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

Meridian Exports Pvt Ltd, an Indian company, hid part of its income and the Department wants evidence against it. Mr. Rajan, an employee who was privy to the concealment, offers to make a full and true disclosure of all the circumstances. Under the Income-tax Act, 2025, who may tender immunity from prosecution and penalty to Mr. Rajan, and on what condition?

The Central Government may tender the immunity, for reasons recorded in writing, to a person privy to the concealment. The condition is a full and true disclosure of the whole circumstances of the concealment or evasion. Tax officers and the Tribunal do not hold this power under section 519.

  1. AThe Assessing Officer, on condition that he pays the tax evaded
  2. BThe Central Government, on condition of his making a full and true disclosure of the whole circumstances relating to the concealmentCorrect
  3. CThe Principal Commissioner, on condition that he resigns from the company
  4. DThe Income-tax Appellate Tribunal, on condition that the company files a revised return

Explanation

Section 519 empowers the Central Government to tender immunity from prosecution and from penalty to a person concerned in or privy to concealment of income, for reasons recorded in writing, on condition of full and true disclosure. The Assessing Officer, Commissioner or Tribunal has no such power under this provision, so the other options are wrong.

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