The question (6 marks)
Sanjay's return, as processed, showed total income of 900000. On scrutiny the officer added 300000 of receipts which Sanjay had not recorded at all. Assume that tax at the applicable rates on 1200000 is 60000 and on 900000 is 30000. Compute the penalty, state how the answer would differ had the addition been a bona fide but mistaken claim, and advise Sanjay on any route by which the penalty may be avoided. (6 marks)
MU Module III, penalty for under-reporting and misreporting; pack ch. 03, problem question.
Plan your answer on paper before you look at the authorities — issue first, then the rule, then apply it to these facts.
It tests Unit 3 · Assessment, Authorities, Appeals and Penalties of Law of Taxation.
Authorities you will need
- Section 439, Income-tax Act
- Section 440, Income-tax Act
- Sections 470, 471 and 472, Income-tax Act
- Sections 478 and 479, Income-tax Act
How an answer is marked
A full-marks answer names the issue in one line, states the rule with its section, cites the authority, applies it to these facts and concludes — in that order. The app's model answer for this question is written in exactly that shape, with a checklist to mark your own attempt against.