CA.Mohit Gupta
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Introduction The legislature has intentionally drafted the provisions relating to Search and Survey in the statue book of Income Tax Act, 1961 with the target of unearthing the undisclosed income of any person in form of any money, bullion, jewellery or other valuable article or thing. Search
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FAQ :
No, declaring undisclosed income to 'buy peace', avoid litigation, or settle amicably does not automatically grant immunity from penalties. The Income Tax Act does not provide for such immunity without a specific legal provision.
Penalties can be levied on the 'tax sought to be evaded' and, in cases of search, also on the 'undisclosed income' itself, as per the provisions of the Income Tax Act, 1961.
A disclosure of additional or undisclosed income admitted in a statement under Section 132(4) is considered a minimum binding commitment to the department, provided it is corroborated by evidence unearthed during the search.
Yes, the tax department can still impose penalties. A voluntary disclosure does not absolve an assessee from penal proceedings, especially if the disclosure is made in response to incriminating material found during a search or survey.
While promissory estoppel is a principle of equity, it cannot be applied against a statute. There is no provision in the Income Tax Act that permits a compromise assessment or grants immunity from penalty based on such pleas.
The Supreme Court has held that Assessing Officers should not be swayed by pleas like 'voluntary disclosure', 'buy peace', or 'avoid litigation' to grant immunity from penalties. Penalties must be levied as per the law.
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