Income Tax Law / Offences and Prosecution

Section 278AB of the Income-tax Act, 1961: Immunity from Prosecution

Updated: 28 October 2026 | Historical provision and current legal position

Section 278AB of the Income-tax Act, 1961 provided a specific route for obtaining immunity from prosecution when an application before the former Settlement Commission had abated. It was not a general amnesty: the applicant had to meet statutory conditions, including cooperation and full and true disclosure.

Law update (October 2026): The Income-tax Act, 2025 came into force on 1 April 2026 and repealed the 1961 Act subject to its savings and transitional provisions. Section 278AB has no direct counterpart in the 2025 Act. Historical proceedings and any saved rights must be assessed under the applicable transitional provisions; do not assume that a new Section 278AB application is available for a fresh 2026 case.

Meaning and scope of Section 278AB

Immunity from prosecution means protection, to the extent granted by the competent authority, against criminal prosecution for specified offences. Abatement in this context means termination of settlement proceedings under Section 245HA, after which the case could return to ordinary income-tax proceedings. Full and true disclosure requires truthful disclosure of income and the manner in which it was earned.

Eligibility and conditions under the 1961 Act

Section 278AB(1): The person must have applied for settlement under Section 245C and the settlement proceedings must have abated under Section 245HA.
Section 278AB(2): The application to the Principal Commissioner or Commissioner could not be made after prosecution proceedings were instituted following abatement.
Section 278AB(3): The authority could grant conditional immunity if satisfied that the applicant cooperated after abatement and made full and true disclosure of income and its source.
Proviso to subsection (3): For settlement applications made before 1 June 2007, the provision allowed a wider scope of immunity covering specified offences under other Central enactments, as stated in the historical statute.
Section 278AB(4): Breach of a condition caused the immunity to stand withdrawn.
Section 278AB(5): Immunity could also be withdrawn if the authority found post-abatement concealment of material particulars or false evidence, exposing the person to prosecution.

How an application was evaluated

The applicant had to establish the earlier settlement application and its abatement, apply before the statutory prosecution cut-off, supply evidence of cooperation and disclosure, and comply with any conditions in the order. The provision used the word may, so immunity was discretionary rather than automatic. An order granting immunity did not itself erase the underlying tax assessment or all other liabilities.

Position under the Income-tax Act, 2025

The 2025 legislation does not reproduce the special abated-settlement route in Section 278AB. Different immunity mechanisms must not be confused with it. In particular, Section 440 concerns specified immunity linked to assessment, penalty and prosecution subject to its own conditions, while Section 519 concerns a Central Government tender of immunity to obtain evidence in tax-concealment or evasion matters. Neither should be described as a direct replacement for Section 278AB.

For older disputes, review the repeal-and-savings framework, the date of the settlement application, the date of abatement, whether prosecution was instituted, and any existing immunity order before taking a position on continued rights or proceedings.

Illustrative example

A taxpayer filed an application before the former Settlement Commission. The proceedings later abated, and the taxpayer sought immunity before prosecution was instituted. Under Section 278AB, the Principal Commissioner or Commissioner could consider cooperation and truthful disclosure and, if satisfied, grant immunity subject to conditions. If the taxpayer subsequently supplied false evidence, the immunity could be withdrawn. This example explains the historical provision; it does not establish eligibility under the 2025 Act.

Frequently asked questions

Was immunity automatic under Section 278AB?

No. The competent authority had discretion to grant immunity after verifying statutory conditions.

Could immunity be withdrawn?

Yes. Non-compliance with conditions, concealment of material facts or false evidence could result in withdrawal under subsections (4) and (5).

Does Section 278AB continue unchanged in 2026?

No. It has no direct equivalent in the Income-tax Act, 2025. Transitional questions for historical cases require separate examination.

Official legislation and guidance

This article is general legal information. The effect of repeal, savings provisions, later amendments and any individual prosecution or settlement history should be reviewed with the relevant statutory text and professional advice.