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

An assessee applies to the Commissioner under section 469(5) for waiver of penalties on grounds of genuine hardship. The Commissioner waives penalties of Rs. 70,000 on one tax year and Rs. 45,000 on another. What is the position regarding prior approval under section 469(6)?

Prior approval is required, because section 469(6) looks at the aggregate penalties waived. Rs. 70,000 plus Rs. 45,000 equals Rs. 1,15,000, which exceeds the Rs. 1,00,000 limit, regardless of each year's amount being lower.

  1. ANot needed, since each waiver is below Rs. 1,00,000
  2. BNeeded, since the aggregate Rs. 1,15,000 exceeds Rs. 1,00,000Correct
  3. CNeeded only if waiver exceeds Rs. 5,00,000
  4. DNeeded only if the assessee has not cooperated

Explanation

Section 469(6) tests the aggregate amount of penalties reduced, waived or compounded under sub-section (5). 70,000 + 45,000 = 1,15,000, which exceeds Rs. 1,00,000, so approval is required. Testing each year separately is the error in the first option.

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