The devil is always in the fine print, especially when it comes to the Income Tax (I-T) Act and its rules. Following demonetisation, tax experts are examining whether penalty under section 270A of the I-T Act (which is 200% of the I-T payable on misreported or under-reported income) can be levied if an individual deposits unaccounted money, but pays advance tax on the same and also declares it in his I-T return (ITR).
Prima facie, it appears that in a scenario where income has been declared in the ITR, this penalty cannot be imposed unless the I-T Act is amended.
To illustrate: A person has deposited cash in excess of Rs 10 lakh in his bank accounts up to December 31. He has paid advance tax against these sums deposited by December 15 and March 15......................Read more
Source: The Times of India