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

Mehta Textiles Ltd, an Indian company, is assessed for the tax year 2026-27. Its director, Mr. Rohan Mehta, was privy to concealment of income by a related trader. The Central Government, for reasons recorded in writing, tendered him immunity on condition of full and true disclosure, and he accepted. Later it found he was wilfully concealing material facts. What is the legal position?

If a person given immunity wilfully conceals anything, the Central Government can record a finding to that effect, and the immunity is deemed withdrawn. He can then be prosecuted for the offence and also becomes liable to the penalty that would otherwise have applied.

  1. AThe immunity continues because it was accepted, and cannot be withdrawn
  2. BThe Central Government may record a finding and the immunity is deemed withdrawn, so he may be tried and become liable to penaltyCorrect
  3. COnly the Assessing Officer can withdraw immunity, and only for penalty, not prosecution
  4. DThe immunity is automatically void from the start, and no finding is needed

Explanation

Under section 519(3), where a person to whom immunity was tendered is wilfully concealing anything, the Central Government may record a finding and the immunity is deemed withdrawn. Under section 519(4) he may then be tried for the offence and becomes liable to the penalty. Option A ignores the withdrawal power.

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