Income Tax Act 2025: Section 491 for Tax Year 2026-27

Prosecution to be at instance of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner

[Section-491 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 491(1) of Income Tax Act 2025

491(1) A person shall not be proceeded against for an offence under section 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483, or 484 except with the previous sanction of the Principal Commissioner or Commissioner or Joint Commissioner (Appeals) or Commissioner (Appeals).

Section 491(2) of Income Tax Act 2025

491(2) The Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General may issue such instructions or directions to the income-tax authorities mentioned in sub-section (1) as he considers fit for institution of proceedings under that sub-section.

Section 491(3) of Income Tax Act 2025

491(3) A person shall not be proceeded against for an offence under section 478 or 482 in relation to the assessment for a tax year for which the penalty imposed or imposable on him under section 439 has been reduced or waived by an order under section 469.

Section 491(4) of Income Tax Act 2025

491(4) Any offence under this Chapter may be compounded, either before or after the institution of proceedings, by the Principal Chief Commissioner or Chief Commissioner or a Principal Director General or Director General.

Section 491(5) of Income Tax Act 2025

491(5) Where any proceeding has been taken against any person under sub-section (1), any statement made or account or other document produced by such person before any income-tax authority specified in section 236(a) to (k) shall not be inadmissible as evidence for the purpose of such proceedings merely on the ground that—

• 491(5)(a) such statement was made or such account or document was produced in the belief that the penalty imposable would be reduced or waived, under section 469; or
• 491(5)(b) the offence for which such proceeding was taken would be compounded.

Section 491(6) of Income Tax Act 2025

491(6) The power of the Board to issue orders, instructions or directions under this Act shall include the power to issue instructions or directions (including instructions or directions to obtain the previous approval of the Board) to other income-tax authorities for the proper composition of offences under this section.

FAQs on Section 491 of Income Tax Act 2025

What is the requirement under Section 491(1) before initiating prosecution for certain offences?
A person cannot be prosecuted for offences under Sections 473 to 484 without the previous sanction of the Principal Commissioner, Commissioner, Joint Commissioner (Appeals), or Commissioner (Appeals).

Who can issue directions for initiating proceedings under Section 491(2)?
The Principal Chief Commissioner, Chief Commissioner, Principal Director General, or Director General may issue instructions or directions to the authorities specified in Section 491(1) for initiating prosecution.

Is there any restriction on prosecution under Section 478 or 482 in certain cases?
Yes, under Section 491(3), a person cannot be prosecuted for an offence under Section 478 or 482 for a tax year if the penalty under Section 439 for that year has been reduced or waived by an order under Section 469.

Can offences under this Chapter be compounded?
Yes, as per Section 491(4), any offence under this Chapter may be compounded either before or after the institution of proceedings by the Principal Chief Commissioner, Chief Commissioner, Principal Director General, or Director General.

Can evidence like statements or documents be used in prosecution if the person believed the penalty would be waived?
Yes, according to Section 491(5), such evidence cannot be excluded solely because it was given or produced under the belief that the penalty would be reduced or waived under Section 469, or that the offence would be compounded.

Does the Board have powers to direct the composition of offences under this section?
Yes, under Section 491(6), the Board may issue orders, instructions, or directions, including requiring prior approval, to income-tax authorities for proper composition of offences under this section.

Which sections require prior sanction before prosecution can begin under Section 491(1)?
Sections 473, 474, 475, 476, 477, 478, 479, 480, 481, 482, 483, and 484 require prior sanction for prosecution under Section 491(1).

Who has the authority to compound an offence under this Chapter?
The authority to compound an offence lies with the Principal Chief Commissioner, Chief Commissioner, Principal Director General, or Director General.

Can prosecution proceed if the penalty has been waived but the offence falls outside Section 478 or 482?
Yes, the restriction in Section 491(3) specifically applies only to offences under Section 478 or 482, so prosecution may proceed for other offences even if the penalty has been waived.

What is the significance of Section 236(a) to (k) in Section 491(5)?
Section 491(5) ensures that evidence submitted before income-tax authorities specified in Section 236(a) to (k) remains admissible in prosecution, even if submitted under belief of penalty relief or possible compounding.