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TMI BlogPenalty for concealment of income – Section 271 [Applicable upto 31st March, 2016]X X X X Extracts X X X X X X X X Extracts X X X X ..... y the penalty for concealment of Income, then the penalty proceedings must be initiated by the Assessing Officer before the completion of assessment. If CIT (Appeals) is to levy the penalty for concealment of income, then the penalty proceedings must be initiated before passing the order under section 250. If CIT under section 263 increases the income, then he must initiate the penalty proceedings before passing the order under section 263. Note:- Penalty is initiated by issuing a show cause notice. * There will be no penalty for concealment of income on any additions made on a Question of Law. There will be no penalty for concealment of income on any addition made on debatable issue. * Penalty for concealment of Income is levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be deemed to represent the income in respect of which particulars have been concealed. Explanation 2 to Section 271(1) Additions are sometimes made by the assessing Officer for purely technical reasons, e.g., application of a presumptive rate of gross profit or of yield, or on account of estimated disallowance of certain expenses, shortfalls, wastage, etc., but no penalty for concealment is levied in respect of these additions for want of adequate evidence to establish that these additions represent the assessee's concealed income. In later assessments, when called upon to explain certain deposits, etc., the assessee urges at times that such deposits, etc., have come out of the income represented by the aforesaid additions made ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch had been furnished for the earlier year. The following points should also be kept in view: * Where the amount so added in the earlier year is not sufficient to cover the entire amount of receipt, deposit, outgoing or investment of the current year, then that part of the amount so added in the year immediately preceding the earlier year which is sufficient to cover the receipt, deposit, outgoing or investment not so covered shall be treated as the income of the assessee for which particulars have been concealed for the year immediately preceding the earlier year and so on until the entire amount is covered. * Where any penalty is imposable by virtue of Explanation 2, proceedings for the imposition of such penalty may be initiated (no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral provisions and the tax is paid under the provisions of section 115JB or 115JC of the Act. [In Commissioner of Income Tax, Meerut and Another Versus M/s. Jindal Polyester & Steel Ltd. Ghaziabad [2014 (4) TMI 562 - ALLAHABAD HIGH COURT]. The High Court held that book profit disclosed by assessee for purpose of tax liability under MAT provision was relevant and not income determined under provisions of the Income-tax Act. When concealment of income did not lead to tax evasion under MAT provisions, no penalty would be levied. Section 271 of the Act has been amended so as to provide that the amount of tax sought to be evaded shall be the summation of tax sought to be evaded under the general provisions and the tax sought to be evaded und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice u/s 148. Where returned income is positive. The amount of tax sought to be evaded= Tax on total income assessed Less: Tax on (total income assessed-concealed income). Explanation 5A to Section 271(1) - Deemed Concealment Where, in the course of a search-initiated u/s 132 on or after 1-6-2007, and the assessee is found to be the owner of - * any money, bullion, jewellery or other valuable article or thing and the assessee claims that such assets have been acquired by him by utilising his income for any previous year; or * any income based on any entry in any books of account or other documents or transactions and he claim that such entry in the books of account or other documents or transactions represents his income for any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g anything contained in the other provisions of this Act, the penalty imposable under sub-section (1) shall be the same amount as would be imposable on that firm if that firm were an unregistered firm. Section 271(4) If the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) in the course of any proceedings under this Act, is satisfied that the profits of a registered firm have been distributed otherwise than in accordance with the shares of the partners as shown in the instrument of partnership on the basis of which the firm has been registered under this Act, and that any partner has thereby returned his income below its real amount, he may direct that such partner shall, in addition to the tax, if any, p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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