Answer

1. F

   Facts

   Penalty and prosecution are separate. Prosecution for wilful attempt to evade tax under Sec 276C, or wilful failure to file under Sec 276CC, is launched only in more serious cases with sanction from senior officers. Immunity under Sec 270AA, where granted, covers prosecution under these two sections as well.

2. P

   Provisions and law

   • Sec 276C (now Sec 478)Prosecution for wilful attempt to evade tax
   • Sec 276CC (now Sec 479)Prosecution for wilful failure to file a return
   • Sec 270AA (now Sec 440)Immunity from Sec 270A penalty and prosecution on paying tax and interest and not appealing
3. A

   Analysis

   Most penalty cases for ordinary under-reporting, such as missed interest income of ₹50,000, end with penalty or its deletion, not prosecution. Risk rises with deliberate acts like fake bills or hidden accounts and large amounts. If you are worried, immunity removes both penalty and prosecution under Sec 276C and 276CC on paying the demand and giving up appeal. Compounding of offences is another route under CBDT guidelines if prosecution is started.

4. C

   Conclusion

   1. 1Assess how serious the facts are: error, under-reporting or deliberate act
   2. 2Reply to the penalty notice on merits
   3. 3Consider immunity if the facts are weak and the amount is large
   4. 4Take professional advice at once if a prosecution show cause arrives

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.