Penalty for Underreporting / Misreporting of Income under Income Tax Provisions

Tax Planning Course: https://taxplanningforsalariedemploye... ..................................................... . कर निर्धारण वर्ष 2017-18 से आयकर अधिनियम 1961 में एक धारा 270A जोड़ी गयी है जो की पहले से लागू धारा 271(1)(c) का स्थान लेगी । यह धारा अंडर रिपोर्टिंग एवं मिस-रिपोर्टिंग ऑफ़ इनकम पर पेनल्टी का प्रावधान करती है। यह वीडियो अंडर रिपोर्टिंग एवं मिस रिपोर्टिंग से सम्बंधित बिंदुओं पर प्रकाश डालने का एक प्रयास है। आशा करता हूँ कि दर्शक इससे लाभान्वित होंगे । Before enactment of the Finance Act 2016 an assessee concealing particulars of income was subjected to the penalty for concealed income as per the provisions of section 271(1)(c) but the said provisions for levy of concealment penalty are replaced by the provisions of section 270A by the Finance Act 2016 thereby attracting penalty provisions on ‘under-reporting’ and ‘misreporting’ of income. The purposes of such insertion appears to enlarge the scope of levy of penalty, avoid litigation and remove discretion of income tax authorities by trying to be objective. One may understand the provisions of section 270A by following discussion: What is the nature of fault covered: Under-reporting or misreporting of income related matters are covered under section 270A. Who can levy the penalty: Assessing Officer, CIT, Principal Commissioner, CIT (Appeals) What is the quantum of penalty: In case of ‘under-reporting of income’, it shall be a sum equal to ‘50% of the amount of tax payable’ on under-reported income In case of ‘misreporting of income’, it shall be a sum equal to ‘200% of the amount of tax payable’ on misreported income. Whether penalty provisions are mandatory or discretionary: It is both, depending on the facts and circumstances of the case. What is the meaning of the term ‘under-reporting of income’: It is defined in section 270A(2), kindly refer also discussed in the video even. Whas is not under reporting: It may also be noted that section 270A(6) further provides certain cases which shall not be treated as under-reported income: (a) the amount of income in respect of which the assessee offers an explanation and the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, is satisfied that the explanation is bona fide and the assessee has disclosed all the material facts to substantiate the explanation offered; (b) the amount of under-reported income determined on the basis of an estimate, if the accounts are correct and complete to the satisfaction of the Assessing Officer or the Commissioner (Appeals) or the Commissioner or the Principal Commissioner, as the case may be, but the method employed is such that the income cannot properly be deduced therefrom; (c) the amount of under-reported income determined on the basis of an estimate, if the assessee has, on his own, estimated a lower amount of addition or disallowance on the same issue, has included such amount in the computation of his income and has disclosed all the facts material to the addition or disallowance; (d) the amount of under-reported income represented by any addition made in conformity with the arm's length price determined by the Transfer Pricing Officer, where the assessee had maintained information and documents as prescribed under section 92D, declared the international transaction under Chapter X, and, disclosed all the material facts relating to the transaction; and (e) the amount of undisclosed income referred to in section 271AAB. What is misreporting of income: Sec 270A(9) defines misreporting it is also discussed in this video. A combined interpretation of above text therefore means that prima-facie any additions made by the assessing officer falls in the category of under-reporting of income, however any addition which satisfied be amongst clause (a) to clause (f) above shall then be treated to be misreporting of income thereby attract penalty @ 200% of tax amount payable on such under-reported income which is treated as misreported income. IMMUNITY FROM IMPOSTION OF PENALTY LEVIED UNDER SECTION 270A: A very imporatnt provision which is discussed in details in the video even. #PenaltyForUnderreportingOfIncome, #PenaltyForMisreportingOfIncome, #ImmunityFromPenalty