessees if the tax effect exceeds the prescribed threshold.
• Guidance for Appellate Forums– The Board noted that assessees often claim relief by citing the Department’s non-filing of an appeal in similar cases for any other assessment year or any other assessee, implying acceptance of the Tribunal’s or Court’s decision. The CBDT has directed that:
  • Departmental representatives must inform Tribunals and Courts that non-filing in prior years was due to monetary limits.
  • Such non-filing should not be treated as precedent.
  • Tribunals/Courts must consider the orders, instructions and directions issued by the CBDT and reasons for non-filing in each case.

Stay of Demand

Stay of Demand

Where an assessee receives a notice of demand following an assessment order and fails to pay the demanded amount within 30 days, or such shorter time as prescribed with approval from the Joint Commissioner, interest and penalty become applicable. However, in genuine hardship cases, the assessee may seek a stay of demand from the Assessing Officer, JCIT(A), CIT(A) or the ITAT.

• Stay of Demand by the Assessing Officer– If the assessee believes that the assessment is excessive or high-pitched, he may file a stay application with the AO. The AO may extend the time for payment, allow payment in instalments, or choose not to treat the assessee as a defaulter during the pendency of the appeal with JCIT(A) or CIT(A).

The Assessing Officer (AO) may grant a stay on the recovery of the demand, subject to payment of 20% of the disputed tax demand [Office Memorandum F. No.404/72/93-ITCC (FTS: 284146) dated 31-07-2017]. This threshold may be increased in the following circumstances:

• • Taxpayer has a history of tax litigation with similar issues decided against the assessee;
  • Same issue already decided in favour of the Department by a jurisdictional High Court or Supreme Court;
  • Tax demand is based on credible evidence collected in search or survey operations.
• Stay of Demand by the ITAT – The assessee may apply to the ITAT for stay of demand. ITAT may grant a stay for up to 180 days, subject to the assessee having deposited or furnished security equivalent to 20% of the tax liability (including interest, penalty, fee, etc.).

If the appeal is not disposed of within 180 days and the delay is not attributable to the assessee, the ITAT may extend the stay. However, the total stay period cannot exceed 365 days in aggregate, and the appeal must be disposed of within the extended stay period. If not disposed of within 365 days, the stay shall be vacated automatically, regardless of whether the delay is attributable to the assessee.

• Procedure for Filing Stay Petition

➢ The stay application must be filed in triplicate, accompanied by a fee of Rs. 500.

➢ Separate applications are required for stay of recovery under different enactments.

➢ Every application shall be neatly typed on one side of the paper, and shall be in English and must include:

• • • Summary of facts relating to the tax demand;
    • Result of the appeal filed before CIT(A);
    • Break-up of total demand, undisputed and outstanding amounts;
    • Date of filing appeal to ITAT and appeal number (if known);
    • Past applications for stay and their results;
    • Brief reasons for seeking a stay;
    • Details of any security offered;
    • Clear and concise prayers;
    • Affidavit supporting the contents, sworn by the assessee or authorised agent.

➢ Applications not meeting the above requirements may be summarily rejected.

Revision of Orders Prejudicial to Revenue

Section 263 empowers the PCCIT/CCIT/PCIT/CIT to revise any order passed by the Assessing Officer or Transfer Pricing Officer, if such order is erroneous and prejudicial to the interests of the Revenue. The authorities may call for and examine the records (which are available at the time of examination) of any proceedings under the Income-tax Act.

If an assessee is aggrieved by an order and it is not covered under Section 263, they may apply for revision under Section 264.

• Impact of Revision– The authority may pass an order as circumstances justify, including:
  • Enhancing or modifying the assessment;
  • Cancelling the assessment and directing a fresh assessment;
  • Modifying or cancelling the TPO’s order under Section 92CA and directing a fresh order.

The assessee must be given an opportunity to be heard before the order is passed.

• Orders Eligible for Revision– Revision can be undertaken for the following orders:
  • Any order passed by the AO;
  • Orders passed based on directions of the Joint Commissioner under Section 144A;
  • Orders passed by the Joint Commissioner while acting as AO or TPO under delegated powers;
  • TPO’s order under Section 92CA;
  • Orders where some matters were not adjudicated in the appeal;
• When is an Order Deemed to be Erroneous?– An order is deemed erroneous and prejudicial if, in the opinion of revisionary authorities:
  • Required inquiries or verification were not made;
  • Relief was allowed without due inquiry;
  • The order violates CBDT’s order, direction, or instruction under Section 119;
  • It is contrary to decisions prejudicial to the assessee rendered by the jurisdictional High Court or the Supreme Court in the case of the assessee or any other person.
• Time Limit for Passing the Revisionary Order – The revision order must be passed within 2 years from the end of the financial year in which the original order was passed. However, no time limit applies where the revision is done to give effect to a direction of the order of the ITAT, High Court or Supreme Court.

While computing the limitation period, time taken for rehearing under Section 129, and time under stay by the court are excluded.

• Right to Appeal– An assessee aggrieved by a revision order under Section 263, including any rectification order under Section 154 made in respect of such revision, can file an appeal before the Income-tax Appellate Tribunal (ITAT).

Revision in Favour of Assessee

Revision in Favour of Assessee

Section 264 empowers the PCCIT/CCIT/PCIT/CIT (“Commissioner”) to revise any order passed by a subordinate authority either Suo motu (on their own motion), or on an application filed by the assessee. The revision may be undertaken only in favour of the assessee and cannot result in any order prejudicial to the assessee.

• Orders Eligible for Revision– The Commissioner may revise only those orders which are passed by a subordinate Assessing Officer.
• Orders not Eligible for Revision– Orders that cannot be revised under Section 264 include:
  • Orders appealable before CIT(A), JCIT(A), or ITAT where:

➢ The time limit for filing the appeal has not expired; or

➢ The assessee has not waived his right to appeal.

• • Orders that have been made the subject of an appeal to the JCIT(A), CIT(A), or ITAT.
  • CBDT, vide Circular No. 367, dated 26-07-1983, clarified that if the appeal is dismissed as withdrawn, incompetent, or time-barred, it shall not be considered the ‘subject of an appeal’, and revision under Section 264 may still be possible.
• Time Limit for Making Application—Theapplication must be made within 1 year from the date of communication of the order or the date of knowledge, whichever is earlier. Condonation of delay is permitted if sufficient cause is shown. The application filed under Section 264 must be accompanied by a fee of Rs. 500.
• Time Limit for Passing the Revisionary Order – The revision order must be passed within 1 year from the end of the financial year in which the assessee makes the application. If revision is initiated suo motu, the order must be passed within 1 year from the date of the original order. A revision order under this provision is not appealable to the ITAT.

However, no time limit applies where the revision is done to give effect to a direction of the order of the ITAT, High Court or Supreme Court.

While computing the limitation period, time taken for rehearing under Section 129, and time under stay by the court are excluded.

Faceless Revision of Orders

Faceless Revision of Orders

The Central Government is empowered to make a scheme for revision of orders prejudicial to the interest of revenue or other orders to enhance efficiency, transparency, and accountability by:

• Minimising physical interface during revisional proceedings;
• Optimising resource utilisation through scale and specialisation; and
• Team-based revision of orders with dynamic jurisdiction.

The Central Government may notify exceptions, modifications, or adaptations to provisions of the Act for implementing the scheme. Such notifications must be laid before both Houses of Parliament.

Faceless Effect of Orders

Faceless Effect of Orders

The Central Government is empowered to make a scheme to give effect to the orders passed by the JCIT(A), CIT(A), ITAT, High Court, or Supreme Court or revisionary orders passed under Sections 263 or 264 to enhance efficiency, transparency, and accountability by:

• Minimising physical interface during appellate or revisional proceedings;
• Optimising resource utilisation through scale and specialisation; and
• Team-based giving of effect to orders with dynamic jurisdiction.

The Central Government may notify exceptions, modifications, or adaptations to provisions of the Act for implementing the scheme. Such notifications must be laid before both Houses of Parliament.

Dispute Resolution Committee (DRC)

Dispute Resolution Committee (DRC)

The Dispute Resolution Committee (DRC) provides a mechanism for specified taxpayers to resolve disputes arising from assessment orders or TDS/TCS-related orders through a faceless process.

• Constitution and Composition of DRC – Constituted by the Central Government for each region under the jurisdiction of the Principal Chief Commissioner of Income-tax. Each DRC comprises:
  • 2 retired IRS officers (who held the rank of CIT or higher for at least 5 years); and
  • 1 serving officer, not below the rank of Principal CIT/CIT, nominated by the CBDT.
  • Members are appointed for a term of 3 years and can be removed for valid reasons, with due opportunity of hearing.
• Eligible Applicants (Specified Persons) – A person is eligible to approach the DRC if he is not:
  • Subject to detention under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974;
  • Prosecuted and convicted under:

➢ Indian Penal Code (IPC), 1860;

➢ Unlawful Activities (Prevention) Act, 1967;

➢ Narcotic Drugs and Psychotropic Substances Act, 1985;

➢ Prohibition of Benami Transactions Act, 1988;

➢ Prevention of Corruption Act, 1988;

➢ Prevention of Money Laundering Act, 2002.

• • Prosecuted or convicted under the Income Tax Act or the IPC;
  • Convicted in a prosecution by the Income Tax authority;
  • Notified under Section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992;
  • Subject to the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, proceedings for the relevant year.
• Orders Eligible for Resolution before DRC – An application can be filed with DRC in respect of the following orders:
  • Intimation under Section 143(1) where adjustments are objected to;
  • Assessment or reassessment order except an order passed in pursuance of DRP directions;
  • A draft assessment order referred to in Section 144C(1);
  • Order for TDS/TCS matters, including intimations under Sections 200A(1), 206CB, 206C(6A), and orders under Section 201;
  • Rectification order under Section 154 that enhances the assessment or reduces loss.
• Eligibility Criteria for Dispute Resolution – An assessee may approach DRC if:
  • Aggregate variation proposed or made in the order does not exceed Rs. 10 lakh;
  • Return of income has been filed for the relevant assessment year, and the returned income does not exceed Rs. 50 lakh;
  • The order is not based on search (Section 132), requisition (Section 132A), survey (Section 133A), or information received under an agreement referred to in Sections 90/90A;
  • For TDS/TCS cases, variation means the amount on which tax was not deducted/collected.
• Procedure and Filing
  • Application to be filed in Form 34BC on the Income-tax e-filing portal;
  • Application fee: Rs. 1,000;
  • Proceedings shall be conducted under the e-Dispute Resolution Scheme, 2022, effective from 05.04.2022.
• Time Limits for Application
  • Orders passed on or before 31.08.2024: File by 30.09.2024, if the appeal time has not expired or is pending before the JCIT(A) or CIT(A). If the appeal deadline has lapsed, application to the DRC is not permitted.
  • Orders passed after 31.08.2024: Application must be filed within 1 month of receipt of the order.
• Powers of DRC– The DRC may:
  • Reduce or waive penalty imposable under the Income Tax Act;
  • Grant immunity from prosecution for any offence punishable under the Income Tax Act.
• Conditions for Granting Relief – DRC shall grant relief if the assessee has paid tax on the returned income in full and co-operated during DRC proceedings. However, no immunity is available where prosecution was initiated before receipt of the application. Immunity stands withdrawn if conditions are violated.
• Time Limit for Resolution Order—The DRC must pass the resolution order within 6 months from the end of the month in which the application is admitted. If DRC members differ in opinion, the decision shall be made by the majority.
• Modification of Order by AO – Upon receipt of DRC’s order:
  • The AO shall pass the assessment, reassessment, or recomputation order where the specified order is a draft under Section 144C(1); or
  • In any other case, modify the assessment, reassessment, or recomputation order, as directed.
  • AO to act within 1 month from the end of the month of receipt of the DRC order.

• Finality of the DRC Order – No appeal or revision is permitted against the AO’s order passed in conformity with the DRC’s resolution. If the matter originally related to a draft order under Section 144C(1), no reference to DRP is allowed after DRC resolution.

e-Dispute Resolution Scheme, 2022

e-Dispute Resolution Scheme, 2022

The e-Dispute Resolution Scheme, 2022, notified via Notification No. 27/2022 dated 05.04.2022, provides a faceless framework for the resolution of specified disputes by the Dispute Resolution Committee (DRC). The DRC offers taxpayers an alternative remedy to avoid prolonged litigation by resolving eligible disputes arising from assessment and TDS/TCS-related orders.

• Preliminary Screening by DRC
  • The DRC verifies whether the application meets the eligibility criteria and whether the order in question qualifies under the scheme.
  • If the DRC intends to reject the application, it issues a show-cause notice, giving the assessee a chance to respond.
  • Based on the response:

➢ DRC may reject the application, or

➢ Admit the application for further processing.

• • If rejected, the assessee may appeal before JCIT(A) or CIT(A), and the time taken by the DRC will be excluded from the limitation period for such appeal.

• Post-Admission Process– Once an application is admitted:
  • The DRC may call for relevant records from the Income Tax Authority.
  • It may also seek a report from the Assessing Officer (AO).
  • Requests for further queries or information are sent via registered e-mail, and the assessee must respond electronically.
  • The assessee must also submit proof of withdrawal of any parallel appeal filed before JCIT(A), CIT(A), or the Dispute Resolution Panel (DRP), within 30 days of admission. Otherwise, the application is liable to be rejected.
• Types of Decision by DRC – After reviewing all material, DRC can pass any of the following three types of resolution orders:
  • Modification with Relief –

➢ Makes changes to the assessment order in favour of the assessee.

➢ Waives penalties and grants immunity from prosecution.

➢ For waiver of penalty or immunity from prosecution or both, the following conditions should be satisfied:

• • Full tax on returned income is paid.
  • Assessee has cooperated during the proceedings.
  • No immunity if prosecution was already initiated before the DRC application
• Immunity Without Modification –

➢ Does not alter the assessment order.

➢ Still waives penalty and grants immunity from prosecution if the assessee meets the above conditions.

• No Modification –

➢ Does not modify or grant any immunity.

➢ Merely disposes of the application, which is still not prejudicial to the assessee.

• Timeline and Implementation – DRC must pass the resolution order within 6 months from the end of the month in which the application is admitted.

AO to issue modified order to give effect to the DRC’s decision and serve a demand notice on the assessee. The assessee shall submit proof of payment to the DRC and AO. Upon proof of payment, DRC grants immunity and/or penalty waiver.

• Termination of Proceedings – DRC may terminate proceedings at any stage, after recording the reasons in writing and giving the assessee a chance to be heard, if:
  • The assessee fails to cooperate or respond.
  • The assessee conceals material facts or provides false evidence.
  • The assessee doesn’t pay the demand as per the DRC’s order.

In such cases, the DRC will notify the income-tax authority for appropriate further action under the Income-tax Act.

• Powers of the Dispute Resolution Committee – Any proceedings before the DRC are treated like court proceedings under certain sections of the Indian Penal Code. Income-tax authorities are considered Civil Courts for limited purposes. If there’s any difficulty in implementing the DRC’s order, the DRC can fix it on its own or on request, as long as it is not inconsistent with the Income-tax Act.
• No Further Appeal or Reference
  • No appeal or revision can be filed against the AO’s order that gives effect to the DRC’s resolution.
  • In case of a Section 144C(1) order, the assessee cannot approach the DRP after DRC resolution.

• Privacy and Confidentiality
  • Proceedings are not open to the public.
  • Only the assessee, authorised representatives, and concerned officers are allowed to attend (even virtually).

• Personal Hearing and Communication Protocol
  • Personal Appearance – Not required in faceless proceedings. However, the appellant may request a personal hearing, which shall be:

➢ Allowed by DRC;

➢ Conducted via video conferencing or telephony;

➢ Board shall ensure video conferencing facilities at the necessary locations to avoid denial of opportunity due to lack of technology.

➢ Assessee’s authorised representative must file the authorisation electronically in advance.

• • Mode of Communication—All internal communications between DRC and any income-tax authority shall be exchanged exclusively by electronic mode, and communication between the DRC and the assessee or the authorised representative shall be exchanged electronically to the extent technologically feasible. Electronic records are authenticated by the DRC and the PCIT/CIT through digital signature. The assessee or any other person shall authenticate an electronic record by affixing a digital signature or logging in via a registered account.

All communication is delivered through a registered account, email, or mobile App (with real-time alert via SMS/email/notification). The assessee’s response is deemed authenticated once acknowledged via the registered account.

• Language of the DRC
  • Language of proceedings: Hindi or English, as per assessee’s choice.
  • If documents are in any other language, an English translation is mandatory
• Power to specify format, mode, procedure, and processes – The PDGIT/DGIT, in consultation with the jurisdictional PCCIT/PDGIT, in charge of DRC, with Board approval, shall prescribe standards, procedures, and processes for the effective functioning of NFAC and the Appeal Unit in an automated environment, including:
  • Service of orders, or other communications;
  • Receipt of information or documents in response;
  • Issue of official email-id to the DRC;
  • Issuance of acknowledgements for responses received;
  • Provision of e-proceedings facilities (login, status tracking, display, downloads);
  • Access, verification, and authentication of submissions during the dispute resolution proceedings;
  • Centralised receipt, storage, and retrieval of documents; and
  • General administration and grievance redressal mechanism in the respective DRC.

Avoiding Repetitive Appeals by the Assessee

Avoiding Repetitive Appeals by the Assessee

To reduce litigation and avoid repetitive appeals on the same question of law, the Income-tax Act provides a mechanism wherein an assessee can voluntarily submit a declaration, confirming that the issue pending in a later year is identical to one already contested in a previous year.

Upon acceptance of this declaration, the Assessing Officer (AO) or Appellate Authority can dispose of the later case without awaiting the final judicial outcome of the earlier one. The assessee forfeits the right to raise the same issue in any further appeal for the later year.

• When Can a Declaration be Filed?– A declaration can be submitted when:
  • A question of law is already pending before the High Court or Supreme Court in relation to an earlier assessment year, and
  • The same question of law arises in a subsequent assessment year before the Assessing Officer or the Appellate Authority.
• Purpose and Effect of Filing Declaration – By filing Form 8, the assessee agrees:
  • That the final decision on the question of law in the earlier case shall also apply to the later case; and
  • That no further appeal will be filed on the same question of law in a later year, if the AO or Appellate Authority accepts the claim.
• Procedure for Filing Declaration
  • The declaration must be submitted electronically in Form 8;
  • It must be verified by a person authorised to verify the return of income under Section 140.

• Report from Assessing Officer
  • If the declaration is submitted before an Appellate Authority, it shall call for a report from the Assessing Officer to verify the correctness of the assessee’s claim.
  • If the AO requests, an opportunity of hearing may be provided to him before the authority admits or rejects the claim.

• Order Accepting or Rejecting the Declaration – The Assessing Officer or Appellate Authority, as the case may be, shall pass a written order to either:
  • Admit the claim, if satisfied that the question of law in the later year is identical to that in the earlier year; or
  • Reject the claim if not satisfied.

Such order is final and cannot be challenged by way of appeal, revision, or reference.

• Consequences of Admission of Claim – Where the declaration is admitted:
  • The AO or Appellate Authority shall dispose of the later case without waiting for the final decision in the earlier case;
  • The assessee is barred from raising the same question of law in any subsequent appeal for that year.

• Application of Final Decision in Earlier Case – Once the decision in the earlier case becomes final:
  • The AO or Appellate Authority shall apply that decision to the later case;
  • If necessary, the earlier order passed in the later case shall be amended accordingly.

Avoidance of Repetitive Appeals by Revenue

Avoidance of Repetitive Appeals by Revenue

To streamline litigation and avoid filing repetitive appeals on the same question of law, Section 158AB empowers the Revenue to defer the filing of an appeal in a subsequent case where an identical question of law is already pending in another case.

• Scope and Application – The provision applies where the Collegium identifies that:
  • The question of law arising in a later case from the order of JCIT(A), CIT(A), or ITAT is identical to one already pending in an earlier case;
  • The earlier case, which is in favour of the assessee, is pending either:

➢ Before the Jurisdictional High Court under Section 260A;

➢ Before the Supreme Court under Section 261; or

➢ As a Special Leave Petition (SLP) under Article 136 of the Constitution.

The earlier case may pertain to the same assessee or any other assessee.

• Role and Composition of the Collegium – The Collegium is constituted by the Principal CCIT, CCIT, or DGIT and comprises:
  • The jurisdictional PCIT or CIT; and
  • 2 other officers of the rank of PCIT/CIT nominated by the authority.
  • The senior-most member of the Collegium acts as the Chairperson [Order F. No. 370133/13/2022-TPL, dated 28-09-2022].
  • Upon finding the questions to be identical, the Collegium informs the PCIT/CIT not to file an appeal before ITAT or the jurisdictional High Court on the issue in the later case.

• Procedure for Deferral
  • On receiving communication from the Collegium, the PCIT/CIT may instruct the Assessing Officer (AO) to file an application in Form No. 8A before the ITAT or High Court.
  • This application must be filed within 120 days of the receipt of the order from JCIT(A)/CIT(A)/Tribunal.
  • The application states that the appeal on the question of law in the later case will be filed after the earlier case is decided.

• Acceptance by the Assessee is Mandatory – The deferral process is initiated only if the assessee accepts that the question of law in the later case is identical to that in the earlier case. If the assessee does not accept, the Department proceeds to file a regular appeal under the normal provisions.
• Appeal in Case of Contradictory Orders – If the order of the JCIT(A) or CIT(A) or ITAT, as the case may be, in the later case, conflicts with the final decision in the earlier case:
  • PCIT/CIT may instruct the AO to file an appeal before the ITAT/Jurisdictional High Court against such conflicting order of the JCIT(A) or CIT(A) or ITAT.
  • Time limit:

➢ 60 days for filing an appeal to the ITAT;

➢ 120 days for filing an appeal to the High Court;

from the date of receipt of the order of the jurisdictional High Court/Supreme Court

• • The jurisdictional PCIT/CIT must follow the procedure specified by the CBDT.
• CBDT Guidelines on Monetary Thresholds – The usual monetary limits prescribed by CBDT for appeal filing also apply to deferral under Section 158AB[Circular No. 8/2023, dated 31-05-2023].
  • When an appeal involves multiple issues, if the total tax effect (aggregated across issues) exceeds the monetary limit, appeals on identical questions can be deferred; appeals on non-identical questions can proceed.
  • If the tax effect does not exceed the threshold, the appeal cannot be filed or deferred.
  • An appeal deferred under Section 158AB can be contested on its merits irrespective of the tax effect until an identical case, where judicial finality is awaited, is resolved and favours Revenue.

If that case doesn’t favour the Revenue and isn’t accepted by the Department, it may be taken to a higher court. Meanwhile, the deferred appeal remains deferred until that identical case is resolved.

*********

Income-tax Rules, 1962

Rule – 16

⁴⁷[Application under section 158AB to defer filing of appeal before the Appellate Tribunal or the jurisdictional High Court.

16. The application referred to in sub-section (2) of section 158AB, required to be made before the Appellate Tribunal or the jurisdictional High Court, as the case may be, shall be made in Form No. 8A by the Assessing Officer.]

Rule – 45

PART X

APPEALS

⁸¹[Form of appeal to ⁸²[Joint Commissioner (Appeals) or Commissioner (Appeals)].

45. (1) An appeal to the ⁸²[Joint Commissioner (Appeals) or the Commissioner (Appeals)]shall be made in Form No. 35.

(2) Form No. 35 shall be furnished in the following manner, namely:—

(a) in the case of a person who is required to furnish return of income electronically under sub-rule (3) of rule 12,—

(i) by furnishing the form electronically under digital signature, if the return of income is furnished under digital signature;

(ii) by furnishing the form electronically through electronic verification code in a case not covered under sub-clause (i);

(iii) in a case where the assessee has the option to furnish the return of income in paper form, by furnishing the form electronically in accordance with clause (a) of sub-rule (2) or in paper form

(3) The form of appeal referred to in sub-rule (1), shall be verified by the person who is authorised to verify the return of income under section 140 of the Act, as applicable to the assessee.

(4) Any document accompanying Form No. 35 shall be furnished in the manner in which the said form is furnished.

(5) The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, shall—

(i) specify the procedure for electronic filing of Form No. 35 and documents;

(ii) specify the data structure, standards and manner of generation of electronic verification code, referred to in sub-rule (2), for the purpose of verification of the person furnishing the said form; and

(iii) be responsible for formulating and implementing appropriate security, archival and retrieval of policies in relation to the said form so furnished.]

Notes:

^81.Substituted by the IT (Third Amdt.) Rules, 2016, w.e.f. 1-3-2016.
^82.Substituted for “Commissioner (Appeals)” by the IT (Sixth Amdt.) Rules, 2023, w.e.f. 29-5-2023

Rule – 46A

Production of additional evidence before the ⁸³[Joint Commissioner] (Appeals) and Commissioner (Appeals).

46A. (1) The appellant shall not be entitled to produce before the ⁸³[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals), any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the Assessing Officer, except in the following circumstances, namely :—

(a) where the Assessing Officer has refused to admit evidence which ought to have been admitted ; or

(b) where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer ; or

(c) where the appellant was prevented by sufficient cause from producing before the Assessing Officer any evidence which is relevant to any ground of appeal ; or

(d) where the Assessing Officer has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.

(2) No evidence shall be admitted under sub-rule (1) unless the ⁸⁴[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals) records in writing the reasons for its admission.

(3) The ⁸⁴[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] shall not take into account any evidence produced under sub-rule (1) unless the Assessing Officer has been allowed a reasonable opportunity—

(a) to examine the evidence or document or to cross-examine the witness produced by the appellant, or

(b) to produce any evidence or document or any witness in rebuttal of the additional evidence produced by the appellant.

(4) Nothing contained in this rule shall affect the power of the ⁸⁴[Joint Commissioner] (Appeals) or, as the case may be, the Commissioner (Appeals)] to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty (whether on his own motion or on the request of the Assessing Officer) under clause (a) of sub-section (1) of section 251 or the imposition of penalty under section 271.

Notes:

^83.Substituted for “Deputy Commissioner” by the IT (Sixth Amdt.) Rules, 2023, w.e.f. 29-5-2023.
^84. Substituted for “Deputy Commissioner” by the IT (Sixth Amdt.) Rules, 2023, w.e.f. 29-5-2023.

Rule – 47

Form of appeal and memorandum of cross-objections to Appellate Tribunal.

47. (1) An appeal under sub-section (1) or sub-section (2) of section 253 to the Appellate Tribunal shall be made in Form No. 36, and where the appeal is made by the assessee, the form of appeal, the grounds of appeal and the form of verification appended thereto shall be signed by the person specified in ⁸⁵[sub-rule (3)] of rule 45].

(2) A memorandum of cross-objections under sub-section (4) of section 253 to the Appellate Tribunal shall be made in Form No. 36A, and where the memorandum of cross-objection is made by the assessee, the form of memorandum of cross-objections, the grounds of cross-objections and the form of verification appended thereto shall be signed by the person specified in ⁸⁵[sub-rule (3)] of rule 45].

******

Income Tax Forms

Form No. : 1

¹[Appendix IV

FORM NO. 1

[See rule 11UE (1)]

Undertaking under sub-rule (1) of rule 11UE of the Income-tax Rules, 1962

To,
Principal Commissioner/Commission
………………….. ………………………. ……………………

Sir/Madam,

I …………………………………….. (name in block letters) son/daughter of …………………………………………. designation ………………………………….. and nationality …………………………………. and related passport number………………………………….. (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number (see Note 1) …………………………………………………………………. on behalf of ………………………………………… (name of the declarant) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) ……………………………………….. and being duly authorised and competent to represent the declarant in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be ,hereby declare as follows:

a. That specified orders have been passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside India made before the 28th day of May, 2012 and particulars of such specified orders are provided in Part A of the Annexure.

b. The declarant has (strike off the options that are not applicable),

i. not filed any appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings constituted under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders, and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such relevant order or orders are provided in Part B of the Annexure;

ii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders and has irrevocably withdrawn, on a with prejudice basis, all such appeals or applications or petitions or proceeding and evidence thereof is furnished herewith and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and irrevocably withdrawn with prejudice by the declarant, are provided in Part C of the Annexure;

iii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and all the appeals or applications or petitions or proceeding filed by the declarant have been disposed of and no further appeal or application or petition or proceeding has been filed by the declarant and evidence thereof is furnished herewith and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and disposed of, are provided in Part C of the Annexure;

iv. filed appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant orders and one or more of such appeals or applications or petitions or proceeding are pending as on the date of this undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such appeals or applications or petitions or proceeding that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. The declarant further undertakes that it shall not file any such appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such pending appeals or applications or petitions or proceeding filed by the declarant and their status as on the date of this undertaking, are provided in Part D of the Annexure;

c. The declarant has (strike off the options that are not applicable),

i. not initiated any proceeding for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant orders, and hereby undertakes that it shall not initiate any such arbitration, conciliation or mediation in future. Particulars of such relevant order or orders are provided in Part B of the Annexure;

ii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn any such proceeding for arbitration, conciliation or mediation, and notices given thereof and evidence thereof is furnished herewith. The declarant hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and irrevocably withdrawn with prejudice by the declarant, are provided in Part E of the Annexure;

iii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and all the arbitration, conciliation or mediation filed by the declarant have been disposed of and no further proceeding has been initiated by the declarant and evidence thereof is furnished herewith. The declarant hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and disposed of, are provided in Part E of the Annexure;

iv. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and one or more of such proceeding or notices are pending on the date of undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such proceeding or notices for arbitration, conciliation or mediation that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. Particulars of such pending proceeding and notices filed by the declarant are provided in Part F of the Annexure. The declarant hereby further undertakes that it shall not initiate any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders;

v. received or got any awards, orders, judgments or any other reliefs issued in favour of the declarant, arising out of or in any way relating to the imposition of tax, interest and penalty based on the relevant order or orders, under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise and hereby undertakes to irrevocably waive any right to seek or pursue any claim or costs or declaratory relief in relation to or arising out of such awards, orders or judgments or any other relief that may have been ordered, issued or passed against India and any Indian affiliate, whether it is in proceeding initiated by the declarant or by India and any Indian affiliate. The declarant also undertakes to irrevocably waive any right to seek or pursue any claim for costs or relief in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment or any other relief issued in favour of the declarant. The declarant hereby undertakes that it shall not initiate or file any such arbitration, conciliation or mediation in future. Particulars of such awards, orders, judgment or any other relief are provided in Part G of the Annexure;

.d. The declarant has (strike off the options that are not applicable),

i. not initiated any proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referred in clause (c) of this undertaking either against the Republic of India and any Indian affiliate, and hereby undertakes that it shall not initiate any such proceeding in future. Particulars of such award, order or judgment are provided in Part B of the Annexure;

ii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. The declarant has irrevocably and with prejudice withdrawn or discontinued any such proceeding and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments and evidence thereof is furnished herewith. Particulars of such proceeding, initiated and withdrawn or discontinued by the declarant, are provided in Part H of the Annexure;

iii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. All such proceeding filed by the declarant have been disposed of and no further proceeding has been filed by the declarant and evidence is herewith furnished and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and disposed of, are provided in Part H of the Annexure;

iv. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referred to in clause (c) of this undertaking, either against the Republic of India and any Indian affiliate and one or more of such proceeding are pending on the date of undertaking and, the declarant has obtained one or more orders from any court or other authority which remain outstanding against India and any Indian Affiliate. The declarant hereby undertakes that it shall not file in future any such proceeding to enforce or pursue attachments regarding any awards, orders, judgments, or any other relief that may have been ordered , issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant as referenced in clause (c) of this undertaking or to enforce the orders from any court or other authority which remain outstanding against Republic of India and any Indian Affiliate. The declarant further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to such outstanding order, in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. Particulars of such proceeding are provided in Part I of the Annexure. The declarant also undertakes to irrevocably withdraw, terminate and discontinue with prejudice any and all such proceeding to enforce or pursue attachments in accordance with clause (e).

e. The declarant hereby undertakes as follows:

i. to irrevocably and with prejudice withdraw, discontinue, terminate and take all necessary steps to irrevocably and with prejudice close the pending proceeding referred in sub-clause (iv) of clause (b), sub-clause (iv) of clause (c), sub-clause (v) of clause (c) and sub-clause (iv) of clause (d) of this undertaking, as well as any other pending proceeding against India or Indian affiliates relating to the relevant order or orders and not referenced in clauses (b), (c) and (d) above, and not to pursue in any way and by any means in future the pending proceeding as referenced in clauses (b), (c), and (d) above, and any other pending proceeding relating to the relevant order or orders not referred in the above clauses and any other fresh proceeding relating to the relevant order or orders. In so acting, declarant shall act in accordance with this undertaking and in full cooperation with the Republic of India;

ii. to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, declaratory reliefs and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist , in relation to any award, order, judgment, or any other relief as referred in clauses (b), (c) and (d) of this undertaking, against the Republic of India and all Indian affiliates, ordered, issued or passed in connection with the relevant order or orders, whether it is in proceeding initiated by the declarant or by Republic of India and any Indian Affiliate. The declarant further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to any outstanding order referenced in clause (d), in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. For the avoidance of doubt, the declarant’s irrevocable waiver includes irrevocable waiver of any right provided by any existing ex parte, provisional, or other kind of court order permitting enforcement or attachment against the Republic of India and any Indian affiliate, in furtherance of any award, order judgment, or any other relief that may have been ordered or issued or passed by any arbitral tribunal as referred in clauses (b), (c) and (d) above. For further avoidance of doubt, the declarant also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by Republic of India and any Indian affiliate to set aside such award, order or judgement ordered, issued or passed in favour of the declarant. Such irrevocable waiver includes, but is not limited to, any right under any relevant ex parte order;

iii. to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment, or any other relief issued in favour of the declarant.

f. The declarant specifically represents that all Parts of the Annexure as described in this undertaking are full and complete to the best of its knowledge.

g. The declarant hereby undertakes to irrevocably terminate, release, discharge and forever irrevocably waive any right, whether direct or indirect, and any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted) in relation to any facts, events, or omissions occurring from the beginning of time to the date of this undertaking and thereafter in future in relation to taxation of said income or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the declarant under any law for the time being in force, in equity, under any statute or under any agreement entered into by Republic of India with any country or territory outside Republic of India, whether for protection of investment or otherwise , whether it is in proceeding initiated by the declarant or by Republic of India and any Indian affiliate. For the avoidance of doubt, the declarant’s above waiver includes an irrevocable waiver of any claim against India and any Indian Affiliate to costs incurred or interest accrued in relation to the relevant order or orders, or any related ongoing or completed litigation, arbitration, conciliation or mediation. Moreover, for the avoidance of any doubt, the declarant hereby undertakes (for itself and on behalf of all related parties) to forgo any reliance on any right under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders.

h. The declarant further represents that as of the date of this undertaking, it has not transferred any of its claims under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, or granted any rights, to third parties, and further undertakes to not transfer any of its claims to third parties after entering this undertaking. Where any such claim or right is transferred, the declarant confirms that it has provided the particulars of all the interested parties in Part L, and the undertakings from each of such interested parties is attached with this undertaking in accordance with Part M of the Annexure.

i. In the event that, notwithstanding the foregoing, any person asserts, brings, files or maintains any claim against the Republic of India or Indian affiliates (hereinafter collectively referred to as “releases”) at any time on or after the date of furnishing this undertaking, the declarant shall indemnify, defend and hold harmless such releases from and against any and all costs, expenses (including attorney’s fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim. The declarant specifically represents that, to the best of its knowledge, after—

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. irrevocable withdrawal of all pending proceeding as outlined in this undertaking, no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, shall remain outstanding against the Republic of India or any Indian affiliates. To avoid any doubt, the declarant’s indemnity of releases under this clause shall include any claim brought by any third party alleging that it has obtained the declarant’s claims under an award, judgment or court order or the relevant order or orders. An indemnity bond to this effect is attached in Part N of the undertaking.

j. For the removal of any doubt, the declarant fully assumes the risk through the indemnity in clause (i) of any omission or mistake with respect to securing releases against any related claim by any person. If the declarant fails to obtain any release from such person, the declarant warrants that it will indemnify the Republic of India or any Indian affiliates from any defense costs, court costs, and damages. An indemnity bond to the effect of clauses (i) and (j) is annexed to the undertaking.

k. The declarant further undertakes to refrain from facilitating, procuring, encouraging or otherwise assisting any person (including but not limited to any related party or interested party) from bringing any proceeding or claims of any kind referred to in the above clauses, or any proceeding or claim of any kind related to any relevant order or orders referred to above (whether in respect of tax, interest or penalty). The declarant shall notify by a public notice or press release, at any time before furnishing intimation in Form No. 3 where this Form is required to be furnished under rule 11UF and before furnishing this undertaking in other cases, that by signing this undertaking any claims arising out of or relating to the relevant order or orders or any related award, judgment or court order, no longer subsist. Such public notice or press release shall include, among other things, confirmation that,—

i. the declarant (and its related parties) forever irrevocably forgo any reliance on any right and provisions under any award, judgment or court order pertaining to the relevant order or orders or under the relevant order or orders;

ii. the declarant has provided this undertaking, which includes a complete release of the Republic of India and any Indian Affiliates with respect to any award, judgment or court order pertaining to the relevant order or orders or under the relevant order or orders, and with respect to any claim pertaining to the relevant order or orders;

iii. the undertaking also includes an indemnity against any claims brought against the Republic of India or any India affiliate, including by related parties or interested parties, contrary to the release; and

iv. the declarant confirms it will treat any such award, judgment or court order as null and void and without legal effect to the same extent as if it had been set aside by a competent court and will not take any action or initiate any proceeding or bring any claim based on that.

l. The declarant confirms that the undertakings given herein are intended to be enforceable by the Republic of India, including so as to secure the irrevocable waiver, withdrawal or discontinuance (as appropriate) of all the proceeding and claims referred to in any of the clauses of this undertaking.

m. The declarant represents and warrants that:

i. it has full legal power and authority to execute and deliver this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j)under applicable law;

ii. the execution, delivery and performance of this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) has been duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law (see Note 3);

iii. this undertaking constitutes the legal, valid and binding obligation of the declarant, enforceable against the declarant in accordance with its terms;

iv. such authorisations described in the above sub-clauses (i), (ii) and (iii) are effective under applicable law, and to this end, letters from local counsel in the relevant jurisdictions are attached to this undertaking which confirm the legality of such authorisations under applicable law.

n. The declarant confirms that by submitting the present undertaking, it fulfills the conditions specified in the Explanation below the sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9.

o. The details of the bank account in which the refund may be credited are provided in Part J of the Annexure.

p. The details of all the interested parties are provided in Part K and Part L of the Annexure. The undertaking in Part M of the Annexure by each of such persons is attached with this undertaking. The declarant represents and warrants that:

i. all such undertakings have been executed and delivered by the person who has full legal power and authority to execute and deliver such undertakings;

ii. the execution, delivery and performance of this undertaking has been duly authorised by all necessary corporate action; and

iii. this undertaking constitutes the legal, valid and binding obligation of the declarant, enforceable against such person in accordance with its terms. Such separate, related undertakings may take the same form as this undertaking.

q. The declarant is or is not covered under sub-rule (6) of rule 11UF and in case if the declarant is not covered under said sub-rule all the conditions provided under sub-rule (2) of rule 11UE have been fulfilled.

r. This undertaking is governed by relevant Indian law and any dispute with respect to this undertaking shall be subject to Indian laws and be decided in accordance with the procedures specified in the Act under the exclusive jurisdiction of the relevant income-tax authorities, tribunals or courts in Republic of India, as the case may be, which are empowered to decide disputes under the Act.

I also confirm that I am aware of all the consequences and implications of this undertaking.

Place:…………………………………

Signature:………………………………….

Date: …………………………………………………………………………………………………………………………….

Attachments

1. The Board Resolution or legal authorisation, as the case may be, as referred to in clause (m) of the undertaking

2. An indemnity bond to the effect of clause (i) and clause (j) of the undertaking attached in Part N of the undertaking.

3. Copy of the public notice referred to in clause (k) of the undertaking, where Form No. 3 is not required to be furnished under sub-rule (6) of rule 11UF.

4. Attachments as required in different parts of the Annexure to this undertaking.

Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the declarant are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

a. record the signatory’s power and authority to give the undertaking on behalf of the declarant; and

b. record the declarant’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.

VERIFICATION

Verified that the contents of this undertaking are true to the best of my knowledge and belief. No part of the undertaking is false and nothing has been concealed or misstated therein.

Verified at________________ place_______________ on this the_________ day________________ of ______ month_______________ , year .

Place: ……………………

Date:……………………..

Signature…………………………

 

Annexure

Part A– Particulars of the relevant order or orders:

Sl. No.	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Taxes or penalty determined	Interest	Total demand	Relief, provided in any appeal proceeding , if any	Demand recovered from the declarant	Pending demand or refund due as on date	Details of the attachments made by any Income-tax Authority
			Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)

Part B– Particulars of the relevant order or orders covered by sub-clause (i) of clauses (b), (c) and (d) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	No appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court has been filed(refer clause (b)(i) of the undertaking).	No proceeding has been initiated for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise (refer clause (c)(i) of the undertaking).	No proceeding initiated to enforce or pursue attachments in connection with any award, order or judgment, any other relief that may have been ordered or issued or passed by any tribunal or court or other judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the declarant against the Republic of India and Indian affiliates (refer clause (d)(i) of the undertaking).
(1)	(2)	(3)	(4)	(5)
		Applicable or Not applicable	Applicable or Not applicable	Applicable or Not applicable

Part C: Particulars of the appeals or applications or petitions or proceeding under sub-clauses (ii) and (iii) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding	Date of disposing of or withdrawal such appeals or applications or petitions or proceeding (Please attach a copy of order by the Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court accepting the withdrawal or disposing of)
(1)	(2)	(3)	(4)	(5)	(6)

Part D – Particulars of the appeals or applications or petitions or proceeding under sub-clause (iv) of clauses (b) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding
(1)	(2)	(3)	(4)	(5)

Part E – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (ii) and (iii) of clause (c) of the undertaking:

Sr. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country) where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation	Date of disposing of or withdrawal of such proceeding for arbitration, conciliation or mediation, or notices (Please attach evidence of such disposing of or withdrawal, including order of the Tribunal or court or other judicial or quasi-judicial or administrative authority).
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part F – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (iv) of clause (c) of the undertaking:

Sl. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part G – Particulars of the award, order or judgment or any other relief under sub-clause (v) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of such award, order or judgment or any other relief	Particulars (including the name of the country) where proceeding related to such award, order, judgment or any other relief were held	Date of such award, order, judgment or any other relief along with reference number	Status of the award, order, judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)

Part H – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clauses (ii) and (iii) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part A where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief	Date of disposing of or withdrawal of proceeding to enforce such award, order or judgment or any other relief (Please attach a copy of evidence of such disposing of/withdrawal, including order of the Court or other judicial authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part I – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clause (iv) of clause (d) of the undertaking:

Sl. No.	Sl. No in Part A where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part J – Details of bank account in Republic of India to which the refund is to be remitted

Sl. No.	Bank Name and Address	Account Number and other required details for remittance
(1)	(2)	(3)

Part K– Details of all the companies or entities in the entire chain of holding of the declarant till the ultimate holding company or entity of the declarant:

Sl. No.	Name of holding company	Percentage of the ownership by such holding company in the declarant as on the date of undertaking	If the ownership in the declarant is not held directly by such holding company, the chain of ownership with the names of all the companies in the chain of ownership
(1)	(2)	(3)	(4)

Part L- Details of all the interested parties other than the interested parties covered under Part K

Sl. No.	Name of such persons whose interest may be affected directly or indirectly by this undertaking	Nature of interest of such person	Amount of interest of such person (Rs), if available
(1)	(2)	(3)	(4)

PART M Undertaking by person(s) declared in Part K and Part L of the Undertaking

To,
Principal Commissioner/Commissioner
……………….. ……………………… ………….

Sir/Madam,

I………………….. (name in block letters) son/daughter of…………………………………………….. designation ……………….. .and nationality …………………………. .and related passport number……………………………… (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number (see Note 1) ………………………………. on behalf of …………………………………. . (name of the interested party) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) …………………………………………. . and being duly authorised and competent to represent the interested party in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be , hereby declare as follows:

(a) The particulars of specified orders that have been passed or made in respect of income accruing or arising through or from the transfer of an asset or a capital asset situate in India in consequence of the transfer of a share or interest in a company or entity registered or incorporated outside Republic of India made before the 28th day of May, 2012 in the case of declarant and the nature of interest of the interested party in such specified orders are provided in Part MA of the Annexure.

(b) The interested party has (strike off options that are not applicable):

i. not filed any appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders, and hereby undertakes that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such relevant order or orders are provided in Part MB of the Annexure;

ii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn all such appeals or applications or petitions or proceeding or such appeals or applications or petitions or proceeding have been disposed at any time before the date of filing Form No. 1, and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and irrevocably withdrawn with prejudice by the interested party, are provided in Part MC of the Annexure.

iii. filed one or more appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and all the appeals or applications or petitions or proceeding filed by the interested party have been disposed of and no further appeal or application or petition or proceeding has been filed by the interested party and evidence thereof is furnished herewith and hereby undertake that it shall not file any appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such appeals or applications or petitions or proceeding filed and disposed of, are provided in Part MC of the Annexure.

iv. filed appeals or applications or petitions or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court against the relevant order or orders and one or more of such appeals or applications or petitions or proceeding are pending as on the date of this undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such appeals or applications or petitions or proceeding that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e) below. The interested party further undertakes that it shall not file any such appeal, application, petition or proceeding in future against the relevant order or orders. Particulars of such pending appeals or applications or petitions or proceeding filed by the interested party and their status as on the date of this undertaking, are provided in Part D of the Annexure. Particulars of any appeals or applications or petitions or proceeding as described in this clause (b) which are not covered by the sub-clauses (i) and (ii) are also provided in Part MD of the Annexure.

(c) The interested party has (strike off options that are not applicable):

i. not initiated any proceeding for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders, and hereby undertakes that it shall not initiate any such arbitration, conciliation or mediation in future. Particulars of such relevant order or orders are provided in Part MB of the Annexure;

ii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and has irrevocably, on a with prejudice basis, withdrawn any such proceeding for arbitration, conciliation or mediation, and notices given thereof. The interested party hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and irrevocably withdrawn with prejudice by the interested party, are provided in Part ME of the Annexure.

iii. initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside India, whether for protection of investment or otherwise against the relevant order or orders and all the arbitration, conciliation or mediation filed by the interested party have been disposed of and no further proceeding has been initiated by the interested party and evidence thereof is furnished herewith. The interested party hereby undertakes that it shall not reopen in future any such proceeding or initiate or file any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of such proceeding for arbitration, conciliation or mediation and notices given thereof, initiated and disposed of, are provided in Part ME of the Annexure.

iv. has initiated proceeding for arbitration, conciliation or mediation, or notices thereof has been given, under any law for the time being in force or under any agreement entered into by Republic of India with any other country or territory outside Republic of India, whether for protection of investment or otherwise against the relevant order or orders and one or more of such proceeding or notices are pending on the date of undertaking and hereby undertakes to irrevocably withdraw, terminate and discontinue any and all such proceeding or notices for arbitration, conciliation or mediation that are pending as on the date of signing this undertaking, on a with prejudice basis, in accordance with clause (e). Particulars of such pending proceeding and notices filed by the interested party are provided in Part F of the Annexure. The interested party hereby further undertakes that it shall not initiate any such arbitration, conciliation or mediation in future arising out of or in connection with the relevant order or orders. Particulars of any proceeding for arbitration, conciliation or mediation, or notices thereof, which are not covered by the sub-clause (i) and sub- clause (ii), are also provided in Part MF of the Annexure.

v. received or got any awards, orders, judgements or any other reliefs issued in favour of the interested party, arising out of or in any way relating to the imposition of tax, interest and penalty based on the relevant order or orders, under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise and hereby undertakes to irrevocably waive any right to seek or pursue any claim or costs or declaratory relief in relation to or arising out of such awards, orders or judgments or any other relief that may have been ordered, issued or passed against India and any Indian affiliate, whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. The interested party also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic to set aside such award, order or judgment issued in favour of the interested party. The interested party hereby undertakes that it shall not initiate or file any such arbitration, conciliation or mediation in future. Particulars of such awards, orders, judgment or any other relief are provided in Part MG of the Annexure.

(d) The interested party has (strike off options that are not applicable):

i. not initiated any proceeding to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referred in clause (c) of this undertaking either against the Republic of India and any Indian affiliate, and hereby undertakes that it shall not initiate any such proceeding in future. Particulars of such award, order or judgment are provided in Part MB of the Annexure.

ii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgements or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. The interested party has irrevocably and with prejudice withdrawn or discontinued any such proceeding and hereby undertakes that it shall not reopen any such proceeding in future or file fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and withdrawn or discontinued by the interested party, are provided in Part MH of the Annexure.

iii. initiated proceeding to enforce or pursue attachments in connection with any awards, orders, judgements or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party, as referred to in clause (c) of this undertaking against the Republic of India and any Indian affiliate. All such proceeding filed by the interested party have been disposed of and no further proceeding has been filed by the interested party and evidence is herewith furnished and hereby undertakes that it shall not reopen any such proceeding in future or file or initiate fresh proceeding to enforce or pursue attachments. Particulars of such proceeding, initiated and disposed of, are provided in Part MH of the Annexure.

iv. initiated proceeding to enforce or pursue attachments in respect of any awards, orders, judgments, or any other relief that may have been ordered, issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referred to in clause (c) of this undertaking, either against the Republic of India and any Indian affiliate and one or more of such proceeding are pending on the date of undertaking and, interested party has obtained one or more orders from any court or other authority which remain outstanding against India and any Indian affiliate. The interested party hereby undertakes that it shall not file in future any such proceeding to enforce or pursue attachments regarding any awards, orders, judgments, or any other relief that may have been ordered , issued or passed by any tribunal or court or other judicial, quasi-judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party as referenced in clause (c) of this undertaking or to enforce the orders from any court or other authority which remain outstanding against India and any Indian affiliate. The interested party further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to such outstanding order, in order to set-aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. Particulars of such proceeding, are provided in Part MI of the Annexure. Particulars of any such proceeding, to enforce or pursue attachments in connection with any awards, orders, judgments, or any other relief, which are not covered by the sub-clauses (i) and (ii), are also provided in Part MI of the Annexure. The interested party also undertakes to irrevocably withdraw, terminate and discontinue with prejudice any and all such proceeding to enforce or pursue attachments in accordance with clause (e) below.

(e) The interested party hereby undertakes as follows: –

i. to irrevocably and with prejudice withdraw, discontinue, terminate and take all necessary steps to irrevocably and with prejudice close the pending proceeding referred in sub-clause (iv) of clause (b), sub-clause (iv) of clause (c), sub-clause (v) of clause (c) and sub-clause (iv) of clause (d) of this undertaking, as well as any other pending proceeding against Republic of India or Indian affiliates relating to the relevant order or orders and not referenced in clauses (b), (c) and (d) above, and not to pursue in any way and by any means in future the pending proceeding as referenced in clauses (b), (c) and (d) and any other pending proceeding relating to the relevant order or orders not referred in the above clauses and any other fresh proceeding relating to the relevant order or orders. In so acting, interested party shall act in accordance with this undertaking and in full cooperation with the Republic of India.

ii. to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, declaratory reliefs, and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown previously (or in future discovered), suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist , in relation to any award, order, judgment, or any other relief as referred in clauses (b), (c) and (d) of this undertaking, against the Republic of India and all Indian affiliates, ordered, issued or passed in connection with the relevant order or orders, whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. For the avoidance of doubt, the interested party’s irrevocable waiver includes irrevocable waiver of any right provided by any existing ex parte, provisional, or other kind of court order permitting enforcement or attachment against the Republic of India and any Indian affiliate, in furtherance of any award, order, judgment, or any other relief that may have been ordered or issued or passed by any arbitral tribunal as referred in clauses (b), (c) and (d). The interested party further undertakes to fully cooperate with the Republic of India or any Indian affiliate which is subject to any outstanding order referenced in clause (d), in order to set aside or otherwise nullify any such outstanding order, and irrevocably and with prejudice waives any rights or remedies arising from such outstanding order. For further avoidance of doubt, the interested party also undertakes to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by Republic of India and any Indian Affiliate to set aside such award, order or judgment ordered, issued or passed in favour of the interested party. Such irrevocable waiver includes, but is not limited to, any right under any relevant ex parte order.

iii. to irrevocably waive any right to seek or pursue any claim for costs in respect of any proceeding initiated by the Republic of India to set aside such award, order or judgment, or any other relief issued in favour of the interested party.

(f) The interested party specifically represents that all Parts of the Annexure as described in this undertaking are full and complete to the best of its knowledge.

(g) The interested party hereby undertakes to irrevocably terminate, release, discharge, and forever irrevocably waive any right, whether direct or indirect, and any remedies, claims, demands, liens, actions, suits, causes of action, obligations, controversies, debts, costs, attorneys’ fees, court’s fees, expenses, damages, judgments, orders, compensation and liabilities of whatever kind or nature at law, in equity, or otherwise, whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden, which have existed or may have existed, or do exist or which hereafter can, shall or may exist, based on pursuit of any remedy or any and all claims, demands, damages, judgments, awards, costs, expenses, compensation or liabilities of any kind (whether asserted or unasserted) in relation to any facts, events, or omissions occurring from the beginning of time to the date of this undertaking and thereafter in future in relation to taxation of said income or relevant order or orders, or any related award, judgment or court order, which may otherwise be available to the interested party under any law for the time being in force, in equity, under any statute or under any agreement entered into by India with any country or territory outside India, whether for protection of investment or otherwise , whether it is in proceeding initiated by the interested party or by India and any Indian affiliate. For the avoidance of doubt, the interested party’s above waiver includes an irrevocable waiver of any claim against India and any Indian affiliate to costs incurred or interest accrued in relation to the relevant order or orders, or any related ongoing or completed litigation, arbitration, conciliation or mediation. Moreover, for the avoidance of any doubt, the interested party hereby undertakes to forgo any reliance on any right under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders.

(h) The interested party further represents that as of the date of this undertaking, it has not transferred any of its claims under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, or granted any rights, to third parties, and further undertakes to not transfer any of its claims to third parties after entering this undertaking.

(i) In the event that, notwithstanding the foregoing, any person asserts, brings , files or maintains any claim against the Republic of India or Indian affiliates (hereinafter collectively referred to as “releasees”)at any time on or after the date of furnishing this undertaking, the interested party shall indemnify, defend and hold harmless such releasee from and against any and all costs, expenses (including attorneys’ fees and court’s fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim. The interested party specifically represents that, to the best of its knowledge, after

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. irrevocable withdrawal of all pending proceeding as outlined in this undertaking.

no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, shall remain outstanding against the Republic of India or any Indian affiliate. To avoid any doubt, the interested party’s indemnity of releasees shall include any claim brought by any third party alleging that it has obtained the interested party’s claims under an award, judgment or court order or the relevant order or orders. An indemnity bond to this effect is attached in Part N of the undertaking.

(j) For the avoidance of any doubt, the interested party fully assumes the risk through the indemnity in clause (i) of any omission or mistake with respect to securing releases against any related claim by any person. If the interested party fails to obtain any release from such person, the interested party warrants that it will indemnify the Republic of India or any Indian affiliates from any defense costs, court costs, and damages. An indemnity bond to the effect of clauses (i) and (j) is annexed to the undertaking.

(k) The interested party further undertakes to refrain from facilitating, procuring, encouraging or otherwise assisting any party (including but not limited to any related party) from bringing any proceeding or claims of any kind referred to in the above clauses, or any proceeding or claim of any kind related to any relevant order or orders referred to above (whether in respect of tax, interest or penalty). The interested party shall notify by a public notice or press release, at any time before furnishing intimation in Form No. 3 where Form No. 3 is required to be furnished under rule 11UF and before furnishing this undertaking in other cases, that by signing this undertaking any claims arising out of or relating to the relevant order or orders or any related award, judgment or court order, no longer subsist. Such public notice shall include, among other things, confirmation that,-

i. the interested party forever irrevocably forgoes any reliance on any right and provisions under any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders;

ii. the interested party has provided this undertaking, which includes a complete release of the Republic of India and any Indian Affiliate with respect to any award, judgment, or court order pertaining to the relevant order or orders or under the relevant order or orders, and with respect to any claim pertaining to the relevant order or orders;

iii. the undertaking also includes an indemnity against any claims brought against the Republic of India or any India affiliate contrary to the release; and

iv. the interested party confirms it will treat any such award, judgment, or court order as null and void and without legal effect to the same extent as if it had been set aside by a competent court and will not take any action or initiate any proceeding or bring any claim based on that.

(l) The interested party confirms that the undertakings given herein are intended to be enforceable by the Republic of India, including so as to secure the irrevocable waiver, withdrawal or discontinuance (as appropriate) of all the proceeding and claims referred to in any of the clauses of this undertaking.

(m) The interested party represents and warrants that:

i. it has full legal power and authority to execute and deliver this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) under applicable law;

ii. the execution, delivery and performance of this undertaking (including but not limited to the issuance of the indemnity described in clauses (i) and (j) has been duly authorised by all necessary corporate action, including but not limited to any board resolution or similar authorisation under applicable law (see Note 3);

iii. this undertaking constitutes the legal, valid and binding obligation of the interested party, enforceable against the interested party in accordance with its terms;

iv. such authorisations described in the above sub-clauses (i), (ii) and (iii) are effective under applicable law, and to this end, letters from local counsel in the relevant jurisdictions are attached to this undertaking which confirm the legality of such authorisations under applicable law; and

(n) This undertaking is governed by relevant Indian law and any dispute with respect to this undertaking shall be subject to Indian laws and be decided in accordance with the procedures specified in the Act under the exclusive jurisdiction of the relevant Income-tax authorities, tribunals or courts in India, as the case may be, which are empowered to decide disputes under the Act.

I also confirm that, I am aware of all the consequences and implications of this undertaking.

Place: ……………….. .

Date: ……………………….. .

Signature………………………………………….

Attachments

1. The Board Resolution and legal authorisation, as referred to in clause (m) of Part M.

2. An indemnity bond to the effect of clauses (i) and (j) of Part M in Part N of the undertaking in Form No. 1;

3. Copy of the public notice referred to in clause (k) of Part M, where Form No. 3 is not required to be furnished under sub-rule (6) of rule 11UF.

4. Attachments as required in different parts of the Annexure to Part M of this undertaking

Notes:

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number/Aadhaar Number or Tax Deduction Account Number of the interested party are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

a. record the Signatory’s power and authority to give the undertaking on behalf of the interested party; and

b. record the interested party’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.

VERIFICATION

Verified that the contents of this undertaking are true to the best of my knowledge and belief. No part of the undertaking is false and nothing has been concealed or misstated therein.

Verified at ___________place_________ on this the ___day ____of ___month ______ ,_year ________ .

Place: ……………..

Date: ……………….

Signature…………….

Annexure

Part MA– Particulars of the relevant order or orders:

Sl. No.	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Nature of interest of the interested party
			Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)

Part MB– Particulars of the relevant order or orders covered by sub-clause (i) of clauses (b), (c) and (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	No appeal or application or petition or proceeding before any Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court has been filed(refer clause (b)(i) of the undertaking).	No proceeding has been initiated for arbitration, conciliation or mediation, and no notice has been given thereof under any law for the time being in force or under any agreement entered into by India with any other country or territory outside India, whether for protection of investment or otherwise (refer clause (c)(i) of the undertaking).	No proceeding initiated to enforce or pursue attachments in connection with any award, order or judgment, any other relief that may have been ordered or issued or passed by any tribunal or court or other judicial or administrative authority in relation to the said arbitration, conciliation or mediation proceeding in favour of the interested party against the Republic of India and Indian affiliates (refer clause (d)(i) of the undertaking).
(1)	(2)	(3)	(4)	(6)
		Applicable or Not applicable	Applicable or Not applicable	Applicable or Not applicable

Part MC – Particulars of the appeals or applications or petitions or proceeding under sub-clauses (ii) and (iii) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding	Date of disposing of or withdrawal of such appeals or applications or petitions or proceeding (Please attach a copy of order by the Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court accepting the withdrawal or disposing of)
(1)	(2)	(3)	(4)	(5)	(6)

Part MD – Particulars of the appeals or applications or petitions or proceeding under sub-clause (iv) of clause (b) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of appeals or applications or petitions or proceeding	Income-tax authority or Authority for Advance Rulings constituted under section 245-O of the Act or the Board for Advance Rulings under section 245-OB or Income-tax Settlement Commission constituted under section 245B or the Interim Board for Settlement constituted under section 245AA or any tribunal or court before whom such appeals or applications or petitions or proceeding has been filed	Date of filing the appeals or applications or petitions or proceeding
(1)	(2)	(3)	(4)	(5)

Part ME – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clauses (ii) and (iii) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation	Date of disposing of or withdrawal of such proceeding for arbitration, conciliation or mediation, or notices (Please attach evidence of such disposing or withdrawal, including order of the Tribunal or court or other judicial or quasi-judicial or administrative authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part MF – Particulars of the proceeding for arbitration, conciliation or mediation, or notices under sub-clause (iv) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding for arbitration, conciliation or mediation, or notices thereof with case number or Notice given	Particulars (including the name of the country where such proceeding for arbitration, conciliation or mediation are pending or notices thereof have been issued)	Date of initiating the proceeding for arbitration, conciliation or mediation/issue of notice	Name of the agreement entered into by India under which the proceeding for arbitration, conciliation or mediation are pending	Status of the proceeding for arbitration, conciliation or mediation
(1)	(2)	(3)	(4)	(5)	(6)	(7)

Part MG – Particulars of the award, order or judgment or any other relief under sub-clause (v) of clause (c) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of such award, order or judgment or any other relief	Particulars (Including the name of the country) where proceeding related to such award, order, judgment or any other relief were held	Date of such award, order, judgment or any other relief along with reference number	Status of the award, order, judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)

Part MH – Particulars of the proceeding to enforce any award, order or judgment or any other relief under sub-clauses (ii) and (iii) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief	Date of disposing of or withdrawal of proceeding to enforce such award, order or judgment or any other relief (Please attach a copy of evidence of such disposing of/withdrawal, including order of the Court or other judicial authority)
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)

Part MI – Particulars of the proceeding under sub-clause (iv) of clause (d) of the undertaking:

Sl. No.	Sl. No. in Part MA where the relevant order is mentioned	Nature of proceeding to enforce such award, order or judgment or any other relief	Particulars (including the name of the country where such proceeding to enforce any award, order or judgment or any other relief are taking place)	Date of filing proceeding to enforce any award, order or judgment or any other relief	Nature of such award, order or judgment or any other relief (Attach copy thereof)	Status of the proceeding to enforce such award, order or judgment or any other relief
(1)	(2)	(3)	(4)	(5)	(6)	(7)

 

Part N

INDEMNITY BOND

This Indemnity Bond (“Bond”) is made on this………….. day of……….. , 2021 by………….. (name in block letters) son/daughter of………………….. designation and nationality……………………… and related passport number…………….. (hereinafter referred to as “Signatory”) having Permanent Account Number/Aadhaar Number/Tax Deduction Account Number (See Note 1)………………. on behalf of……………. (name of the declarant or interested party, as the case may be) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number………………………… (See Note 2) and being duly authorised and competent to represent the declarant or interested party, as the case may be, in this regard pursuant to Board Resolution or legal authorisation (See Note 3), of the FIRST PART.

And

The Republic of India and any Indian affiliate (hereinafter collectively referred to as “releases”) of the OTHER PART WHEREAS:

A. The Income-tax Rules, 1962 have been amended and the Income-tax (31st Amendment) Rules, 2021 have come into force from the date of their publication in the Official Gazette.

B. The declarant or interested party, as the case may be, has filed an undertaking under sub-rule (1) of rule 11UE of the Income -tax Rules, 1962, to which this indemnity bond is annexed. Any defined terms not defined herein shall have the same meaning as the definitions given under rule 11UE and the undertaking.

C. Pursuant to the above, the declarant or interested party, as the case may be, has agreed to indemnify, defend and hold harmless the Republic of India and Indian affiliates from and against any and all costs, expenses (including attorney fees and court fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of any claim at any time after the date of furnishing the undertaking in Form No. 1 by any person, related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief, or to any dispute underlying the award, and the declarant or interested party, as the case may be, has agreed to furnish an indemnity bond to this effect, such that the declarant or interested party, as the case may be, fully assumes the risk of any omission or mistake with respect to identification and procurement of authorisations and undertakings from any related parties or interested parties as provided in the undertaking, and securing the Republic of India and Indian affiliates from any claim related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief or to the dispute underlying the award against the Republic of India or Indian affiliates in connection with the relevant order or orders.

D. Accordingly the declarant or interested party, as the case may be, is executing this Indemnity Bond in favour of the Republic of India on the terms appearing hereunder.

NOW THIS INDEMINTY BOND WITNESSETH AS FOLLOWS:

1. In the event that any person or entity asserts, brings, files or maintains any claim against any releasee at any time on or after the date of furnishing this undertaking, related to any relevant order or orders, or in relation to any award, order, judgment, or any other relief, or to any dispute underlying the award, against the Republic of India or Indian affiliates in connection with the relevant order or orders, the declarant or interested party, as the case may be, shall indemnify, defend and hold harmless such releasees from and against any and all costs, expenses (including attorney fees and court fees), interest, damages, and liabilities of any nature arising out of or in any way relating to the assertion or, bringing, filing or maintaining of such claim.

2. The declarant or interested party, as the case may be, specifically represents that, to the best of
its knowledge, after—

i. the execution of this undertaking;

ii. the execution of any separate related undertaking by any other party in connection with the relevant order or orders; and

iii. withdrawal of all pending proceeding as outlined in this undertaking,

that no other claim regarding the said relevant order or orders referenced above, or any related award, judgment, or court order, or any aspect of the dispute underlying the award shall remain outstanding against the Republic of India or other releasee.

Explanation I.-For the removal of any doubt, the declarant’s or interested party’s indemnity of releasees under this clause shall include any claim brought by any third party alleging that it has obtained declarant’s or interested party’s, as the case may be, claims under an award, judgment or court order or the relevant order or orders.

Explanation II.- the declarant or interested party, as the case may be, fully assumes the risk through this indemnity of any omission or mistake with respect to securing releases against any related claim by any person. If the declarant or interested party, as the case may be, fails to obtain any release from such person, the declarant or interested party, as the case may be, indemnifies through this document the releasees from any defense costs, court costs, and damages.

3. This Indemnity Bond shall be governed by the relevant laws of India and the Delhi High Court
shall have sole jurisdiction to entertain and try any dispute or difference arising out of or in connection with the terms of this Bond.

IN WITNESS WHEREOF the undersigned herein has signed and set his hands on this ………………. day of………… , 2021.

For and on behalf of the declarant or interested party, as the case may be,

Name and address of Witness

Signature of the Witness

1.

2.

Place:
Date:
Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the declarant or interested party, as the case may be, are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking shall, among other things:

(a) record the signatory’s power and authority to give the undertaking on behalf of the declarant or interested party, as the case may be; and

(b) record the declarant or interested party’s power and authority, as the case may be, to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking).]

Note:

^1.Inserted by the Income-tax (Thirty-first Amendment) Rules, 2021, w.e.f. 1-10-2021.

Form No. : 2

¹[FORM NO. 2
[See rule 11UF]
Form for Certificate Under sub-rule (2) of rule 11UF

<Name of the declarant>
Address of the declarant
Sir/Madam

1. The……………………… (name of the declarant) (hereinafter referred to as the declarant) with Permanent Account Number/Aadhaar number/Tax Deduction Account Number/Company Identification Number and Taxpayer Identification Number……….. has filed an undertaking in Form No. 1 dated………. under sub-rule (1) of the rule 11UE of the rules.

2. Pursuant to the undertaking filed by the declarant in Form No. 1 under sub-rule (1) of rule 11UE, the provisions of fifth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act shall be applicable to the orders mentioned below, subject to the fulfilment of the conditions specified in said proviso read with relevant rules and fulfilment of the undertakings by the declarant in Form No. 1:

TABLE

Sl. No.	Sl. No. of the Table in Part A of Form No. 1 where the relevant order is mentioned	Assessment Year or Financial year	Income-tax Authority passing the order	Details of the order under consideration		Taxes or Penalty determined	Interest	Total demand	Relief, provided in any appeal proceeding, if any	Demand recovered from the declarant	Pending demand or refund due as on date	Details of the attachments made by any Income-tax Authority
				Section and sub-section of the Income-tax Act, 1961	Date of order
(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)

3. Demand recovered, as per the column (11) of the Table above, shall be refunded to the declarant, subject to the conditions under sub-rule (2) of the rule 11UE and the provisions of the Act, without any interest as per the provisions of the sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act, attachments, if any, the details whereof are provided in column (13) of the Table, shall be revoked and appeals or applications or petitions or proceeding, if any, filed by any income-tax authority or any other person representing the Republic of India with respect to the specified orders, as per column (2) of the Table, shall be withdrawn or intimation shall be sent to the concerned person, on the issue of Form No. 4, as per the procedure provided in sub-rule (16) of rule 11UF. Further, no interest under section 244A of the Act will be payable to the declarant as per the provisions of sixth proviso to Explanation 5 to clause (i) of sub-section (1) of section 9 of the Act.

Certificate No…….
Place…..
Date………..

………………………….

(Principal Commissioner/Commissioner of Income-tax) ]

Note:

^1.Inserted by the Income-tax (Thirty-first Amendment) Rules, 2021, w.e.f. 1-10-2021.

Form No. : 2A

FORM NO. 2A [Omitted by the IT (Tenth Amdt.) Rules, 2001, w.e.f. 2-7-2001. Earlier, existing Form No. 2A was inserted by the IT (Third Amdt.) Rules, 1994, w.e.f. 1-6-1994; substituted by the IT (Fourth Amdt.) Rules, 1995, w.e.f. 1-6-1995; amended by the IT (Fourth Amdt.) Rules, 1998, w.e.f. 1-4- 1998 and later on substituted by the IT (Fifth Amdt.) Rules, 2000, w.e.f. 11-5-2000.]

Form No. : 2B

FORM NO. 2B [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2B was inserted by the IT (Sixteenth Amdt.) Rules, 1995, w.e.f. 23-8-1995; amended by the IT (Eighth Amdt.) Rules, 1999, w.e.f. 18-5-1999, IT (Sixth Amdt.) Rules, 2000, w.e.f. 11-5-2000 and later on substituted by the IT (Fifteenth Amdt.) Rules, 2001, w.e.f. 27-7-2001.]

Form No. : 2C

FORM NO. 2C [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2C was inserted by the IT (Eighth Amdt.) Rules, 1997, w.e.f. 27-6-1997; substituted by the IT (Eleventh Amdt.) Rules, 1998, w.e.f. 25-8-1998; amended by the IT (Seventh Amdt.) Rules, 2000, w.e.f. 11-5-2000 and IT (Eighteenth Amdt.) Rules, 2002, w.e.f. 29-7-2002 and later on substituted IT (Sixteenth Amdt.) Rules, 2001, w.e.f. 27-7-2001.]

Form No. : 2E

FORM NO. 2E [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 2E was inserted by the IT (Sixth Amdt.) Rules, 2003, w.e.f. 14-5-2003 and later on amended by the IT (Ninth Amdt.) Rules, 2004, w.e.f. 14-7-2004 and IT (Sixteenth Amdt.) Rules, 2005, w.e.f. 20-6-2005.]

Form No. : 3

1 [FORM NO. 3
[See rule 11UF]

Intimation for Withdrawal under sub-rule (3) of rule 11UF of the Income- tax Rules, 1962

To,

The Principal Commissioner/Commissioner

………………………………………. ……………………………….

Sir/Madam,

I……………… (name in block letters) son/daughter of ………………… designation ……………..and nationality ………………..and related passport number………………. (hereinafter referred to as “signatory”) having Permanent Account Number/Aadhaar Number ………………………(see Note 1) on behalf of …………………….. (name of the declarant) having Permanent Account Number/Aadhaar number/Tax Deduction Account Number (see Note 2) ……………………………….. and being duly authorised and competent to represent the declarant in this regard pursuant to Board Resolution and legal authorisation (see Note 3), as the case may be, hereby confirm that the declarant has received an order in Form No. 2 dated________

Pursuant thereto, I confirm that the pending appeals or applications or petitions, arbitration, conciliation, mediation, claims or other proceeding, if any, as referred in Part D, Part F, Part G, Part I and Part M of the undertaking in Form No. 1 dated…… have been irrevocably, on a with prejudice basis, withdrawn or discontinued and are not being pursued. The evidence of action taken in this regard are enclosed herewith.

Place…………….
Date…………….

………………..
Signature/Verification

Attachments

1. Attach the Board Resolution or legal authorisation, as the case may be, as referred to in clause (m) of the undertaking.

2. Attach the evidence of action taken as referred above.

VERIFICATION

Verified that the contents of this intimation are true to the best of my knowledge and belief. No part of the intimation is false and nothing has been concealed or misstated therein.

Verified at……place………. on this the ……. day …………. of…. month……….,…year………..

Place: ……………..
Date: …………….

Signature
………………………………..

Notes

1. This information is required to be furnished where the Permanent Account Number or Aadhaar Number of the signatory is available.

2. Company Identification Number and Taxpayer Identification Number are to be provided where Permanent Account Number or Aadhaar Number or Tax Deduction Account Number of the interested party are not available.

3. The Board Resolution or legal authorisation, as referred to in clause (m) of the undertaking and such Board resolution or legal authorisation shall, among other things:

(a) record the signatory’s power and authority to give the undertaking on behalf of the interested party; and

(b) record the interested party’s power and authority to indemnify defend and hold harmless the Republic of India and the Indian affiliates in accordance with clause (i) of the undertaking.]

Note:

^1.Inserted by the Income-tax (Thirty-first Amendment) Rules, 2021, w.e.f. 1-10-2021.

Form No. : 3AA

FORM NO. 3AA [Omitted by the IT (Twenty-first Amdt.) Rules, 2021, w.e.f. 29-7-2021 (see rule 130). Earlier, Form No. 3AA was inserted by the IT (Fourteenth Amdt.) Rules, 2002, w.e.f. 1-4-2003 and later on amended by the IT (Fifteenth Amdt.) Rules, 2004, w.e.f. 1-4-2005.]

Form No. : 3AB

FORM NO. 3AB [Omitted by the IT (Thirty-second Amdt.) Rules, 1999, w.e.f. 19-11-1999. Earlier, Form No. 3AB was inserted by the IT (Amdt.) Rules, 1978 and amended by the IT (Sixth Amdt.) Rules, 1986, w.e.f. 1-4-1987.]

*******

Tax Reference Tables

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

PENALTIES

Section	Nature of default	Penalty leviable
(1)	(2)	(3)
140A(3)	Failure to pay wholly or partly—	Such amount as Assessing Officer may impose but not exceeding tax in arrears
	(a) self-assessment tax/fringe benefit tax, or
	(b) interest, and fee, or
	(c) both
	under section 140A(1)
158BFA(2)	Determination of undisclosed income of block period	50 per cent of tax leviable in respect of undisclosed income
221(1)	Default in making payment of tax	Such amount as Assessing Officer may impose but not exceeding amount of tax in arrears
234E	Failure to file statement within time prescribed in section 200(3) or in proviso to section 206C(3)	Rs. 200 for every day during which failure continues but not exceeding tax deductible/collectible
234F	Default in furnishing return of income within time as prescribed under section 139(1)	Rs. 5,000 if return is furnished after due date specified under section 139(1). However if the total income of the person does not exceed Rs. 5 lakhs then Rs. 1,000 shall be the late filing fees.
234G	Fee for default in submission of statement/certificate prescribed under section 35/Section 80G	Rs. 200 per day
234H	Fee for default in intimating the Aadhaar Number	a) Rs. 500, if such intimation is made between 01-04-2022 and 30-06-2022; and Rs. 1,000, in all other cases.
270A(1)	Under-reporting and misreporting of income	A sum equal to 50% of the amount of tax payable on under-reported income. However, if under-reported income is in consequence of any misreporting thereof by any person, the penalty shall be equal to 200% of the amount of tax payable on under-reported income
271A	Failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA	Rs. 25,000
271AA(1)	(1) Failure to keep and maintain information and documents required by section 92D(1) or 92D(2)	2% of value of each international transaction/or specified domestic transaction entered into
	(2) Failure to report such transaction
	(3) Maintaining or furnishing incorrect information or document
271AA(2)	Failure to furnish information and document as required under Section 92D(4)	Rs. 5,00,000/-
271AAA	Where search has been initiated before 1-7-2012 and undisclosed income found	10% of undisclosed income
2B(1)	Where search has been initiated on or after 1-7-2012 but before 15-12-2016 and undisclosed income found	(a) 10% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income
		(b) 20% of undisclosed income of the specified previous year if assessee does not admit the undisclosed income, and on or before the specified date declare such income in the return of income furnished for the specified previous year and pays the tax, together with interest thereon;
		(c) 60% of undisclosed income of the specified previous year if it is not covered by (a) or (b) above
271AAB(1A)	Where search has been initiated on or after 15-12-2016 but before 01-09-2024 and undisclosed income found	(a) 30% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income (b) 60% of undisclosed income of the specified previous year in any other case.
271AAC	Income determined by Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D for any previous year. [if such income is not included by assessee in his return or tax in accordance with section 115BBE has not been paid]	10% of tax payable under section 115BBE.
271AAD	Penalty, if during any proceedings under the Act, it is found that in the books of accounts maintained by assessee, there is: a) A false entry; or b) Any entry relevant for computation of total income of such person has been omitted to evade tax liability.	100% of such false entries or omitted entry
271AAE	Penalty for violation of the provisions of 21st proviso to section 10(23C) or section 13(1)(c) pertaining to passing of unreasonable benefits to trustees or specified person	(a) For the first violation: to the extent of income applied by the institution for the benefit of any interested party referred to in section 13(3); (b) For any violation in subsequent years: twice the amount of such income so applied (“double penalty”).
271B	Failure to get accounts audited or furnish a report of audit as required under section 44AB	One-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, which-ever is less
271BA	Failure to furnish a report from an accountant as required by section 92E	Rs. 1,00,000
271C	Failure to deduct tax at source, wholly or partly, under sections 192 to 196D (Chapter XVII-B), second proviso to section 194B, or failure to pay or ensure payment of tax as required by section 115-O(2), first proviso to section 194R(1), proviso to section 194S(1) or section 194BA(2) .	Amount equal to tax not deducted or paid
271CA	Failure to collect tax at source as required under Chapter XVII-BB	Amount equal to tax not collected
271D	Taking or accepting any loan or deposit or specified sum in contravention of the provisions of Section 269SS. “Specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.	Amount equal to loan or deposit or specified sum so taken or accepted
271DA	Receipt of an amount of Rs. 2 lakh or more in contravention of provisions of Section 269ST.	Amount equal to such receipt
271DB	Failure to provide facility for accepting payment through prescribed electronic modes of payment as referred to in section 269SU	Rs. 5,000 rupees for every day of default
271E	Repayment of any loan or deposit or specified advance otherwise than in accordance with provision of Section 269T. “Specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not transfer takes place.	Amount equal to loan or deposit or specified advance so repaid
271FA1	Failure to furnish an annual information return as required under section 285BA(1)2	Rs. 500 per day of default
	Failure to furnish annual information return within the period specified in notice u/s 285BA(5) Rs. 1,000 per day of default	Rs. 1,000 per day of default
271FAA1	Failure to furnish a statement under section 285BA or failure to furnish a correction statement within the specified period or failure to comply with the due diligence requirement	Rs. 50,000
	Furnishing of inaccurate information by reporting financial institution and such inaccuracy is due to false or inaccurate information submitted by the holder of reportable accounts	Rs, 5,000 for every inaccurate reportable account
271FAB	Section 9A provides that fund management activity carried out by an eligible offshore investment fund through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India (subject to certain conditions). The provision requires that eligible investment fund shall furnish within 90 days from the end of the financial year a statement, in respect of its activities in a financial year, in the prescribed form containing information relating to fulfilment of specified conditions and such other information or documents as may be prescribed. Penalty to be levied if investment fund failed to comply with the requirement.	Rs. 5,00,000
271G3	Failure to furnish any information or document as required by section 92D(3)	2% of the value of the international transaction/specified domestic transaction for each failure
271GA	Section 285A provides for reporting by an Indian concern if following two conditions are satisfied: a) Shares or interest in a foreign company or entity derive substantial value, directly or indirectly, from assets located in India; and b) Such foreign company or entity holds such assets in India through or in such Indian concern. In this case, the Indian entity shall furnish the prescribed information for the purpose of determination of any income accruing or arising in India under Section 9(1)(i). In case of any failure, the Indian concern shall be liable to pay penalty.	Penalty shall be: a) a sum equal to 2% of value of transaction in respect of which such failure has taken place, if such transaction had effect of, directly or indirectly, transferring right of management or control in relation to the Indian concern; b) a sum of Rs. 5,00,00 in any other case.
271GB(1)	Failure to furnish report under section 286(2)	Rs. 5,000 per day upto 30 days and Rs. 15,000 per day beyond 30 days
271GB(2)	Failure to produce the information and documents within the period allowed under section 271GB(6)	Rs. 5,000 for every day during which the failure continues.
271GB(3)	Failure to furnish report or failure to produce information/documents under section 286 even after serving order under section 271GB(1) or 271GB(2)	Rs. 50,000 for every day for which such failure continues beginning from the date of serving such order.
271GB(4)	Failure to inform about inaccuracy in report furnish under section 286(2)	Rs. 5,00,000
	Or furnishing of inaccurate information or document in response to notice issued under section 286(6).
271GC	Failure to submit statement under section 285 by a non-resident having liaison office in India (applicable with effect from April 1, 2025)	Rs. 1,000 per day of failure, up to 3 months; or Rs. 1,00,000 in any other case
271H4	Failure to deliver/cause to be delivered a statement within the time prescribed in section 200(3) or the proviso to section 206C(3), or furnishes incorrect information in the statement	W.e.f. 1-10-2014 Assessing Officer may direct payment of penalty. Penalty shall not be less than Rs. 10,000 but may extend to Rs. 1,00,000
271K4	Penalty of default in submission of statement/certificate prescribed under section 35/Section 80G	Rs. 10,000 to Rs. 1 lakh
271-I	As per section 195(6) of the Act, any person responsible for paying to a non-resident or to a foreign company, any sum (whether or not chargeable to tax), shall furnish the information relating to such payment in Form No. 15CA and 15CB. Penalty shall be levied in case of any failure.	Rs. 1,00,000
271J	Furnishing of incorrect information in any report or certificate by an accountant or a merchant banker or a registered valuer	Rs. 10,000 for each incorrect report or certificate
272A(1)	Refusal or failure to :	Rs. 10,000 for each failure/default
	(a) answer questions
	(b) sign statement
	(c) attend to give evidence or produce books of account, etc., in compliance with summons under section 131(1)
	(d) comply with notices u/s 142(1)/143(2) or failure to comply with direction issued u/s 142(2A).
272A(2)	Failure to :
	(a) furnish requisite information in respect of securities as required under section 94(6) ;	Rs. 500 for every day during which the failure continues (In respect of penalty for failure, in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns u/ss 206 and 206C and statements under Section 200(2A) or section 200(3) or proviso to section 206C(3) or section 206C(3A), penalty shall not exceed amount of tax deductible or collectible)
	(b) give notice of discontinuance of business or profession as required under section 176(3) ;
	(c) furnish in due time returns, statements or certificates, deliver declaration, allow inspection, etc., under sections 133, 134, 139(4A), 139(4C), 192(2C), 197A, 203, 206, 206C, 206C(1A) and 285B;
	(d) deduct and pay tax under section 226(2)
	(e) file a copy of the prescribed statement within the time specified in section 200(3) or the proviso to section 206C(3) (up to 1-7-2012)
	(f) file the prescribed statement within the time specified in section 206A(1) (g) Failure to deliver or cause to be delivered a statement under Section 200(2A) or Section 206C(3A) within prescribed time. With effect from June 1, 2015, it is mandatory for an office of the Government, paying TDS or TCS, as the case may be, without production of a challan, to deliver a statement in the prescribed form and manner to the prescribed authority.
272AA(1)	Failure to comply with section 133B	Not exceeding Rs. 1,000
272B	Failure to comply with provisions relating to PAN or Aadhar as referred to in section 139A/139A(5)(c)/(5A)/(5C)	Rs. 10,000 for each default
272BB(1)	Failure to comply with section 203A	Rs. 10,000 for each failure/default
272BB(1A)	Quoting false tax deduction account number/tax collection account number/tax deduction and collection account number in challans/certificates/statements/documents referred to in section 203A(2)	Rs. 10,000

Note : No penalty is imposable for any failure under sections 271(1)(b), 271A, 271AA, 271B, 271BA, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FAB, 271FB, 271G, 271GA, 271GB, 271H, 271-I, 272A(1)(c) or (d), 272A(2), 272AA(1), 272B, 272BB(1), 272BB(1A), 272BBB(1), 273(1)(b), 273(2)(b) and 273(2)(c) if the person or assessee proves that there was reasonable cause for such failure (section 273B).

Section 273AA provides that a person may make application to the Principal Commissioner/Commissioner for granting immunity from penalty, if (a) he has made an application for settlement under section 245C and the proceedings for settlement have abated; and (b) penalty proceeding have been initiated under this Act. The application shall not be made after the imposition of penalty after abatement.

Notes:

^1.With effect from assessment year 2015-16 “annual information return” has been changed to “statement of financial transaction or reportable account” and word “return” has been changed to “statement”.

^2.With effect from assessment year 2015-16 a new section 271FAAhas been inserted to provide for a penalty of Rs. 50,000 for furnishing inaccurate statement of financial transaction or reportable account in certain cases.

^3.With effect from 1-10-2014 TPO can also levy penalty.

^4.Section 271Has amended with effect from 1-10-2014 provides that penalty shall be levied by Assessing Officer.

[As amended by Finance Act, 2025]

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Tutorials

Disclaimer:

The contents of this document are for information purposes only. This aims to enable public to have a quick and an easy access to information and do not purport to be legal documents.

Viewers are advised to verify the content from Government Acts/Rules/Notifications etc.

PENALTIES UNDER THE INCOME-TAX ACT

Introduction

Under the Income-tax Act, penalties are levied for various defaults committed by the taxpayer. Some of the penalties are mandatory and a few are at the discretion of the tax authorities. In this part, you can gain knowledge about the provisions relating to various penalties leviable under the Income-tax Act.

Penalty for default in making payment of Self Assessment Tax

As per section 140A(1) any tax due (after allowing credit for TDS, advance tax, etc.) along with interest and fee* should be paid before filing the return of income. Tax paid as per section 140A(1) is called ‘self-assessment tax’.

As per section 140A(3), if a person fails to pay either wholly or partly self-assessment tax or, interest, or fee* then he will be treated as assessee in default in respect of unpaid amount. As per section 221(1), if a taxpayer is treated as an assessee in default, then he shall be held liable to pay penalty of such amount as the Assessing Officer may impose and in the case of a continuing default, such further amount or amounts as the assessing officer may, from time to time, direct. However, the total amount of penalty cannot exceed the amount of tax in arrears.

Before charging penalty under section 221(1), the tax authority shall give the taxpayer a reasonable opportunity of being heard. No penalty is levied if the taxpayer proves to the satisfaction of the tax authorities that the default was for good and sufficient reason.

Note: An assessee shall not cease to be liable to any penalty under section 221(1) merely by reason of the fact that he paid the tax before the levy of such penalty.

* Fee for default in furnishing return of income shall be Rs. 5,000 if return has been furnished after the due date prescribed under section 139(1). However, it shall be Rs. 1,000 if the total income of an assessee does not exceed Rs. 5 lakh.

Penalty for default in making payment of Tax

As per section 220(1), when a demand notice under section 156 has been issued to the taxpayer for payment of tax (other than notice for payment of advance tax), then such amount shall be paid within a period of 30 days of the service of the notice at the place and to the person mentioned in the notice. In certain cases, the above period of 30 days can be reduced by the tax authorities with the previous approval of designated authorities. If the taxpayer makes default in payment of any tax due from him, then apart from other penal provisions, he is treated as an assessee in default.

As per section 221(1), if a taxpayer is treated as an assessee in default, then he shall be liable to pay penalty of such an amount as the Assessing Officer may impose. However, penalty cannot exceed the amount of tax in arrears. Thus, penalty under section 221(1) is a general penalty and can be levied in all the cases in which the taxpayer is treated as an assessee in default.

Before charging penalty as discussed above, the tax authorities shall give the taxpayer a reasonable opportunity of being heard. No penalty is levied if the taxpayer proves to the satisfaction of the tax authorities that the default was for good and sufficient reason.

Note: An assessee shall not cease to be liable to any penalty under section 221(1) merely by reason of the fact that he paid the tax before the levy of such penalty.

Late filing fees for delay in filing the TDS/TCS statement

As per section 200(3) every person liable to deduct tax at source is liable to file the statement in respect of tax deducted by him i.e. TDS return. Further, as per proviso to section 206C(3) every person liable to collect tax at source has to furnish statement in respect of tax collected by him i.e. TCS return. Section 234E provides for levy of late filing fees for the delay in filing TDS/TCS return.

As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees however shall not exceed the amount of TDS/TCS. TDS/TCS return cannot be filed (after prescribed due date) without payment of late filing fees as discussed above.

Fee for default in furnishing return of income

If assessee who is required to furnish return of income under section 139 failed to furnish return of income within due date as prescribed under section 139(1) then as per section 234F, he will be required to pay fee of Rs. 5,000 if return has been furnished after the due date prescribed under section 139(1). However, it shall be Rs. 1,000 if the total income of an assessee does not exceed Rs. 5 lakh.

Penalty for failure to comply with notice issued under section 142(1) or 143(2) or direction for audit under section 142(2A)

Penalty under section 272A is levied if a taxpayer fails to comply with notice issued to him under section 142(1) or section 143(2) or fails to comply with a direction issued under section 142(2A). Before understanding the penalty provisions of section 272A we shall take a brief overview of provisions of section 142(1), section 142(2A) and section 143(2).

Under section 142(1), the Assessing Officer can issue notice asking the taxpayer

• to file the return of income if he has not filed the return of income or to produce or cause to be produced such accounts or documents as he may require or

• to furnish in writing and verified in the prescribed manner, information in such form and on such points or matters (including a statement of all assets and liabilities of the taxpayer, whether included in the accounts or not) as he may require.

Section 142(2A) deals with special audit. As per section 142(2A), if the conditions justifying special audit as given in section 142(2A) are satisfied, then the Assessing Officer can direct the taxpayer to get his accounts audited or re-audited from a chartered accountant nominated by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner.

Section 143(2) deals with the provisions relating to the issuance of notice before conducting a scrutiny assessment under section 143(3).

If the taxpayer fails to comply with notice issued to him under section 142(1) or section 143(2) or fails to comply with a direction issued under section 142(2A), then as per section 272A he shall be liable for a penalty of Rs. 10,000 for each failure.

Penalty for underreporting and misreporting of income

Many times a taxpayer may try to reduce his tax liability by underreporting or misreporting of income. In such a case, by virtue of Section 270A, the taxpayer will be held liable for penalty. The rate of penalty shall be fifty per cent of the tax payable on under-reported income. However, in a case where under-reporting of income results from misreporting of income, the taxpayer shall be liable for penalty at the rate of two hundred per cent of the tax payable on such misreported income.

Underreporting of income

A person shall be considered to have under-reported his income in the following cases:

Cases	Income assessed under normal Provisions	Income assessed under MAT/AMT Provisions
Return of Income is filed	Income assessed is greater than the income determined in the return processed u/s. 143(1)(a)	The deemed total income assessed or reassessed as per the provisions of sec. 115JB /115JC , is greater than the deemed total income determined in the return processed under sec 143(1)(a)
No Return of Income is filed or return is filed for the first time under section 148.	The income assessed is greater than the maximum exemption limit	The deemed total income assessed as per the provisions of sec. 115JB /115JC , is greater than the maximum exemption limit.
Case of Reassessment	The income reassessed is greater than the income assessed or reassessed immediately before such reassessment	The deemed total income reassessed as per the provisions of sec. 115JB /115JC , is greater than the deemed total income assessed or reassessed immediately before such reassessment.
Loss Assessed	The income assessed or reassessed has the effect of reducing the loss or converting such loss into income.	The income assessed or reassessed has the effect of reducing the loss or converting such loss into income.

Misreporting of Income

The following cases will be considered as misreporting of income:

1. Misrepresentation or suppression of facts;

2. Failure to record investments in the books of account;

3. Claim of expenditure not substantiated by any evidence;

4. Recording of any false entry in the books of account;

5. Failure to record any receipt in books of account having a bearing on total income; and

6. Failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.

If a closely held company issues its shares at a price higher than its fair market value (FMV) then it shall be liable to pay tax on difference between the FMV and issue price of the shares as per section 56(2)(viib)* of the Income-tax Act. Such tax is called as ‘Angel Tax’ in common parlance. However, the Department for Promotion of Industry and Internal Trade (DPIIT) has issued a Notification No. 127(E), dated 19-02-2019 whereby an eligible start-up shall be exempted from levy of Angel tax if it satisfies the conditions mentioned in such notification.

With a view to ensure compliance to the conditions specified in the notification, the Finance (No. 2) Act, 2019 reiterates that in case of failure to comply with the conditions specified in the notification, the consideration received from issue of shares as exceeding the fair market value of such shares, shall be deemed to be income of the company chargeable to tax for the previous year in which such failure takes place. Further, it shall be deemed that the company has misreported the said income and, consequently, a penalty of an amount equal to 200% of tax payable on the underreported income (i.e., difference between issue price and fair market value of shares) shall be levied as per section 270A.

* Provisions of Section 56(2)(viib) are not applicable from Assessment Year 2025-26.

Computation of under-reported Income

The amount of under-reported income shall be computed as under:

1. Where income is assessed for the first time and return of income was furnished by the assessee, the difference between the amount of income assessed and the amount of income determined after processing of return under Section 143(1) shall be considered as underreported income.

2. Where income is assessed for the first time and no return of income was furnished by the assessee or return was furnished by the assessee for the first time under section 148, the difference between the amount of income assessed and the basic exemption limit applicable in case of the assessee shall be considered as underreported income.

3. Where income is not assessed for the first time, the difference between the amount of income reassessed or recomputed and the amount of income assessed, reassessed or recomputed in a preceding order shall be considered as underreported income.

4. If an assessment or reassessment has the effect of reducing the loss declared in the return or converting that loss into income, the amount of under-reported income shall be the difference between the loss claimed and the income or loss, as the case may be, assessed or reassessed.

5. Where income assessed as per the provisions of Minimum Alternate Tax (MAT) or Alternate Minimum Tax (AMT), underreported income shall be computed as per the following formulae:

(A — B) + (C — D) where,

A = the total income assessed as per the provisions other than the provisions contained in section 115JB or section 115JC (herein called general provisions);

B = the total income that would have been chargeable had the total income assessed as per the general provisions been reduced by the amount of under-reported income;

C = the total income assessed as per the provisions contained in section 115JB or section 115JC;

D = the total income that would have been chargeable had the total income assessed as per the provisions contained in section 115JB or section 115JC been reduced by the amount of under-reported income.

If the amount of under-reported income on any issue is considered both under the provisions contained in section 115JB or section 115JC and under general provisions, such amount shall not be reduced from total income assessed while determining the amount under item D.

Penalty for failure to keep, maintain, or retain books of account, documents, etc., as required under section 44AA

For the purpose of Income-tax Act, a taxpayer is required to maintain the books of account as provided in section 44AA. If the taxpayer fails to maintain books of account as per the provisions of section 44AA, then he shall be liable to pay penalty under section 271A. Penalty under section 271A is Rs. 25,000.

Penalty for failure to keep and maintain information and document etc. in respect of international transaction or specified domestic transaction

Section 92D provides that every person entering into an international transaction or specified domestic transaction shall keep and maintain such information and documents as may be prescribed in this regard under rule 10D. Further a person, being a constituent entity of an international group, shall also keep and maintain such information and documents in respect of an international group as may be prescribed. The Income-tax Authority may require the taxpayer to produce these documents. On such demand by the Income-tax Authority, the taxpayer has to provide these documents within a period of 30 days or such extended period as may be allowed by the tax authorities. These documents should be maintained for a period of 8 years from the end of the relevant assessment year.

The provisions relating to penalty for failure to keep and maintain information and documents in respect of international transaction or specified domestic transaction are given in section 271AA. Penalty under section 271AA is attracted in the case of any of the following failures:

1) If a person fails to keep and maintain information and documents in respect of international transaction or specified domestic transaction as provided in section 92D read with rule 10D.

2) If a person fails to report the international transaction or specified domestic transaction which he is required to do so.

3) If a person maintains or furnishes an incorrect information or document in respect of international transaction or specified domestic transaction.

Penalty will be a sum equal to 2% of the value of each international transaction or specified domestic transaction entered into by the taxpayer.

If any person, being a constituent entity of international group fails to furnish information and documents in respect of international group [as referred to in Section 92D], it may be liable to pay penalty of Rs 5,00,000.

Penalty in case of search

To unearth the undisclosed income, tax authorities generally conduct search at the premises of the taxpayer. Section 132 provides the circumstances in which the tax authorities can initiate a search. If a search has been initiated and any undisclosed income is unearthed in the search, then penalty can be levied under section 271AAB.

The quantum of penalty under section 271AAB shall be as follows:

1) Where search has been initiated on or after 1-7-2012 but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the president (i.e., 16-12-2016) –

a) 10% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income

b) 20% of undisclosed income of the specified previous year if assessee does not admit the undisclosed income, and on or before the specified date declare such income in the return of income furnished for the specified previous year and pays the tax, together with interest thereon;

c) 60% of undisclosed income of the specified previous year if it is not covered by (a) or (b) above

2) Where search has been initiated on or after the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the president (i.e., before 01-09-2024)-

a) 30% of undisclosed income of the specified previous year if assessee admits the undisclosed income; substantiates the manner in which it was derived; and on or before the specified date pays the tax, together with interest thereon and furnishes the return of income for the specified previous year declaring such undisclosed income

b) 60% of undisclosed income of the specified previous year if it is not covered by above provisions

Penalty for ‘false entry’ in the books of account

The Finance Act 2020 has introduced a new section 271AAD under the Act to provide for a levy of penalty on a person, if during any proceedings under the Act, it is found that in the books of accounts maintained by him there is:

a) A false entry; or

b) Any entry relevant for computation of total income of such person has been omitted to evade tax liability.

The penalty payable by such person shall be equal to the aggregate amount of false entries or omitted entry.

It is also provided that any other person, who causes in any manner a person to make or cause to make a false entry or omits or causes to omit any entry, shall also pay by way of penalty a sum which is equal to the aggregate amount of such false entries or omitted entry.

For the purpose of section 271AAD, the false entries to include use or intention to use:

a) Forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence;

b) Invoice in respect of supply or receipt of goods or services or both issued by the person or any other person without actual supply or receipt of such goods or services or both; or

c) Invoice in respect of supply or receipt of goods or services or both to or from a person who do not exist.

Consequences of default in submission of statement/certificate prescribed under section 35/ Section 80G

The Finance Act, 2020 has amended section 35 of the Income-tax Act to provide that deduction available under this section shall be available to the research association, university, college or other institution or the company only if the assessee delivers a statement of donations, as prescribed by the board, and also furnishes certificate of the amount of donation to the donors.

Similar amendment has also been made in Section 80G to provide that entities receiving donation shall be required to file a statement of the donation received and shall issue a certificate to donor.

In order to ensure compliance with the provision, the Finance Act, 2020 has inserted a new section 234G which provides for levy of fee of Rs. 200 per day if taxpayer fails to submit such statement or certificate within prescribed time. However, the fee shall not exceed the amount in respect of which the failure has occurred. Such fees shall be paid before submitting such statement or before furnishing of certificate, as the case may be.

Consequently, a new section 271K has been inserted in the Act which empowers the Assessing Officer to levy a penalty of Rs. 10,000 to Rs. 1 lakh, if assessee fails to furnish the statement or fails to furnish a certificate.

Faceless Penalty

With an objective to eliminate the human interface in such cases also, an e-penalty scheme is to be launched on the lines of e-assessment scheme.

Section 274 of the Income-tax Act prescribes procedure for imposing penalty on the assessee. The Finance Act, 2020 has inserted a new sub-section 2(A) to section 274 to authorize the Central Government to notify an e-scheme for the purposes of imposing penalty so as to impart greater efficiency, transparency and accountability by:

a) eliminating the interface between the Assessing Officer and the assessee in the course of proceedings to the extent it is feasible technologically;

b) optimising utilisation of the resources through economies of scale and functional specialisation;

c) introducing a mechanism for imposing of penalty with dynamic jurisdiction in which penalty shall be imposed by one or more tax authorities.

The Central Government vide notification S.O. 117(E), dated 12-1-2021, has notified the Faceless Penalty Scheme, 2021 effective from 12-01-2021.

Penalty in case of income from undisclosed sources

The Assessing Officer may make addition to the income of an assessee under section 68, section 69, section 69A, section 69B, section 69C or section 69D if assessee fails to explain the nature and source of his income.

Section 271AAC of the Income-tax Act empowers AO or Commissioner (Appeals) to levy penalty at the rate of 10% of the tax payable under section 115BBE if any addition is made under section 68, section 69, section 69A, section 69B, section 69C, section 69D. However, no penalty shall be levied if such income is disclosed in the return of income and tax on such income is paid under Section 115BBE on or before the end of the relevant previous year.

Failure to get accounts audited or furnish a report of audit as required under section 44AB

section 44AB prescribes when the accounts of the taxpayer are to be audited. If a taxpayer, in spite of the requirement of section 44AB, fails to get his accounts audited, then he can be held liable for penalty under section 271B. Penalty under section 271B will be levied for failure to get the accounts audited or failure to furnish a report of audit as required under section 44AB. Penalty shall be one-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, whichever is less.

Penalty for failure to furnish a report from an accountant as required by section 92E

section 92E provides that every person entering into an international transaction or specified domestic transaction shall obtain a report from a chartered accountant in the prescribed form and shall furnish the same on or before the date prescribed in this regard. If a taxpayer fails to do so, then he shall be liable to pay penalty under section 271BA. Penalty under section 271BA for failure to furnish a report from a chartered accountant as required by section 92E is Rs. 1,00,000.

Penalty for failure to deduct tax at source

If a person fails to deduct tax at source as required by or under the provisions of chapter XVII-B fails to deduct the tax, then he can be held liable to pay penalty under section 271C.

Further, penalty shall also be levied if a person fails to pay or ensure payment of tax as required by section 115O(2), first proviso to section 194R(1), proviso to section 194S(1) or section 194BA(2).

Penalty under section 271C shall be levied of an amount equal to tax not deducted (in case of TDS), tax not paid (in case of dividend distribution tax) or ensure payment of (in case of sections 194R, 194S , 194BA ).

Penalty for failure to pay tax in respect of winning from lottery or crossword puzzle

The section 194B provides that the person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle or card game and other game of any sort in an amount exceeding [ten thousand rupees], shall, at the time of payment thereof, deduct income-tax thereon at the rates in force.

Proviso to section 194B provides that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.

If any person fails to pay whole or part of the tax as required under proviso to section 194B than, such person shall be liable to pay penalty under section 271C of an amount equal to tax not paid.

Penalty for failure to collect tax at source

Similar to the provisions of tax deducted at source, section 206C provides certain items in respect of which tax is to be collected at source by the person receiving payment in respect of certain specified items. If the person required to collect tax at source fails to collect the tax, then he shall be liable to pay penalty under section 271CA. Penalty shall be levied of an amount equal to tax not collected.

Taking or accepting certain loans or deposits or specified sum in contravention of provisions of section 269SS

Section 269SS provides that no person shall take or accept loan or deposit or specified sum exceeding Rs. 20,000 by any mode other than account payee cheque or account payee demand draft or use of electricity clearing system through a bank account or through such other electronic modes as may be prescribed.

Specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place.

Contravention of the provisions of section 269SS will attract penalty under section 271D. Penalty under section 271D shall be levied of an amount equal to loan or deposit taken or accepted.

Penalty on receipt of an amount of Rs. 2 lakh or more in cash

Section 269ST provides that no person shall receive an amount of Rs. 2,00,000 or more,—

(a) in aggregate from a person in a day;

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, or through such other electronic mode as may be prescribed.

However, the said restriction shall not apply to Government, any banking company, post office savings bank, co-operative bank or a person notified by the Central Government.

Section 271DA provides for levy of penalty on a person who receives a sum in contravention of the provisions of section 269ST. The penalty shall be equal to the amount of such receipt. However, the penalty shall not be levied if the person proves that there were good and sufficient reasons for such contravention.

Penalty for not providing facility for accepting payment through prescribed electronic modes of payment

The Finance (No. 2) Act, 2019 has inserted a new Section 269SU in Income-tax Act with effect from November 1, 2019. The section provides that every person engaged in business should mandatorily provide the facility for accepting payment through prescribed electronic mode, if the gross receipts from such business exceeds Rs. 50 crore during the immediately preceding previous year.

Consequential penal provisions have been inserted in Section 271DB, which provides for penalty of Rs. 5,000 rupees for every day of default in case the person does not accept payment through notified digital modes. The section also provides for immunity from penalty in case person proves that there is a good and sufficient reasons for such default.

Repaying loans or deposits or specified advance in contravention of provisions of section 269T

section 269T provides that no person shall repay any loan or deposit or specified advance exceeding Rs. 20,000 by any mode other than account payee cheque or account payee demand draft in the name of the person who has made the loan or deposit or paid the specified advance or by use of electricity clearing system through a bank account or through such other electronic mode as may be.

“Specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not transfer takes place.

Contravention of the provisions of section 269T will attract penalty under section 271E. Penalty under section 271E shall be a sum equal to loan or deposit or specified advance so repaid.

Failure to furnish statement of financial transaction or reportable account (previously called as ‘Annual Information Return (AIR)’) as required under section 285BA(1)

Non-furnishing of statement of financial transaction or reportable account will attract penalty under section 271FA. Penalty shall be levied of Rs. 500 per day of default.

However, section 285BA(5) empower the tax authorities to issue a notice to the person directing him to file the statement within a period not exceeding 30 days from the date of service of such notice and in such a case person shall furnish the statement within the time specified in the notice. If person fails to file the statement within the specified time, then a penalty of Rs. 1,000 per day shall be levied from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.

Penalty for furnishing inaccurate statement of financial transaction or reportable account

Section 271FAA levies penalty penalty for furnishing inaccurate statement of financial transaction or reportable account.

If a prescribed reporting financial institution referred to in Section 285BA(1) who is required to furnish statement of financial transaction or reportable account:

a) provides inaccurate information in the statement or fails to furnish correct information within the specified period; or

b) fails to comply with the prescribed due diligence requirement then, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of fifty thousand rupees.

Further, a penalty of Rs. 5,000 would be levied on reporting financial institution if there is any inaccuracy in SFT and such inaccuracy is due to false or inaccurate information submitted by the holder of reportable accounts. The reporting financial institution may also recover such penalty amount from the holder of the reportable account.

Penalty for failure to furnish statement or information or document by an eligible investment fund.

A new section 9A has been inserted by Finance Act, 2015 to provide that fund management activity carried out by an eligible offshore investment fund through an eligible fund manager acting on behalf of such fund shall not constitute business connection in India (subject to certain conditions)

One of the condition is that every eligible investment fund shall, in respect of its activities in a financial year, furnish within 90 days from the end of the financial year, a statement in the prescribed form to the prescribed income-tax authority containing information relating to the fulfilment of the specified conditions or any information or document which may be prescribed. Failure to comply with this condition shall result in penalty of Rs. 5,00,000

Failure to furnish any information or document as required by section 92D(3)

As per section 92D(3) the tax authorities may, in the course of any proceeding under the Act, require any person who has entered into an international transaction or specified domestic transaction to furnish any information or document (as provided in section 92D read with rule 10D). Such information or document is to be produced within a period of 10 days from the date of receipt of a notice issued in this regard (the period can be extended for further 30 days by the tax authorities).Failure to comply with these provisions shall attract penalty under section 271G.

As per section 271G, if any person who has entered into an international transaction or specified domestic transaction fails to furnish any such information or document as discussed above, then the tax authorities may direct that such person shall pay, by way of penalty, a sum equal to 2% of the value of the international transaction or specified domestic transaction for each such failure.

Penalty Section 271GB for failure to furnish report or for furnishing inaccurate report under Section 286

If any reporting entity fails to furnish report [as referred to in Section 286(2)] in respect of international group, then it would be liable to penalty of –

a) Rs 5,000 for every day for which failure continues, if the period of failure does not exceed one month; or

b) Rs 15,000 for every day for which the failure continues beyond the period of one month.

Where a reporting entity provides inaccurate information in the report [as referred to in Section 286(2)], then it is liable to pay penalty of Rs 5,00,000, subject to satisfaction of conditions.

Penalty Section 271GC for failure to furnish report under Section 285 (applicable from AY 2025-26)

If a person fail to furnish statement under section 285 within the prescribed period, the AO may levy the following penalty on him:

a) Rs. 1,000 for each day the failure continues, if the period of failure does not exceed three months; or

b) Rs. 1,00,000 in any other case.

Penalty for failure to furnish information or document under section 285A

A new section 285A has been inserted by Finance Act, 2015 to provide for a reporting obligation on Indian concern through or in which the Indian assets are held by the foreign company or the entity.

The Indian entity shall be obligated to furnish information relating to the off-shore transaction having the effect of directly or indirectly modifying the ownership structure or control of the Indian company or entity.

In case of any failure on the part of Indian concern, it shall pay by way of penalty-

(a) a sum equal to 2% of the value of the transaction in respect of which such failure has taken place in case where such transaction had the effect of directly or indirectly transferring the right of management or control in relation to the Indian concern; and

(b) a sum of Rs. 5,000 in any other case.

Penalty for failure to file the TDS/TCS return

As per section 271H, where a person fails to file the statement of tax deducted/collected at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then he shall be liable to pay penalty under section 271H. Minimum penalty shall be levied of Rs. 10,000 which can go upto Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fee prescribed under section 234E.

Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return.

No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the fee andinterest (if any), to the credit of the Central Government, he has filed the TDS/TCS returnbefore the expiry of a period of one year (see note) from the due date of filing the TDS/TCS return.

Note: The limitation period of one year has been reduced to one month with effect from Assessment Year 2025-26.

In other words, with effect from Assessment Year 2025-26, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied :

1) The tax deducted/collected at source is paid to the credit of the Government.

2) Late filing fees and interest (if any) is paid to the credit of the Government.

3) The TDS/TCS return is filed before the expiry of a period of one month from the due date specified in this behalf.

It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for the delay in filing of TDS/TCS return and not for filing incorrect TDS/TCS return.

Penalty on professionals for furnishing incorrect information in statutory report or certificate

The thrust of the Government in recent past is on voluntary compliance. Certification of various reports and certificates by a qualified professional has been provided in the Act to ensure that the information furnished by an assessee under the provisions of the Act is correct. Various provisions exist under the Act to penalise the defaulting assessee in case of furnishing incorrect information. However, there exist no penal provision for levy of penalty for furnishing incorrect information by the person who is responsible for certifying the same.

In order to ensure that the person furnishing report or certificate undertakes due diligence before making such certification, a new section 271J is inserted under Income-tax Act w.e.f 1/4/2017 so as to provide that if an accountant or a merchant banker or a registered valuer, furnishes incorrect information in a report or certificate under any provisions of the Act or the rules made thereunder, the Assessing Officer or the Commissioner (Appeals) may direct him to pay a sum of Rs. 10,000 for each such report or certificate by way of penalty.

Penalty for failure to furnish information or furnishing inaccurate information under section 195

As per section 195(6) of the Act, any person responsible for paying to a non-resident (not being a company) or to a foreign company, any sum (whether or not chargeable to tax), shall furnish the information relating to payment of such sum in Form 15CA and 15CB .

In case of any failure in this regard a penalty of Rs. 1,00,000 shall be leviable.

Failure to co-operate with the tax authorities

Many times the tax authorities requires any information from a person, in such a case, the tax authorities may request such person to answer questions raised by them or may require the person to sign the statements or may issue him a summon for his attendance. Failure to comply with these directions or notices can attract penalty under section 272A(1) Tax authorities also issues notice under Section 142(1)/Section 143(2) or issues direction for special audit under Section 142(2A). In other words, penalty under section 272A(1) shall be levied if a person refused or fails to:

➢ Answer questions

➢ Sign statement

➢ Attend office to give evidence or produce books of account, etc., in compliance with summons under section 131(1)

➢ Comply with notice under Section 142(1)/Section 143(2) or fails to comply with direction issued under Section 142(2A)

Penalty leviable under section 272A(1) is Rs. 10,000 for each failure/default.

Penalty under section 272A(2)

Penalty under section 272A(2) is levied in respect of following defaults :

1. Failure to furnish requisite information in respect of securities as required under section 94(6). As per section 94(6) the tax authorities can issue notice asking the taxpayer to furnish the particulars of securities owned by him during the year.

2. Failure to give notice of discontinuance of business or profession as required under section 176(3) (within 15 days of discontinuance of business or profession).

3. Failure to furnish in due time returns, statements or certificates, deliver declaration, allow inspection, etc., under sections 133, 134, 139(4A), 139(4C), 192(2C), 197A, 203, 206, 206C, 206C(1A) and 285B.

4. Failure to deduct and pay tax under section 226(2).

5. Failure to file a copy of the prescribed statement within the time specified in section 200(3) or the proviso to section 206C(3) (up to 1-7-2012).

6. Failure to file the prescribed statement within the time specified in section 206A(1). Section 206A(1) deals with filing of quarterly return by banks, co- operative society, etc. in respect of payment of interest to residents without deduction of tax.

7. Failure to deliver or cause to be delivered a statement under Section 200(2A) or Section 206C(3A) within prescribed time. With effect from 01/06/2015, it has been mandatory for an office of the Government paying TDS or TCS, as the case may be, without production of a challan to deliver to the prescribed authority, a statement in such form and manner as may be prescribed.

Penalty in above cases shall be levied at Rs. 500 per day for every day during which the default continues. In respect of penalty for failure, in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and for default under section 200(2A), 200(3), 206, 206C, 206C(3) and 206C(3A), the quantum of penalty shall not exceed the amount of tax deductible or collectible.

Penalty for failure to comply with provisions of 133B

133B empowers the tax authorities to enter the place of business of the taxpayer to collect information required by the authorities which will be useful under the Act. If the taxpayer fails to comply with the provisions of 133B, then penalty shall be levied under section 272AA(1) upto Rs. 1,000.

Penalty for not providing facility for accepting payment through prescribed electronic modes of payment

The Finance (No. 2) Act, 2019 has inserted a new Section 269SU in Income-tax Act with effect from November 1, 2019. The section provides that every person engaged in business should mandatorily provide the facility for accepting payment through prescribed electronic mode, if the gross receipts from such business exceeds Rs. 50 crore during the immediately preceding previous year.

Consequential penal provisions have been inserted in Section 271DB, which provides for penalty of Rs. 5,000 rupees for every day of default in case the person does not accept payment through notified digital modes. The section also provides for immunity from penalty in case person proves that there is a good and sufficient reasons for such default.

Failure to comply with provisions relating to Tax Deduction Account Number or Tax Collection Account Number

As per section 203A, every person deducting tax at source or collecting tax at source has to obtain the Tax Deduction Account Number or Tax Collection Account Number (as the case may be).

Section 203A(2) provides that the deductor or collector of tax at source should quote his Tax Deduction Account Number or Tax Collection Account Number (as the case may be) in the challans, certificates, statement and other documents relating to TDS/TCS. Section 272BB(1) provides for penalty for failure to obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and section 272BB(1A) provides for penalty for quoting incorrect Tax Deduction Account Number or Tax Collection Account Number (as the case may be). Penalty under section 272BB is Rs. 10,000.

Relaxation from penalty

Apart from designing penalty provisions, the Income-tax Act also contains provisions for granting relief from penalty in genuine / deserving cases. Relief can be granted in the following manner:

1. Under section 273A(4) the Principal Commissioner or Commissioner of Income- tax has power to waive or reduce any penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A(4) in this regard are satisfied.

2. Apart from shelter of section 273A(4) as discussed earlier, section 273B also provides relief from penalty in genuine cases. As per section 273B, no penalty shall be levied under section 271A, 271AA, 271B, 271BA, 271BB, 271C, 271CA, 271D, 271E, 271F, 271FA, 271FAB,271FB, 271G , 271GA , 271GB , 271GC , 271H, 271-I, 271J, 272A(1)(c) or (d) , 272A(2), 272AA(1), 272B, 272BB(1), 272BB(1A), 272BBB(1) or 273(2)(b) or (c), if the taxpayer proves that there was reasonable cause for such failure.

Penalty for passing unreasonable benefits to trustee or specified person

The Finance Act, 2022 has inserted a new section 271AAE to the Income-tax Act to levy a penalty on trusts or institutions. Section 271AAE has been inserted to provide as follows:

(a) An institution covered by section 11 to 13 shall be liable to penalty in respect of violation of section 13(1)(c).

(b) An institution covered by section 10(23C)(iv)/(v)/(vi)/(via) shall be liable to penalty in respect of violation of twenty first proviso to section 10(23C) [which is corresponding to section 13(1)(c)].

The penalty is to be computed as follows:

(a) For the first violation: to the extent of income applied by the institution for the benefit of any interested party referred to in section 13(3);

(b) For any violation in subsequent years: twice the amount of such income so applied (“double penalty”).

This section is applicable with effect from Assessment Year 2023-24.

MCQ ON PENALTIES UNDER THE INCOME-TAX ACT

Q1. As per section 140A(1) any tax due (after allowing credit for TDS, advance tax, etc.) along with interest under section 234A, 234B and 234C (if any) and fee should be paid before filing the return of income. Tax paid as per section 140A(1) is called _______.

(a) Advance tax (b) Self assessment tax

(c) Tax paid at source (d) Corporate tax

Correct answer : (b)

Justification of correct answer :

As per section 140A(1) any tax due (after allowing credit for TDS, advance tax, etc.) along with interest under section 234A, 234B and 234C (if any) and fee should be paid before filing the return of income. Tax paid as per section 140A(1) is called ‘self assessment tax’.

Thus, option (b) is the correct option.

Q2. Section 234E provides for levy of late filing fees for the delay in filing of _____

(a) Return of income (b) TDS return

(c) TCS return (d) TDS/TCS return

Correct answer : (d)

Justification of correct answer :

Section 234E provides for levy of late filing fees for the delay in filing TDS/TCS return.

Thus, option (d) is the correct option.

Q3. If the taxpayer fails to maintain books of account as per the provisions of section 44AA, then he shall be liable to pay penalty under section ______ of Rs. 25,000.

(a) 271B (b) 271A

(c)271AA (d) 271AB

Correct answer : (b)

Justification of correct answer :

If the taxpayer fails to maintain books of account as per the provisions of section 44AA, then he shall be liable to pay penalty under section 271A. Penalty under section 271A is Rs. 25,000.

Thus, option (b) is the correct option.

Q4. If a taxpayer, in spite of the requirement of section 44AB, fails to get his accounts audited, then he shall be liable for penalty under section 271B of one-half per cent of total sales, turnover or gross receipts, etc., or _________, whichever is less.

(a) Rs. 2,00,000 (b) Rs. 1,50,000

(c) Rs. 1,00,000 (d) Rs. 50,000

Correct answer : (b)

Justification of correct answer :

section 44AB prescribes when the accounts of the taxpayer are to be audited. If a taxpayer, in spite of the requirement of section 44AB, fails to get his accounts audited, then he shall pay penalty under section 271B. Penalty under section 271B will be levied for failure to get the accounts audited or failure to furnish a report of audit as required under section 44AB. Penalty will be one-half per cent of total sales, turnover or gross receipts, etc., or Rs. 1,50,000, whichever is less.

Thus, option (b) is the correct option.

Q5. Section 269SS provides that no person shall take or accept loan or deposit or specified sum exceeding Rs. 50,000 by any mode other than account payee cheque or account payee demand draft or by use of electricity clearing system through a bank account or through such other electronic mode as may be prescribed Contravention of the provisions of section 269SS will attract penalty under section 271D of an amount equal to loan or deposit taken or accepted or specified sum.

(a) True (b) False

Correct answer : (b)

Justification of correct answer :

Section 269SS provides that no person shall take or accept loan or deposit or specified sum exceeding Rs. 20,000 by any mode other than account payee cheque or account payee demand draftor by use of electricity clearing system through a bank account or through such other electronic mode as may be prescribed. Contravention of the provisions of section 269SS will attract penalty under section 271D. Penalty under section 271D shall be levied of an amount equal to loan or deposit taken or accepted or specified sum.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q6. Penalty under section 271FA shall be levied for failure to file statement of financial transaction or reportable account (previously called as Annual Information Return). Penalty under section 271FA is Rs. for every day during which the failure continues.

(a) 500 (b) 250

(c) 100 (d) 50

Correct answer : (a)

Justification of correct answer :

Penalty under section 271FA shall belevied for failure to file statement of financial transaction or reportable account. Penalty under section 271FA is Rs. 500 for every day during which the failure continues.

Thus, option (a) is the correct option.

Q 7. What is the rate of penalty for underreporting of income under Section 270A?

(a) 100% (b) 200%

(c) 300% (d) 50%

Correct answer : (d)

Justification of correct answer :

The rate of penalty shall be fifty per cent of the tax payable on under-reported income. However, in a case where under-reporting of income results from misreporting of income, the taxpayer shall be liable for penalty at the rate of two hundred per cent of the tax payable on such misreported income.

Q8. As per section 271H, where a person fails to file the statement of tax deducted/collected at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then he shall be liable to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go upto Rs _____.

(a) 1,00,000 (b) 2,00,000

(c) 3,00,000 (d) 3,00,000

Correct answer : (a)

Justification of correct answer :

As per section 271H, where a person fails to file the statement of tax deducted/collected at source i.e. TDS/TCS return on or before the due dates prescribed in this regard, then he shall beliable to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go upto Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fee prescribed under section 234E.

Thus, option (a) is the correct option.

Q9.272B provides penalty in case of default by the taxpayer in complying with the provisions of section 139A or knowingly quoting incorrect PAN or Aadhaar Number in any document referred to in section 139A(5)(c) or intimates incorrect PAN or Aadhaar Number for the purpose of section 139A(5A)/(5C). Penalty under section 272B is Rs. ______ for each default.

(a) 1,00,000 (b)50,000

(c) 50,000 (d) 10,000

Correct answer : (d)

Justification of correct answer :

Section 272B provides for penalty in case of default in complying with the provisions relating to PAN, i.e., failure to obtain, quote, or authenticate PAN. The amount of penalty shall be Rs. 10000 for each default.

As the Finance (No. 2) Act, 2019 as provided for interchangeability of Aadhaar with PAN, Consequential amendments have been made in the penal provisions of Section 272B so as to levy a penalty of Rs. 10,000 for each default in the following cases:

a) If assessee fails to quote or intimate his PAN or Aadhaar or quotes or intimates invalid PAN or Aadhaar.

b) If assessee fails to quote or authenticate his PAN or Aadhaar in specified transactions.

c) If receiver (i.e., banks, financial institution, etc.) of documents in respect of specified transactions fails to ensure that the PAN or Aadhaar are duly quoted and authenticated.

Thus, option (d) is the correct option.

Q10. Section 272BB(1A) provides for penalty for quoting incorrect Tax Deduction Account Number or Tax Collection Account Number (as the case may be). Penalty under section 272BB is Rs ____________.

(a) 75,000 (b) 50,000

(c) 10,000 (d) 5,000

Correct answer : (c)

Justification of correct answer :

Section 203A(2) provides that the deductor or collector of tax at source should quote his Tax Deduction Account Number or Tax Collection Account Number (as the case may be) in the challans, certificates, statement and other documents relating to TDS/TCS. Section 272BB(1) provides for penalty for failure to obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) and section 272BB(1A) provides for penalty for quoting incorrect Tax Deduction Account Number or Tax Collection Account Number (as the case may be). Penalty under section 272BB is Rs. 10,000.

Thus, option (c) is the correct option.