Various Income Tax Offences & Applicable Penalties

It deals with determination of undeclared income for block period, when  search is initiated under section 132 of Income Tax Act or books of account, other documents or any assets are requisitioned under section 132A of Income Tax Act in the case of any person

Maximum penalty would be 300% of the tax leviable in respect of the undisclosed income.

The above penalty shall be charged only on the income determined by the ITO in excess of the income as per the ITR furnished by the assessee u/s 158BC and appeal is not filed against such assessment.

Default in making payment of taxes to the Income Tax Authority

Failure to file return by the assessee with respect to the collection or deduction of TDS or TCS within the time prescribed as given under section 200(3) or 206C (3)

Default in furnishing of return under section 139(1) within the time which is specified by the Income Tax Act

INR 10,000 shall be leviable in any other case.

Note: in case the income earned or declared here does not exceed INR 5 Lakhs, then the penalty also shall not exceed INR 1,000 for the assessment year.

Penalty charged for under-reporting or the reporting of income lower than the actually earned or made income.

Penalty for under-reporting of income earned on account of misreporting of income.

200% of the amount shall be payable as tax (this shall be on the amount underreported reported income).

Failure to declare income and file returns and comply with notices

Note: Applicable up to AY 2016-17

Concealment of the particulars of his income earned or fringe benefits earned or furnished wrong particulars of such income or fringe benefits to the department of Income Tax

Note: Applicable up to AY 2016-17

Maximum: 300% of tax seek to be eluded.

Distribution of profits by a registered firm which is found to be not in accordance with the partnership deed and thereby partner disclosed or returned his income below the real amount

Note: Applicable up to AY 2016-17

Failure to keep, maintain or retain the books of account, documents as required under Section 44AA

Penalty arising with respect to an international transaction or a particularly prescribed domestic transaction with regard to:

-failure to keep and maintain any such information and document which is mandated by the provisions of Section 92D (1) or 92D (2)

– the failure to report an important transaction which was to be furnished

-Maintaining or providing of the wrong information or document related with.

Dealing with any failure to furnish or provide information and also any allied documents to the authority prescribed as required under Section 92D (4)

Deals with the search which has been initiated under Section 132 of the Income Tax Act between the dates of 1^stof June, 2007 and 1^stof July, 2012

Nothing contained in sub-section (1) shall apply.

No penalty under the provisions of clause (c) of sub-section (1) of section 271 shall of Income Tax shall be charged.

Where search has been initiated between 1^stof July 2012 and 15^th of December 2016.

-Assessee admits the earning of the undisclosed income along with the manner of earning the same.

-Substantiates or provides support for the manner in which undisclosed income was derived

-Pays the tax along with interest. And also furnishes the return of income for the relevant or prescribed previous year declaring undisclosed or the undeclared income on or before the prescribed date.

b) At the rate of 20% of the undeclared income if:

-The assessee is not ready to admit the undisclosed income

-Discloses and declares the income for the relevant previous year and pays the tax along with interest on the particular undisclosed income on or before the specified date.

c) If not covered under clause (a) or (b) above, then the penalty shall be charged at the rate of 60% of the undeclared income of the specified previous year.

Where search has been initiated after the date of 15th Dec 2016

-Assessee is admitting the undisclosed income and also specifies or agrees on the manner in which it was derived

-Supports the manner in which the undisclosed income was derived by the person

-Pays the tax with interest and also furnishes the ITR for the relevant previous year declaring an undisclosed income on or before the date specified as such.

b) A rate of 60% of the undeclared income shall be charged if it is not covered under the provisions of clause (a).

Income under section 68,69,69A,69B,69C,69D determined by the assessing officer if not included by assessee or the tax under Section 115BBE has not been paid

*Section 68- Cash Credits

Section 69- Unexplained Investments

Section 69A- Unexplained money Section

69B-69B- The amount of investments not fully disclosed in books of account Section

69C-Unexplained expenditure

Penalty for false entry, fake invoices etc. in books of account

a) A false entry, or

b) There was an omission of any entry which is considered to be relevant for computation of total income of an assessee, then

he may direct the assessee to pay a penalty of an amount which is equal to sum of such false or omitted entries.

The false entry here means the following:

a) Forged or false document which might be in the form of sales invoice which not real

b) Any invoice of supply or receipts of goods or services issued by any person, while there was no actual supply or receipt of goods or services taken place

c) An invoice which was issues or received in respect of supply or receipt of goods or services or both to or from a person who is not existing