Certain interests and penalties not to be levied or imposed
[Section-297 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]
Interest under section 423, 424 or 425 or penalty under section 439 shall not be levied or imposed upon the assessee for the undisclosed income assessed or reassessed for the block period.
FAQs on Section 297 of Income Tax Act 2025
What is the main relief provided under this provision of the Income Tax Act, 2025?
This provision offers relief by stating that no interest under sections 423, 424, or 425 and no penalty under section 439 shall be levied or imposed on undisclosed income assessed or reassessed for the block period.
Which types of interest are not to be levied as per this section?
Interest under section 423 (interest for defaults in payment of advance tax), section 424 (interest for deferment of advance tax), and section 425 (interest for late filing of return) are not to be levied on the undisclosed income for the block period.
What is meant by ‘undisclosed income assessed or reassessed for the block period’?
It refers to income that was not disclosed by the assessee and has been subsequently discovered and added to the total income during an assessment or reassessment for a specific block period, usually under search or survey proceedings.
Is any penalty applicable on such undisclosed income?
No, penalty under section 439 of the Income Tax Act, 2025 is also not applicable for the undisclosed income related to the block period.
Does this provision apply to regular assessment cases?
No, the relief from interest and penalty is specifically applicable only to cases of undisclosed income assessed or reassessed for the block period and not to regular assessments.
What is the effective date of this provision?
This provision is effective from 1st April, 2026.
Are assessees required to apply separately for relief under this provision?
The Act does not specify the need for a separate application; the benefit is to be granted during the assessment or reassessment process for the relevant block period.
Is this provision applicable to both individuals and companies?
Yes, this relief applies to any assessee, including individuals, companies, firms, etc., as long as the condition of undisclosed income for the block period is satisfied.
Can the assessing officer still impose penalties for other reasons?
Yes, penalties unrelated to section 439 or outside the scope of this specific provision may still be imposed if applicable under other provisions of the Act.
Will interest and penalties already collected for past years be refunded under this provision?
No, the provision is prospective and applies only from 1st April, 2026. It does not provide for refund or retrospective relief for past periods.
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