Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

[Section 270A]- Penalty for Under-Reporting and Misreporting of Income

[Section 270A]- Penalty for Under-Reporting and Misreporting of Income
[Section 270A]- Penalty for Under-Reporting and Misreporting of Income

(1)  [Section 270A (1)]-Penalty for Under-Reported income

The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceeding under this Act, direct that any person who has under-reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reported income.

(2) [Section 270A]-Penalty for Cases of Misreporting of Income

 

The cases of misreporting of income referred to in section 270A (8) shall be the following. namely: —

(a)        misrepresentation or suppression of facts;

(b)        failure to record investments in the books of account;

(c)        claim of expenditure not substantiated by any evidence;

(d)        recording of any false entry in the books of account;

(e)        failure to record any receipt in books of account having a bearing on total income; and

(f)      failure to report any international transaction or any transaction deemed to be an international transaction or any specified domestic transaction, to which the provisions of Chapter X apply.

(3) [Section 270A (4)]-Penalty leviable in certain cases where no penalty was levied on Under-Reported income in any Preceding Year

Subject to the provisions of section 270A(6), where the source of any receipt, deposit or investment in any assessment year is claimed to be an amount added to income or deducted while computing loss, as the case may be, in the assessment of such person in any year prior to the assessment year in which such receipt, deposit or investment appears (hereinafter referred to as “preceding year”) and no penalty was levied for such preceding year, then, the under-reported income shall include such amount as is sufficient to cover such receipt, deposit or investment.

See also  [Section 270AA]- Immunity from imposition of Penalty and initiation of proceedings under section 276C or 276CC

The amount referred to in section 270A(4) shall be deemed to be amount of income underreported for the preceding year in the following order—

(a)     the preceding year immediately before the year in which the receipt, deposit or investment appears, being the first preceding year; and

(b)     where the amount added or deducted in the first preceding year is not sufficient to cover the receipt, deposit or investment, the year immediately preceding the first preceding year and so on.

(4) [Section 270A(10)]-Tax payable in respect of the under-reported income

The tax payable in respect of the under-reported income shall be—

(a)     where no return of income has been furnished and the income has been assessed for the first time, the amount of tax calculated on the under-reported income as increased by the maximum amount not chargeable to tax as if it were the total income;

(b)     where the total income determined under section l43(l)(a) or assessed, reassessed or recomputed in a preceding order is a loss, the amount of tax calculated on the under-reported income as if it were the total income;

(c)        in any other case, determined in accordance with the formula—

(X-Y)

where,

X — the amount of tax calculated on the under-reported income as increased by the total income determined under section 143(1)(a) or total income assessed, reassessed or recomputed in a preceding order as if it were the total income; and

Y — the amount of tax calculated on the total income determined under section 143(1)(a) or total income assessed, reassessed or recomputed in a preceding order.

In other words, it will be tax on total income inclusive of under-reported income — Tax on total income determined under section 143(1)(a) or 143(3) or 147, as the case may be.

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