What is Form 68 and 270AA of Income Tax 

 Undisclosed income, also known as black money or unaccounted income, refers to income that has not been reported to the tax authorities. This typically means that the income has not been declared in the income tax return, and therefore, no taxes have been paid on it. Income tax authorities have adopted a slightly liberal approach to motivate more people to disclose their unaccounted or black money. Since, no income tax was levied on them, Section 270AA of the Income Tax Act, 1961 provides relief to taxpayers who have undisclosed income. The section provides for a mechanism for taxpayers to come forward and declare their undisclosed income and pay tax on it, without fear of prosecution or penalty. It is related to Immunity from imposition of penalty, etc. in case of under-reporting and misreporting of income, willful attempt to evade any tax, penalty, or interest or Failure to furnish returns of income. 

A separate form 68 is required to be filed under section 270AA to grant immunity from such penalties.

Section 270AA:
The primary objective of Section 270AA is to encourage taxpayers to voluntarily disclose their undisclosed income and assets to the Income Tax Department. Persons who declares their undisclosed income  have a several benefits like :

• immunity from imposition of prosecution under section-270A
• Immunity from Penalty u/s 270A
• immunity from initiation of proceedings under section-276C or section-276CC
• No Requirement of Explanation

Procedures under Section 270AA:
Taxpayers who wish to declare their undisclosed income and assets under this section must follow the following steps:

• File a declaration in Form No. 1 under Section 270AA(1) of the Income Tax Act.
• Pay the tax dues along with the interest and the cess.
• File an undertaking in Form No. 2 that the taxpayer will not file an appeal against the order passed under Section 270AA.
• File a form 68 containing personal information, details of orders passed and payments and details of verification by assessee
• The Assessing Officer will issue an order under Section 270AA(2) of the Income Tax Act accepting the declaration and granting immunity from prosecution and penalty.

Conditions for availing immunity u/s 270AA:
An assessee may make an application to the Assessing Officer to grant immunity from imposition of penalty under section-270A and initiation of proceedings under section-276C or section-276CC, if he fulfils the following conditions, namely:—

• the tax and interest payable as per the order of assessment or reassessment under sub-section (3) of section-143 or section-147, as the case may be, has been paid within the period specified in such notice of demand; and
• no appeal against the order referred to in clause above has been filed.
• Application shall be made within one month from the end of the month in which the order has been received and shall be made in such form and verified in such manner as may be prescribed.

AO will grant immunity upon satisfaction of all the conditions. The Assessing Officer shall, within a period of one month from the end of the month in which the application is received, pass an order accepting or rejecting such application.

Details of Form 68:

Conclusion:
Form 68 is an application and verification for applying to grant immunity from prosecution for declaring undisclosed income. Section 270A & 270AA deals with such penalties and immunity. Section 270AA of the Income Tax Act provides a beneficial mechanism for taxpayers to come forward and declare their undisclosed income and assets. It is important to ensure that all conditions are met and accurate information is provided in the declaration to avoid any penalties or rejection of the declaration.

About Author:
CA Chinmay Shirish Agate
Chinmay Agate is a Practicing Chartered Accountant having 4+ years of experience and expertise in the field of Direct Taxation and Auditing compliances. In the past, he worked in various CA firms and comes with wide industry experience from services, retail to manufacturing to trading where he has handled various complex assignments. He has keen interest in Forex and Derivative knowledge as well as fundamental analysis.