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

Mehta Textiles Ltd's accountant is the key witness in a concealment-of-income investigation. The accountant was privy to the concealment. Under the Income-tax Act, 2025 (Section 519), which statement is correct about tendering immunity to him?

The Central Government may tender immunity from prosecution and penalty to a person privy to concealment, provided it records reasons in writing and the person makes a full and true disclosure. The power is not with the Assessing Officer, and the immunity can be withdrawn later.

  1. AThe Central Government may tender immunity from prosecution and penalty, for reasons recorded in writing, on condition of full and true disclosureCorrect
  2. BThe Assessing Officer may tender immunity on his own, without recording any reasons
  3. CImmunity can cover prosecution under the Income-tax Act only, and never under the Bharatiya Nyaya Sanhita, 2023
  4. DImmunity once tendered cannot be withdrawn even if the person gives false evidence

Explanation

Section 519(1) lets the Central Government, for reasons recorded in writing, tender immunity from prosecution (under the Act, the Bharatiya Nyaya Sanhita, 2023 or any other Central Act) and from penalty, on condition of full and true disclosure. The Assessing Officer has no such power. Immunity can be withdrawn for non-compliance, wilful concealment or false evidence.

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