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200 penalty cannot be imposed if tax is paid on unaccounted cash in current year

Income Tax - By: - CA Paras Dawar - Dated:- 18-11-2016 - Hon ble Prime Minister, Sh. Narendra Modi on November 8, 2016 made one of his boldest move by launching an aggressive assault on black money through demonetisation of existing ₹ 500 and ₹ 1,000 currency notes. Being seen as a surgical attack on black money, fake currency and corruption, the Hon ble Prime Minister informed his fellow countrymen that the existing ₹ 500 and ₹ 1,000 notes could be deposited in their ban .....

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en analysed in case where a person has deposited his unaccounted cash in his bank account and paid due tax thereon in the return of income for AY 2017-16. The Finance Act 2016 in order to rationalize and bring objectivity, certainty and clarity in the penalty provisions, replaced the existing section 271 of the Act and inserted a new section 270A of the Act for levy of penalty in cases of under reporting and misreporting of income. Sub-section (1) of the new section 270A of the Act provides that .....

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Income Sub-section 2 of section 270A of the Act provides that a person shall be considered to have under-reported his income, if, inter alia, the income assessed is greater than the income determined in the return processed under 143(1)(a) of the Act. Thus, there shall be under-reporting of income only in cases where income assessed during the course of assessment proceedings would be greater than income determined in the return processed under section 143(1)(a) of the Act. Since, the income det .....

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ate of penalty shall be 50% of the tax payable on under-reported income. Further, sub-section 8 of section 270A of the Act provides in a case where under-reported income is in consequence of any misreporting thereof by any person, penalty levied shall be 200% of the tax payable on such under-reported income. Thus, even for levy of penalty at 200% of the tax payable, it is important that the there must be an under-reported income which must be in consequence of misreporting. Levy of penalty where .....

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ppropriate rate are paid in full on such income for AY 2017-18. Now, his income determined in the return processed under section 143(1)(a) of the Act would include this unaccounted cash income [assuming there is no other cause for variation under section 143(1)(a) ]. When the case for AY 2017-18 would be picked up for scrutiny by income tax department, the Assessing Officer would not be able to make any addition on account of this cash deposited in bank account since the person would have alread .....

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ne 30, 2016 issued by CBDT while providing clarifications on the Income Declaration Scheme, 2016 ( IDS ). In question no. 9 of the circular, the CBDT dealt with the question regarding the advantages of the IDS where past undisclosed income is disclosed as current income in the return of income to be filed for AY 2017-18 in place of declaration under IDS. The answer of CBDT, inter alia, provided for the following:- If anyone attempts to disclose past undisclosed income in the current year, he wil .....

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