A newly introduced section 270A provides for levy of penalty in addition to tax, if the taxpayer “under- reports” the income to the income tax department
Thus penalty is levied for the under-reporting of income. Now question arises when income would be considered, as have been “under-reported”.
Sub-section (2) of section 270Aof the Income Tax Act, narrates seven situations where in income would be considered as “under-reported”.
The crux of these seven situations is that the income would result into “under-reporting” if it is assessed at a figure, which is greater than the income, reported by the taxpayer, in his income tax return, while filing return.
Section 270A provides that if there is “under -reporting” of income under any of the said seven situations, then penalty equal to 50% of the tax payable on the under-reported income would be levied.
In the case of “under-reporting” of income, two rates for levy of penalty have been prescribed by the statue, as follows:-
- When the “under-reporting” is not because of misreporting, the penalty would be 50% of tax payable on the “under-reported” income.
- When the “under-reporting” is because of misreporting, the penalty would be 200% of the tax payable on the “under-reported” income.
The moot point is if the tax payer has already paid due tax plus surcharge at the maximum marginal rate, which is 30% plus surcharge and the returned and the assessed income is same, whether the penalty under section 270A would be levied.
The answer is “No”.
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