Penalties Justification of Penalty for Misreporting of Income Under Section 270A(9) in Case of Addition Based on Voluntary Disclosure by Assessee

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The Tax Publishers Income Tax--Penalties Justification of Penalty for Misreporting of Income Under Section 270A(9) in Case of Addition Based on Voluntary Disclosure by Assessee CA. Nisha Bhandari In case of any misrepresentation or suppression of facts penalty may be levied under section 270A(9) for misreporting of income. The present write-up aims at highlighting as to how such penalty can be avoided by the assessee in genuine cases. 1. Penalty when can be levied on account of misreporting of income Penalty under section 270A is levied where a person has underreported his income. The amount of penalty to be levied under section 270A is a sum equal to 50 per cent of the amount of tax payable on underreported income. However, sub-section (8) of section 270A provides that notwithstanding anything contained in sub-section (6) or sub-section (7), where the underreported income is in consequence of any misreporting thereof by any person, the penalty on that person referred to in sub-section (1) shall go up and become equal to two hundred per cent of the amount of tax payable on the underreported income. As provided under sub-section (9) of section 270A, the cases of misreporting of income referred to in sub-section (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 of the Income Tax Act apply. 2. Penalty in case of misrepresentation or suppression of facts SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

Income Tax--Penalties

Justification of Penalty for Misreporting of Income Under Section 270A(9) in Case of Addition Based on Voluntary Disclosure by Assessee

CA. Nisha Bhandari

In case of any misrepresentation or suppression of facts penalty may be levied under section 270A(9) for misreporting of income. The present write-up aims at highlighting as to how such penalty can be avoided by the assessee in genuine cases.

1. Penalty when can be levied on account of misreporting of income

Penalty under section 270A is levied where a person has underreported his income. The amount of penalty to be levied under section 270A is a sum equal to 50 per cent of the amount of tax payable on underreported income. However, sub-section (8) of section 270A provides that notwithstanding anything contained in sub-section (6) or sub-section (7), where the underreported income is in consequence of any misreporting thereof by any person, the penalty on that person referred to in sub-section (1) shall go up and become equal to two hundred per cent of the amount of tax payable on the underreported income.

As provided under sub-section (9) of section 270A, the cases of misreporting of income referred to in sub-section (8) shall be the following, namely :-

(a) misrepresentation or suppression of facts;

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

(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 of the Income Tax Act apply.

2. Penalty in case of misrepresentation or suppression of facts