Clarification on Section 273A(4): Penalty Waiver or Reduction Requires Penalty Imposed u/ss 271 or 273.
The circular addresses the interpretation of Section 273A(4) of the Income-tax Act, which allows the Commissioner to reduce or waive penalties or stay proceedings for recovery if an assessee faces genuine hardship and has cooperated with inquiries. It clarifies that these powers can only be exercised if a penalty has been imposed under Sections 271 or 273, as recovery proceedings are contingent upon such imposition. The circular emphasizes that without a penalty, there can be no proceedings under Section 273A(4), and applications for relief can only be made following a penalty order.
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