The last date for filing returns is extended to 31 August. Following are the penalties for false filing of returns.
Section 270A of the Income Tax Act 1961, penalises for misreporting or under-reporting income. It was made effective from the assessment year 2017-18, shortly after demonetization.
‘As per Section 270A, if any person under-reports or misreports his income, then an assessing officer (AO), a commissioner (appeals), a principal commissioner or a commissioner may direct him to pay penalty in addition to the tax, if any, on such income. This penalty is to be paid over and above the taxes,’ says CA Abhishek Soni, Founder, tax2win.in
Misreporting – explained
Misreporting of income includes misrepresentation or suppression of facts, failure to record investments in the book of accounts, claim of expenditure not substantiated by evidence, recording false entry into the books, failure to record any receipt in books of account having a bearing of total income and failure to report international transaction or any transaction deemed to be international or specified domestic transactions.
Tax evasion cases – false IT returns filed
The Income Tax Department in Bangalore, exposed fraudulent claims of tax refunds by salaried employees. Supposedly from reports, these employees falsely claimed refunds by filing losses under the head income from house property.
Penalty imposed
‘The violators will be penalized under section 270A of the Act followed by prosecution as well. As per Section 270A, if income is under-reported on account of misreporting of income then penalty shall be leviable at the rate of 200% of tax payable on under-reported income. However, if income is under-reported due to any other case, the penalty shall be 50% of tax payable on under-reported income’, says Soni.
However the income tax payee can seek the Assessing Officer (AO) for exemption from penalty under Section 270A. If the AO is convinced with the explanation then the individual is may not be penalized.