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CA Final · Direct Tax Laws & International Taxation · Tax Planning, Tax Avoidance and Tax Evasion

Kiran Textiles Ltd was granted immunity under section 519 of the Income-tax Act, 2025 after giving evidence on a tax evasion racket. Later, the Central Government found that its director was wilfully concealing material facts and giving false evidence, and recorded a finding to that effect. What is the consequence?

The immunity is deemed withdrawn once the Central Government records a finding of wilful concealment or false evidence. The person can then be tried for the original offence and any other offence in the same matter, and also becomes liable to the penalty he would otherwise have faced.

  1. AThe immunity continues but a fresh penalty is levied on the director
  2. BThe immunity is deemed withdrawn, and he may be tried for the offence and for any other offence connected with the same matter, and becomes liable to the penalty otherwise leviableCorrect
  3. COnly the penalty immunity is withdrawn; the prosecution immunity remains
  4. DThe immunity is withdrawn but he cannot be tried for any other offence in the same matter

Explanation

Under section 519(3) and (4), once the Central Government records a finding of non-compliance, wilful concealment or false evidence, the immunity is deemed withdrawn. The person may then be tried for the original offence and any other offence connected with the same matter, and also becomes liable to the penalty. Both prosecution and penalty immunities fall, so the partial-withdrawal options are wrong.

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