Applicability of para 5(b) of instruction No.849 to AY 1973-74 and 1974-75. - Income Tax - 1410/CBDT

INSTRUCTION NO. 1410/CBDT Dated: August 4, 1981 Attention is invited to Instruction No.849 dated 10-7-75 (F.No.206/3/75-II A.II). In para 5(b) of the said Instruction the board had decided that in cases of rectification or reassessment arising out of the retrospective operation of section 40A(7) no penalty proceedings be initiated where the inadequacy in the estimate of the correct income for purposes of payment of advance tax is attributable to the deduction of provision for payment of gratuity and that interest chargeable for short payment of advance tax in view thereof should be waived. 2. The board have considered the question of the waiver of penalty and interest in such cases at the time of original assessment proceedings. It is decided that the clarifications given in para 5(b) of the said instruction will also be applicable to the assessment years 1073-74 and 1974-75 where the original assessment have been completed by disallowing provisions for gratuity in view of the provisions of sec.40A(7). 3. These instructions may kindly be brought to the notice of all the officers working in your charge for their guidance and compliance.