Section 297 — Certain interests and penalties not to be levied or imposed. Successor to s.158BF of the 1961 Act.
Section 297 is in Chapter XVI — Procedure for Assessment, which runs from section 268 to section 301.
The section bars four specific levies in relation to undisclosed income assessed or reassessed for the block period: interest under section 423, interest under section 424, interest under section 425, and penalty under section 439. It is a single sentence with no sub-sections, conditions or exceptions, and it operates only on the block period assessment or reassessment of undisclosed income.
Block period assessment of undisclosed income following a search carries its own charge, and levying default interest and concealment penalty on income that by definition was never declared would duplicate that charge; the section removes those levies for the block period.
The immunity is narrow in two ways and both matter. It covers only the four named provisions — sections 423, 424 and 425 for interest and section 439 for penalty — so any other interest or penalty in the Act is untouched. And it attaches only to undisclosed income assessed or reassessed for the block period, so the same interest and penalty remain available on income assessed in the ordinary course for years outside that block. "Block period" and "undisclosed income" are both defined in section 301, not here.
A search leads to a block assessment in which Rs. 3 crore of undisclosed income is assessed for the block period. The assessee braces for the usual accompaniments — interest for the late return, interest for advance tax default and deferment, and a penalty for under-reporting. None of them can be levied on that income: the section bars interest under sections 423, 424 and 425 and penalty under section 439 upon undisclosed income assessed or reassessed for the block period. The immunity is exactly that narrow, though — it names four provisions and no others, and it reaches only the undisclosed income of the block period.
In the block assessment or reassessment order that follows a search: the order assesses the undisclosed income for the block period but carries no interest under sections 423 to 425 and no penalty under section 439 on it.
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.
See the full 1961 to 2025 concordance.