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

Mehta Textiles Pvt Ltd, an Indian company, has a Director, Mr. Rao, who was privy to concealment of income by the company. The Central Government, for reasons recorded in writing, tenders him immunity from prosecution and penalty under the Income-tax Act, 2025, on condition of full and true disclosure of the whole circumstances. Which statement is correct?

Immunity under section 519 can cover prosecution for offences under the Income-tax Act, the Bharatiya Nyaya Sanhita, 2023 and any other Central Act in force, as well as penalty under the Act. It is tendered by the Central Government, for recorded reasons, on condition of full and true disclosure.

  1. AImmunity can cover only offences under the Income-tax Act, not offences under the Bharatiya Nyaya Sanhita, 2023
  2. BImmunity can cover prosecution under the Act, the Bharatiya Nyaya Sanhita, 2023 or any other Central Act in force, and penalty under the ActCorrect
  3. CImmunity can be tendered only for penalty and never for prosecution
  4. DImmunity can be tendered by the Assessing Officer without recording any reasons

Explanation

Section 519 empowers the Central Government to tender immunity from prosecution for any offence under the Act, the Bharatiya Nyaya Sanhita, 2023 or any other Central Act in force, and from penalty under the Act, on condition of full and true disclosure. Reasons must be recorded in writing. The option limiting immunity to the Income-tax Act is wrong because the section expressly extends further.

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