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Penalty u/s 271(1)(c)

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Querist : Anonymous

Querist : Anonymous (Querist)

17 June 2010 Dear All,

The ITO has assessed penalty u/s 271(1)(c) of Rs. 231000/-. Actually the assessee forget to include the following in return filed in original.

1. Capital Gain on ESOP of Rs. 16 Lac
2. Unexplained expenditure of Rs. 50,000/- paid through credit card
3. Unexplained cash deposit in S.B. A/c
4. Deduction u/s 54 of Rs. 10 Lac.

The AO added the income aforesaid and allow the deduction u/s 54 and raise a demand of Rs. 12000/-. The assessee accept the above addition at the time of assessment proceeding and submitted to AO for the addition. The assessee deposited the demand of Rs. 12000/-. Now the A.O. has issued the penalty order of Rs. 231000/- imposing penalty on equal tax amount relevant to concealed income.

Please guide us whether assessee should be penalise upto Rs. 12000/- as the net impact of the tax evasion had been Rs. 12000/-.

Please cite additional reference.

Thanks in Advance.

Nitin Kumar

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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17 June 2010 Minimum penalty is the amount of tax to be evaded. However, addition made on account of items 1 and 2 above would not automatically justify the imposition of penalty. So on this limited issue, as per my understanding, appeal can be preferred.

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