Section 491: prosecution needs prior sanction, and offences can be compounded

Sanction required before prosecution

"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 Commissioner (Appeals) or Joint Commissioner (Appeals)."

The Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General may issue instructions or directions to income-tax authorities on instituting such proceedings.

No prosecution where a related penalty has been reduced or waived

A person cannot be proceeded against for an offence under section 478 or 482, in relation to the assessment for a tax year, if the penalty imposed or imposable on him under section 439 for that year has been reduced or waived by an order under section 469.

Compounding of offences

"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."

Admissibility of statements made during such proceedings

Where a proceeding has been taken against a person under sub-section (1), any statement made or account or document produced by that person before an income-tax authority specified in section 236(a) to (k) is not inadmissible as evidence merely because:

• the statement was made, or the document produced, in the belief that the penalty imposable would be reduced or waived under section 469; or
• the offence for which the proceeding was taken would be compounded.

Board's power over compounding

The Board's general power to issue orders, instructions or directions under the Act includes the power to issue instructions or directions (including requiring prior approval of the Board) to other income-tax authorities for the proper composition of offences under this section.

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