AA Ltd. is a trading company incorporated and doing business in Hong Kong. For the year ended 31 March 2020, the turnover of AA Ltd. consisted of trading income and dividend income from AA SZ Ltd., a wholly-owned subsidiary incorporated in the Mainland of China ("the Mainland"). AA Ltd. does not have its own establishment in the Mainland.
Required:
(a) From the perspective of AA Ltd., advise whether and how dividend payable by AA SZ Ltd. to AA Ltd. is:
(i) subject to PRC tax based on domestic PRC tax law and Article IO under the PRCHK Double Taxation Arrangement; and
(ii) subject to Hong Kong tax based on domestic HK tax law and Article IO under the PRC-HK Double Taxation Arrangement

(b) In a recent field audit, the Inland Revenue Department discovered that profits earned from certain sales made to customers were not reported by AA Ltd. in the profits tax return submitted for the years of assessment 2015/16 and 2016/17. What are the penalty and prosecution action(s) (if any) which can be taken against AA Ltd. by the Inland Revenue Department?