Penalty U/S 270A and immunity against the same:

 

1.  What is Sec 270A?

As per section 270A of the Income Tax Act, an assessing officer (AO), a commissioner (appeals), a principal commissioner, or a commissioner may direct a person to pay a penalty in following cases:

If he has underreported his income.

or If he has misreported his income

 

2.  Instances of underreporting of income:

The income assessed is greater than the income determined in the return.

The income assessed or reassessed has the effect of reducing the loss or converting such loss into income.

The income reassessed is greater than the income assessed or reassessed immediately before such reassessment.

 

3.  Instances of misreporting of income:

Misrepresentation or suppression of facts.

Claim of expenditure not substantiated by any evidence.

Failure to record any receipt in books of account having a bearing on total income

 

4.  Amount of penalty:

In case of underreporting :- 50 % of tax on underreported income.

In case of misreporting:- Penalty can be up to 200% of the tax on unreported income

 

5.  Sec 270AA of the Income Tax Act, which provides immunity against the penalty provided in Sec 270A, is applicable if all the below conditions are fulfilled:

The tax and the and the interest payable as per the assessment or the reassessment order is paid within the period specified in the notice of demand.

No appeal has been filed against the assessment or the reassessment order.

An application is filed in Form 68 within one month from the end of the month in which assessment order is received by the assessee.

 

6.  Point to note:

These provisions are applicable from assessment year 2017-18 only and not earlier assessment years.