BACKGROUND
With a view to introduce objectivity, clarity and certainty, the Finance Bill, 2016 proposed a levy of penalty for under-reporting of income in lieu of penalty for concealment of particulars of income or furnishing inaccurate particulars of income. W.e.f. Assessment Year 2017-18, in respect of additions which are made to total income, penalty is leviable u/s 270A if there is under-reporting of income.
Under section 270A, penalty is levied at 50 per cent of tax for under-reporting of income and at 200 per cent of tax for under-reporting in consequence of misreporting. Of course, levy of penalty u/s 270A has to be in accordance with the provisions of section 270A.
Section 276C, providing for prosecution for wilful attempt to evade tax, etc., has been amended by the Finance Act, 2016 w.e.f. 1st April, 2017 to cover a situation where a person under-reports his income and tax on under-reported income exceeds Rs. 2,500,000.
Since, provisions of section 270A are enacted in a manner that in most cases, where there is an addition to the total income, penalty proceedings u/s 270A will certainly be initiated and barring situations covered by sub-section (6) of section 270A, penalty will also be levied. The Legislature, with a view to avoid litigation, has simultaneously introduced section 270AA to provide for grant of immunity from penalty u/s 270A and from initiation of proceedings u/s 276C
