Budget 2012 - Penalty,Appeals and Prosecution

[Swati Dodhi]

Penalty

Existing penalty provisions for search cases will apply to search initiated on or after 1 June 2007, but before 1 July 2012.

With the introduction of new section 271AAB, where search is initiated on or after 1 July 2012, the taxpayer will be liable to penalty at -

1. 10% of the undisclosed income, if the taxpayer, in the course of search admits the undisclosed income, specifies and describes the manner in which such income has been derived and on or before the prescribed date, pays the tax and interest, if any, and furnishes return of income declaring such undisclosed income,

2. 20% of the undisclosed income, if the taxpayer in the course of the search does not admit the undisclosed income, but on or before the prescribed date, declares such income in the return of income and pays the tax and interest,

3. 30% to 90% of the undisclosed income, in other cases.

No separate penalty for concealment of income or furnishing incorrect particulars shall be levied in respect of undisclosed income.

The above amendment will be effective from 1 July 2012.

Appeals

Appeals before Commissioner of Income-tax (Appeals)

A person deducting tax at source, aggrieved by an intimation issued in regard to processing statements of tax deduction in the manner provided under the Income-tax Act, may prefer an appeal before the Commissioner of Income-tax (Appeals).

This amendment will be effective from 1 July 2012.

Prosecution

New sections relating to special courts, offense to be tried by special court.

Prosecution base to will be corrected by:

1. constituting special courts for trial of offences

2. applying summons trial for offences to expedite the process providing for appointment of public prosecutors.

The above amendments will be effective from 1 July 2012.

Presently, in case the amount of tax, penalty or interest which would have been evaded by a person -

1. exceeds Rs 100,000 he shall be punishable with rigorous imprisonment of a term which may extend from six months to seven years and with fine.

2. does not exceed Rs 100,000 shall be punishable with rigorous imprisonment of a term which may extend from three months to three years and with fine.

Now, the threshold has been increased to Rs 2,500,000 and where the amount sought to be evaded does not exceed Rs 2,500,000 the term of rigorous imprisonment will be reduced from three years to two years.

The above amendment will be effective from 1 July 2012.