Advance Rulings

Section 245N
(a) Advance Ruling means
i)
Determination by authority in relation to a transaction which has been undertaken or proposed to
be undertaken by a non resident applicant;
ii)
Determination by authority in relation to the tax liability of a non-resident arising out of a
transaction which has been undertaken or proposed to be undertaken by resident applicant with
such non-resident
In both the above cases, such determination shall include the determination of any question of
law or fact of specified in the application;
iii)
A determination or decision by the authority in respect of an issue relating to computation of total
income which is pending before income tax authority or the Appellate Tribunal and such
determination or decision shall include the determination or decision of any question of law or of
fact relating to such computation of total income specified in the application.
(b) Applicant means any person, who:
(i)
Is a non resident mentioned in (a) (i); or
(ii)
A resident mentioned in (a) (ii); or
(iii)
Is a resident falling within any such class or category of persons as the central government may,
specify in the behalf;
Makes an application u/s 245Q.
Section 245-O Authority for advance ruling
The Central Government shall constitute an authority for giving advance rulings, to be known as Authority
for advance ruling.
The Authority for advance ruling will consist of the following members appointed by the Central
Government.
(a) a chairman who will be retired judge of the Supreme Court,
(b) an officer of the India Legal Service who is qualified to be a member of CBDT, and
(c) an officer of the India Legal Service who is qualified to be an Additional Secretary to the Government
of India.
The office of the Authority shall be located of Delhi.
Section 245Q - Application for advance ruling
1. An applicant desirous of obtaining an advance ruling under this chapter may make an application in
such form (Form no. 34C, 34D, 34E in case of Section 245N (b) I, ii, iii) and in such manner as may
be prescribed, stating the question on which the advance ruling is sought.
2. The application shall be made in quadruplicate and be accompanied by a fee of Rs. 2,500.
3. An applicant may withdraw an application within 30 days from the date of application.
Section 245R - Procedure on receipt of application
1. On receipt of an application, the authority shall cause a copy thereof to be forward to the
Commissioner and, if necessary, call upon him to furnish the relevant records. Such record will be
returned to the Commissioner as soon as possible.
2. The Authority may, after examining the application and the records called for, by order, either allow or
reject the application.
The Authority shall not allow the application in the following cases:
Where the question raised in the application:
a. is already pending before any income Tax authority or the Appellate Tribunal
b. involves determination of fair market value of any property;
c. relate to a transaction or issue which is designed prima facie for the avoidance of income tax
No application shall be rejected unless an opportunity has been given to the applicant of being heart.

Where the application is rejected, reason for such rejection shall be given in the order and copy of the
same shall be sent to the applicant and to the commissioner.
Where an application is allowed, the authority shall, after examining such further material as may be
placed before it by the applicant or obtained by the authority, pronounce its advance ruling on the
question specified in the application.
On request received from the applicant, the Authority shall, before pronouncing its advance ruling, provide
an opportunity of being heart, either in a person or through a duly authorised representative.
The Authority shall pronounce its advance ruling in writing within 6 months of the receipt of application.
A copy of the advance ruling pronounced by the authority, duly signed by the Members and certified in the
prescribed manner shall be sent to the Commissioner, as soon as may be, after such pronouncement.
Jain Institute of Commerce
B - 9 ; Main Road; Brij Vihar:
15/ 714; Vasundhra; Ph. 98112-55704
PENALTIES AND PROSECUTION
SECTION 271(1)(c) PENALTY FOR CONCEALMENT OF INCOME
If the Assessing officer or the commissioner(A) in the course of proceedings under this act, is satisfied
that any person has concealed the particulars of his income or furnish inaccurate particulars of such
income, then he may direct that such person shall pay penalty which shall not be less than the amount of
tax sought to be evaded. The maximum penalty is three times the amount of tax sought to be evaded.
The penalty is in addition to the tax payable by assessee.
The following explations to section 271(1)(C) extends the scope of provisions relating to levy of penalty.
EXPLANATION 1If the person fail to offer an explanationor the explanation is found by the assessing officer or
Commissioner to be false; or
If the person offer an explanation but is unable to substantiate it and fails to prove that such explanation is
bonafied and that all the facts relating to the same and material to the computation of his income has
been disclosed by him.
EXPLANATION 2
Where any receipts, deposits, investment or outgoings are sought to be explaINED WITH RESPECT ANT
ADDITIO MADE IN AN EARLIER ASSESSMENT YEAR, THE ADDITIONS MADE IN EARLIERS YEARS
TI THE EXTEND OF INVESTMENT ,receipts, depositins or outgoings will be treated as concealed
income on which penalty would be leviable even though the assessments for such years might have been
concealed.
EXPLANATION 3
If a person who has not been previously assesses ti tax has not furnished his return of income under
section 139