The Finance Act, 2007 carried out a comprehensive amendment to the scheme of settlement of cases. This scheme provides for abatement of proceedings before the Settlement Commission under various circumstances. In order to deal with the various issues that may arise in the event of abatement of proceedings before the Settlement Commission, an amendment has been carried out to empower the Commissioner of Income tax to grant immunity from penalty and prosecution in cases which abate.
The salient features of the scheme for granting immunity from penalty are as under:-
- The application for the immunity must be made by the assessee {person whose case has been abated under section 245(HA)} to the Commissioner of Income-tax.
- If penalty was levied before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity at any time.
- If no penalty was levied till the time of abatement of proceedings before Settlement Commission, then the assessee must make an application for immunity before the imposition of penalty by the Income tax authority.
- Immunity can be granted by the Commissioner on his satisfaction.
- The satisfaction is required to be that the assessee has cooperated in the proceedings after abatement and has made a full and true disclosure of his income and the manner in which such income has been derived.
- Immunity can be subject to such conditions as the Commissioner may think to impose.
- The immunity granted shall stand withdrawn, if such assessee fails to comply with any condition subject to which the immunity was granted.
- The immunity granted may be withdrawn by the Commissioner, if he is satisfied that the assessee had, in the course of proceedings, after abatement, concealed any particulars from the Income-tax authority or had given false evidence.
Similarly the salient features of the scheme for granting immunity from prosecution are as under:-
- The application for the immunity must be made by the assessee {person whose case has been abated under section 245(HA)} to the Commissioner of Income-tax before institution of the prosecution proceedings after abatement.
- If prosecution proceedings were instituted before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity any time. However if the assessee has received any notice etc. from the Income tax authority for institution of prosecution, then he must apply to the commissioner for immunity, before actual institution of prosecution.
- Immunity can be granted by the Commissioner on his satisfaction.
- The satisfaction is required to be that the assessee has cooperated in the proceedings after abatement and has made a full and true disclosure of his income and the manner in which such income has been derived.
- Where application for settlement under section 245C had been made before the 1st day of June, 2007, the Commissioner can also grant immunity from prosecution for any offence under this Act or under the Indian Penal Code or under any other Central Act.
- Immunity can be subject to such conditions as the Commissioner may think to impose.
- The immunity granted shall stand withdrawn, if such assessee fails to comply with any condition subject to which the immunity was granted.
- The immunity granted may be withdrawn by the Commissioner, if he is satisfied that the assessee had, in the course of proceedings, after abatement, concealed any particulars from the Income-tax authority or had given false evidence.
Applicability: These amendments relating to power of the Commissioner to grant immunity from penalty and prosecution have been made applicable from 1st April, 2008.
Further, section 153 of the Income tax Act has been amended so as to allow a minimum time period of one year to the Income tax authority before whom the case was pending when the application was filed with the Settlement Commission.
Applicability: This amendment has been made applicable retrospectively with effect from 1st of June 2007. It shall be deemed that this revised time limit will apply to all cases where settlement proceedings have abated from 1st of June 2007 and thereafter.
Similar amendments have also been carried out in the Wealth-tax Act.
Further the Finance Act, 2007 has provided for abatement of cases from
Settlement Commission if the Commission fails to pass the order of settlement before a specified date. The abatement has started from 1st Day of April, 2008. Some of the cases are expected to abate to CIT(A). Therefore, in order to empower CIT(A) to use the information relating to disclosure made by the assessee before the Settlement Commission while deciding the appeal, the provisions of section 251 of the Incometax Act has been amended so as to provide that where a case abates to the CIT(A), he may, after taking into consideration any additional income disclosed by the Assessee before the Commission, any material filed by the assessee with the Commission and any other material brought on his record, confirm, reduce, enhance or annul orders of assessment.
Similar amendment has been carried out in the Wealth-tax Act, 1957.
Applicability: This amendment has been made applicable with effect from 1st day of April, 2008.
Note: Above is the Analysis of Amendment made by The Finance Act, 2008.
