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

An assessee applies under section 469(5) citing genuine hardship, and the Commissioner waives penalties of Rs. 1,40,000 in aggregate. The application was received on 12 May 2026. Which statement is correct?

Prior approval is needed and the order must be passed by 31 May 2027. Section 469(6) requires approval when aggregate penalties waived exceed Rs. 1,00,000, and section 469(7) allows twelve months from the end of the month of receipt, here May 2026, so the deadline is 31 May 2027.

  1. APrior approval of the higher authority is needed, and the order must be passed by 31 May 2027Correct
  2. BPrior approval is not needed because the limit is Rs. 5,00,000, and the order must be passed by 31 May 2027
  3. CPrior approval is needed, and the order must be passed by 12 May 2027
  4. DPrior approval is not needed, and the order must be passed by 31 May 2026

Explanation

Under section 469(6), prior approval is required if the aggregate penalties reduced, waived or compounded exceed Rs. 1,00,000, and Rs. 1,40,000 exceeds it. Under section 469(7), the order must be passed within twelve months from the end of the month of receipt, which is May 2026, so by 31 May 2027. The Rs. 5,00,000 limit belongs to sub-section (3), a different provision.

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