If a huge sum of cash is deposited in your account, the income tax department can send a notice to you and ask about the source of that amount. In case Read this page you are unable to explain things properly and lack sufficient proof of legitimacy of the cash, then you will be facing prosecution and penalties according to the rules under the Income Tax Act.
As per observations, if an individual completely cooperates with the income Tax Department and discloses all the information about the hidden income then the A.O. (Assessing Officer) may grant immunity to that individual as permitted under the IT Act. However, the final call on whether an individual gets immunity against tax penalties or not depends on the decision of the Income Tax authority. The sections that ca offer immunity against tax penalties are as follows:
Section 270AA – This particular Section offers immunity against prosecution under 276CC and 276C. It also provides immunity against penalty under Section 270A. The individual must agree with the income that has been assessed by the Assessing Officer under Section 147 or 143(3). The tax and the interest must be paid by the individual with the specified time period in the demand notice under Section 156. The individual must file an application seeking immunity from prosecution and penalty. If the Assessing Officer passes an order by accepting the application then the individual will be able to enjoy immunity against prosecutions and penalties.
Section 273A – This particular section does not offer immunity from penalty but the CIT (Commissioner of Income Tax) can choose to decrease or waive the entire penalty. However, the individual must disclose all unaccounted income voluntarily and makes required payments towards taxes and interest before the Assessing Officer comes to know of such income.
Section 245L from Section 245C – An individual can choose to apply for the ITSC after his/her true income has been disclosed. If the income that is disclosed exceeds an amount of Rs.10 lakh, then a fee of Rs.500 will be required while filing the application. The ITSC holds the power to make you immune against penalties and prosecutions.
Section 273AA – This Section can offer complete immunity against all penalties. If an individual files an application for settlement to the ITSC and it has been rejected by the ITSC, then an application can be sent to the Commissioner of Income Tax seeking immunity against penalties. Immunity can be granted by the CIT, but it will be withdrawn in case the individual does not follow all the conditions which are a requirement for the granting of immunity.
Section 273B – Under this section, penalties are not imposed on an individual if the cause of tax payment failure is reasonable. However, if the penalty falls under Section 270A, then penalties will be imposed.
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