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CMA Final · Direct Tax Laws and International Taxation · Penalties and Prosecutions

An assessee applies to the Commissioner for relief on the ground of genuine hardship under the Income-tax Act, 2025. The aggregate penalties proposed to be waived are Rs. 1,50,000, and the assessee has cooperated in the inquiry. Which statement is correct?

Prior approval of the Chief Commissioner or Director General is needed, because the aggregate penalty to be waived, Rs. 1,50,000, exceeds the Rs. 1,00,000 threshold under the hardship provision. The cooperation of the assessee does not remove this requirement.

  1. AThe Commissioner may waive the penalty without any higher approval since the assessee has cooperated
  2. BThe Commissioner may waive it only after obtaining prior approval of the Chief Commissioner or Director General, since the amount exceeds Rs. 1,00,000Correct
  3. CThe Commissioner has no power to waive penalties on grounds of hardship
  4. DThe Commissioner may waive it only if the order is passed within three months of the application

Explanation

Section 469(5) allows waiver on application for genuine hardship with cooperation. Under section 469(6), prior approval of the higher authority is needed where the aggregate penalties reduced or waived exceed Rs. 100000. Rs. 1,50,000 exceeds this. The time limit for the order is twelve months from the end of the month of application, not three months.

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