CHAPTER - XIV
PENALTIES
Penalty for under reporting of tax bases.
230. (1) A person shall be liable to a penalty if he has under reported the tax bases for any financial year.
(2) The penalty referred to in sub-section (1) shall be a sum which shall not be less than, but which shall not exceed two times, the amount of tax payable in respect of the amount of tax bases under reported for the financial year.
(3) A person shall be considered to have under reported the tax bases, if—
(a) the tax bases assessed or reassessed, for the first time, is greater than the maximum amount not chargeable to tax, if any, where no return of tax bases has been filed;
(b) the tax bases assessed is greater than the tax bases disclosed in the return of tax bases; or
(c) the tax bases reassessed is greater than the tax bases assessed immediately before the re-assessment.
(4) The amount of tax bases under reported shall be the aggregate amount of the addition or disallowance made by the Assessing Officer, the Commissioner or the Commissioner (Appeals), as the case may be.
(5) The aggregate amount of the addition or disallowance made by the Assessing Officer in assessment or re-assessment shall, in a case—
(a) where no return of tax bases has been filed as required by any provision of this Code, be the assessed tax bases as reduced by the maximum amount not chargeable to tax, if any;
(b) where the return of tax bases has been filed as required by section 144 or section 146, be the amount of tax bases assessed as reduced by the tax bases disclosed in the return so filed;
(c) where no return of tax bases has been filed under section 144 or in response to a notice under section 146 and whether or not the return of tax bases has been filed in response to a notice under section 159, be the tax bases reassessed as reduced by the maximum amount not chargeable to tax, if any; and
(d) where a return of tax bases has been filed as required by section 144 or in response to a notice under section 146 and whether or not the return of the tax bases has also been filed as required by section 159, be the amount of the tax bases reassessed as reduced by the tax bases assessed immediately before the reassessment.
(6) The aggregate amount of the addition or disallowance made by the Commissioner in revision shall be tax bases assessed consequent to revision as reduced by the tax bases assessed in the order so revised.
(7) The aggregate amount of the addition or disallowance made by the Commissioner (Appeals) in appeal shall be the aggregate of all enhancements made by the Commissioner (Appeals) in the order under appeal.
(8) Subject to the provisions of sub-section (10), the aggregate amount of the addition or disallowance referred to in sub-sections (5) to (7) shall include—
(a) the amount of any money or the value of bullion, jewellery or other valuable article or thing, (hereinafter referred to as "assets"), found in the possession of the assessee, or under his control, in the course of search under section 135, if the assessee claims that such assets have been acquired by him by utilising (wholly or in part) his income for any financial year which has ended before the date of search, and—
(i) the due date for filing the return of tax bases for the financial year has expired, but the assessee has not filed such return before such due date; or
(ii) the return of tax bases for such financial year has been furnished before the date of search, but such income has not been declared therein;
(b) the amount, or value, of assets belonging to the assessee and delivered to the requisitioning officer under sub-section (3) of section 136 or handed over to the Assessing Officer under section 138, if the assessee claims that such assets have been acquired by him by utilising (wholly or partly) his income for any financial year which has ended before the date of requisition or the date of search, as the case may be, during the course of which the assets were seized, and—
(i) the due date for filing the return of tax bases for the financial year has expired, but the assessee has not filed such return; or
(ii) the return of tax bases for such financial year has been furnished before the date of requisition or the date of search, as the case may be, but such income has not been declared therein;
(c) any tax bases based on any entry in any books of account or other documents or transactions, if the assessee claims that such entry in the books of account or other documents or transactions represents his tax bases, wholly or in part, for any financial year which has ended before the date of search during the course of which the assets were seized, and—
(i) the due date for filing the return of tax bases for the financial year has expired, but the assessee has not filed such return; or
(ii) the return of tax bases for such financial year has been furnished before the date of search, but such tax bases has not been declared therein;
(d) in a case where the source of any receipt, deposit or investment in any financial year is claimed to have been added or deducted, as the case may be, in any year prior to the financial 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 such amount as is sufficient to cover such receipt, deposit or investment.
(9) For the purposes of clause (d) of sub-section (8), the amount referred to in said clause shall be deemed to be amount of tax bases under reported 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.
(10) The aggregate amount of the addition or disallowance referred to in sub-sections (5) to (7) shall not include the following, namely:—
(a) the amount relating to addition or disallowance in respect of which the assessee offers an explanation and the Assessing Officer is satisfied that—
(i) the explanation is bona fide;
(ii) the assessee has disclosed all the facts material to the addition or disallowance; and
(iii) the assessee has disclosed all the facts relating to the explanation.
(b) the amount relating to addition or disallowance determined on the basis of an estimate by the Assessing Officer, if the accounts are correct and complete to the satisfaction of the Assessing Officer, but the method employed is such that, in the opinion of the Assessing Officer, the income cannot properly be deduced therefrom;
(c) the amount relating to addition or disallowance pertaining to any issue, determined on the basis of an estimate by the Assessing Officer, if the assessee—
(i) has, on his own, estimated a lower amount of addition or disallowance on the same issue;
(ii) has included such amount in the computation of his tax bases; and
(iii) has disclosed all the facts material to the addition or disallowance; and
(d) the amount of undisclosed tax bases referred to in section 231.
(11) The tax payable in respect of the aggregate amount of the addition or disallowance shall be the amount of tax calculated on the aggregate amount of the addition or disallowance made by the Assessing Officer, the Commissioner or the Comissioner (Appeals), as the case may be,—
(a) at the applicable rate in the case to which Paragraph A or Paragraph B of Part I of the First Schedule applies; and
(b) at the rate specified in Part I of the First Schedule or the Second Schedule, as the case may be, in all other cases.
(12) No addition or disallowance of an amount shall form the basis for imposition of penalty, if—
(a) such addition or disallowance has formed the basis of imposition of penalty in the case of the person for the same or any other financial year; or
(b) the amount relates to any addition or disallowance made pursuant to the adjustment under section 149.
(13) The penalty referred to in sub-section (1) shall be imposed, by an order in writing, by—
(a) the Assessing Officer, if the amount of tax bases under reported is determined in assessment or re-assessment;
(b) the Commissioner, if the amount of tax bases under reported is determined in revision of the tax bases by the Commissioner; or
(c) the Commissioner (Appeals), if the amount of tax bases under reported is determined in appeal against an assessment or re-assessment order.
