Sections 289, 290 and 291 of Income Tax Act 1961: Receipt, Indemnity and Immunity from Prosecution
Sections 289, 290 and 291 form part of Chapter XXIII of the Income Tax Act, 1961. They deal respectively with a receipt for money paid or recovered under the Act, statutory indemnity for specified tax deductions or payments, and the Central Government's power to tender immunity from prosecution and penalty in return for a full and true disclosure.
Section 289 - Receipt to be given
Meaning: Section 289 creates a straightforward statutory requirement that a receipt be issued whenever money is paid or recovered under the Income Tax Act, 1961.
Section 289: A receipt shall be given for any money paid or recovered under this Act.
The provision provides documentary acknowledgment of a payment made or an amount recovered under the Act. It applies according to its terms to any money paid or recovered under the Income Tax Act.
Section 290 - Indemnity
Meaning: Section 290 protects a person who deducts, retains or pays tax under the Act in respect of income belonging to another person, provided the deduction, retention or payment is made in pursuance of the Act.
Section 290: Every person deducting, retaining, or paying any tax in pursuance of this Act in respect of income belonging to another person is indemnified for that deduction, retention or payment.
The indemnity is connected to conduct authorised by the Income Tax Act. Its purpose is to protect a person for carrying out a statutory tax deduction, retention or payment relating to another person's income.
Section 291 - Power to tender immunity from prosecution
Meaning: Section 291 empowers the Central Government, for recorded reasons and where necessary or expedient to obtain evidence, to tender immunity to a person who appears to have been directly or indirectly concerned in or privy to concealment of income or evasion of income tax. The statutory protection is conditional on a full and true disclosure.
Section 291(1) - Conditions for tender of immunity
The Central Government may tender immunity where it forms the required opinion, records its reasons in writing, and considers the step necessary or expedient for obtaining evidence from a person appearing to have been concerned in or privy to concealment of income or evasion of payment of tax on income.
Under the pre-Bharatiya Sakshya Adhiniyam and pre-new-criminal-codes position requested for this page, the provision extends to prosecution for an offence under the Income Tax Act, the Indian Penal Code, 1860, or another Central Act for the time being in force, and also to penalty under the Income Tax Act, subject to full and true disclosure of the whole circumstances relating to the concealment or tax evasion.
Section 291(2) - Effect of accepted immunity
Once the tender is accepted, the person is immune, to the extent covered by the tender, from prosecution for the offence in respect of which immunity was given and from the imposition of the corresponding penalty under the Income Tax Act.
Section 291(3) - Withdrawal of immunity
If the Central Government finds that the person has failed to comply with the condition of the tender, is wilfully concealing anything, or is giving false evidence, it may record a finding to that effect. The immunity is then deemed withdrawn.
The person may thereafter be tried for the offence for which immunity was tendered, or another offence arising in connection with the same matter, and may also become liable to any penalty under the Income Tax Act that would otherwise have applied.
Key distinction between Sections 289, 290 and 291
Section 289 concerns acknowledgment of money paid or recovered. Section 290 concerns legal protection for a person deducting, retaining or paying tax in accordance with the Act on another person's income. Section 291 is different in character: it is an evidentiary and enforcement provision permitting the Central Government to tender conditional immunity to obtain a full and true disclosure in matters involving concealment of income or evasion of tax.
Official legal references
For authoritative statutory material, readers should verify the applicable version of the Income Tax Act, 1961 on the Government of India's India Code portal and the Income Tax Department portal, particularly where the relevant assessment year, proceeding or subsequent legislative amendment may affect the applicable law.