Rule 231: Form 161 for penalty waiver and prosecution immunity

Notification 134/2026, G.S.R. 871(E), took effect on publication in the Official Gazette. It inserts “or waiver” after “imposition” in Rule 231 and substitutes Form No. 161.

The substituted form is titled an application for seeking waiver of penalty under section 440(2). Use the current form and read its verification and payment fields with section 440; the form alone does not establish eligibility.

Section 440 requires the tax and interest under the specified assessment or reassessment order to be paid within the demand-notice period. Specified misreporting cases also require additional income-tax in lieu of penalty: 100% of the tax on under-reported income for section 439(11)(a) to (f), or 120% for section 439(11)(g).

The statutory no-appeal condition and Chapter XXII proceedings restriction must also be considered. A general request to waive a penalty, or filing Form 161 without satisfying the parent provision, is not the same as entitlement to relief.

Part A asks for the name, PAN, address and contact details. Part B asks for the tax year, section under which the order was passed, document identification number, order date, service date and demand-payment due date.

Enter assessed income and under-reported income in the appropriate categories. Reconcile these figures with the actual order and computation sheet rather than estimating them from a payment receipt.

The substituted form separates tax on under-reported income under section 439(11)(a) to (f) from that under clause (g). Its additional-tax fields apply the corresponding 100% and 120% amounts, and its total-payment field combines the relevant tax, interest and additional tax.

Keep the BSR code, deposit date, challan serial number and amount for each payment. Note 3 ties the total amount payable for waiver to the payment due date in the notice of demand. The amount and timing both matter.

Section 440(2) sets the application deadline at one month from the end of the month in which the relevant order is received. Keep receipt or service evidence and check the statutory deadline separately from the payment due date.

The substituted verification declares that no appeal has been filed in respect of the order identified in Part B and undertakes not to file an appeal before expiry of the section 440(5) period. The person signing also declares the capacity and competence to file and verify the application.

Section 440 provides a three-month period from the end of the month of receipt of the application for the Assessing Officer to accept or reject it, and requires a hearing opportunity before rejection. Its other conditions, timing and restrictions continue to apply.

Keep the submitted form, filing acknowledgment, payment evidence and subsequent communications together. An accepted application has consequences for appeal or revision against the underlying order under section 440(8); obtain advice before choosing this route.

Hypothetical: the relevant order is received on 10 October 2026. The section 440(2) application period runs to 30 November 2026, subject to the actual facts and applicable law. This does not extend an earlier payment deadline specified in the demand notice.

If the tax on under-reported income in a qualifying section 439(11)(a) to (f) case is ₹50,000, the additional-tax component under section 440(1)(b) is ₹50,000. For a qualifying clause (g) case with the same tax base, the 120% component is ₹60,000. These are additional components, not the entire demand or an assurance of eligibility.